Monday, January 30, 2006

Paul Krugman, Enron, and Influence Peddling

Influence peddling doesn't have to be illegal to be immoral. One of my favorite lefty heroes is Greg Palast. Back in 2002, on a Democracy Now! show, he lamented Krugman's involvement with Enron. I built a transcript of the pertinent section (not easy work!) by listening to the audio stream:

Amy Goodman: I wanted to go back to Enron and the kind of stories
you were doing long before, uh, it all, long before Enron collapsed
because it wasn't the newspapers that exposed Enron, Enron collapsed
and now the reporting is being done.

Greg Palast: Yeah, and they're all saying oh my gosh, you know, like,
oh, um, you know, uh - they're all surprised. Though I'm not su..,
it's hard to understand why journalists were surprised given the
amount of money journalists were taking including, i'm ashamed to say,
Paul Krugman, whose, you know i was reading Paul Krugman's defense of
energy deregulation, i'm thinking my God, this is against everything
he's ever said in his career - in his life as an economist. And now
he's flacking for this goofball Reaganite/Thatcherite phony idea that
you can have markets in water and power and things like that, and
then I find out he gets fifty grand from Enron. Now I'm not saying it
bought his ideas, but..

Amy Goodman: for what?

Greg Palast: for, um, deregulation.

Amy Goodman: but, what did he get fifty thousand [unintelligible]

Greg Palast: uh, well-uh, he got fifty grand for doing some study for
'em or you know, some writing uh, giving some talks or doing some study,
um, it's just, this is, y-, now he disclosed it - there are other
journalists who aren't disclosing their payments or who have not
disclosed their payments from Enron. Joe Conason was writing about that
story, broke that story.

Amy Goodman: Enron-[interrupted]

Greg Palast: I don't take any money from Enron.

Amy Goodman: Enron and Argentina.

Greg Palast: Enron and Argentina. You can't actually divide the Enron
collapse from the collapse of Argentina...

I don't know exactly which piece it was of Krugman's that Palast was reading, but I trust Palast's reporting and his opinion tremendously. His opinion and integrity is right up there with Chomsky, in my book. There's a very good chance that if Palast doesn't like that something went down, I won't like that something went down.

So, I think it's fair to say that even though Krugman disclosed his Enron ties, I don't believe Krugman was able to see Enron in an objective light - due in large part to that $50,000 he took from them as payment for 'whatever' - thus, Krugman's article came out heavily pro-energy deregulation - Enron's business. Is it possible that Krugman could have taken such a dramatically different stance on deregulation without the influence of $50,000 - even if Krugman thought it had no effect on him? Sure - it's possible, but likely? I'm not buying it. So, no, I don't want part of that timeshare in Baghdad.

So, how wrong was Krugman's decision to write on Enron? Well, I have no idea if he had a choice - if Fortune (or whomever) asked to do an article on Enron or energy deregulation or whatever, but it'd be worth looking into. This is an old story now, so I'm sure someone already has.

The point is that you should not be writing about companies that you took money from, and you should not be covering their industries, arguing-by-proxy that the company you took money from is great because its market is great.

Money buys influence even when you do everything in your power to stop it - even when you're doing your honest best to not let it influence you. It's like asking a judge to convict a cop. It's like asking the Bush Administration to criticize itself. It's like asking the military to investigate its sadistic, torturing, murdering, criminal soldiers - it doesn't happen fairly because of inherent biases built into the system. Taking money from someone will inherently bias you towards that person/company/entity - it's as simple as that.

What's the solution? Disclose, of course, but better, don't write articles in which you have a severe conflict of interest - as there are different levels of conflict. Having a lunch with the CEO of a company you're about to write about - maybe not the end of the world, as long as you disclose. Accepting $50,000 from a company you're about to write about - don't ever do it, even if you do disclose it.

Back to how wrong Krugman was - it's tought to say. He disclosed - that's the gold standard, so I can't hate too much, but it all smells a bit fishy. Not good. It should not have gone down like this. In my critique, I'm comparing Krugman's business ethics with the likes of Chomsky and Palast - folks I consider to be near-flawless in business ethics land, but of course, maybe it's just because I've never had the chance to read of their dirty dealings - if any do, in fact, exist. So my comparison of Krugman to Chomsky/Palast might not be fair, but I expect and demand the best from the people I look up to.

There it is. Love and hate. (this quote not included at linked site, sadly)

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