Question

How does the Enron Scandal relate to the world of economics? (Use economic terms)

Answer 1

The Enron Controversy came to light in October 2001 when it was reported that the seventh largest American company was involved in corporate misconduct and accounting fraud. The Enron energy business scandal involved political ramifications due to Enron's close ties to the White House, Enron's legalization allowing the firm to function completely free of U.S. government oversight, misrepresentation of financial results, a false 'carbon crisis' and embezzlement by Enron executives. The Enron debacle ultimately led to the corporation's collapse and the breakup of the Arthur Andersen auditing firm

Enron lined its house strategically with politicians, well-connected up-and-comers and well-known public figures. In the board of directors and audit committee, they put people with similar mentality to have someone in their corner when they needed them. Enron was able to break the rules when they had to by hand picking the people of significance in their community. Getting their people on the board of directors and the audit committee allowed them to do effectively what they had to achieve results, which resulted directly in many fraudulent practices, and ultimately Enron's collapse.

In short, Enron seemed to represent the view of the Leftists that a reborn capitalism had overthrown the "idealistic" 1960s and 1970s, coming out of the right-wing think tanks with a new optimism The outcome was easy to see: America's most revered corporation turned out to be America's biggest failure, and its top executives turned out to be criminals.