This just gets curiouser and curiouser. Check out this piece from the Krugman archive at MIT. I don’t know about you, but it looks to me like a massive puff-piece about Enron, written by Krugman in Fortune in May 1999. According to Krugman, Enron revolutionized capitalism for the better. Here’s my favorite passage:
“The retreat of business bureaucracy in the face of the market was brought home to me recently when I joined the advisory board at Enron–a company formed in the ’80s by the merger of two pipeline operators. In the old days energy companies tried to be as vertically integrated as possible: to own the hydrocarbons in the ground, the gas pump, and everything in between. And Enron does own gas fields, pipelines, and utilities. But it is not, and does not try to be, vertically integrated: It buys and sells gas both at the wellhead and the destination, leases pipeline (and electrical-transmission) capacity both to and from other companies, buys and sells electricity, and in general acts more like a broker and market maker than a traditional corporation. It’s sort of like the difference between your father’s bank, which took money from its regular depositors and lent it out to its regular customers, and Goldman Sachs. Sure enough, the company’s pride and joy is a room filled with hundreds of casually dressed men and women staring at computer screens and barking into telephones, where cubic feet and megawatts are traded and packaged as if they were financial derivatives. (Instead of CNBC, though, the television screens on the floor show the Weather Channel.) The whole scene looks as if it had been constructed to illustrate the end of the corporation as we knew it.”
Now tell me if I’m wrong, but isn’t this structure, which enabled Enron to hide all sorts of shenanigans, exactly what Krugman is now bemoaning? In fact, the whole article reads like something very un-Krugman-like: a glowing testimony to the post-corporate free-wheeling e-economy he has subsequently come to lambaste. Here’s the kicker:
“Who would have thunk it? The millennial economy turns out to look more like Adam Smith’s vision–or better yet, that of the Victorian economist Alfred Marshall–than the corporatist future predicted by generations of corporate pundits.”
Well, who would have thunk it? Paul Krugman making Larry Kudlow look like a lefty. Perhaps that $50,000 advisory board membership was well worth Enron’s investment. They got exactly the kind of puff-piece in a magazine like Fortune that helped perpetuate their scam. And Krugman was the author.
The Dish 