Some interesting leads. The first is a source at Enron who communicates that there was indeed a budget set up for ‘opinion leaders.’ I’m told the annual amount was some $1 million to give to various pundits, intellectuals and journalists, in return for “advice” about the world, etc. That suggests there are several other columnists/pundits out there who have been on the Enron gravy train. As to the going rate of $50,000 for a couple of meetings, this is less akin to traditional speaking fees (at the most about a fifth of that) than it is akin to payments to members of a board of directors. Kristol, Krugman and Kudlow (the only recipients of Enron money we now have) were de facto members of a satellite Enron board, just one body in a dizzyingly complex set of corporate arrangements designed to conceal conflicts of interest, tax loopholes, hidden losses, and the like. The sheer scale of their remuneration is the most damning fact about this. Nor were Krugman and Kristol just one-off speakers, they were institutionally part of Enron, on a board that was set up and met year to year. Although this had been going on for some time, Kristol and Krugman only disclosed their Enron remuneration in 2001. What was the point of the board? According to Krugman, who was on it, “This was an advisory panel that had no function that I was aware of. My later interpretation is that it was all part of the way they built an image. All in all, I was just another brick in the wall.” I think that means that Krugman himself acknowledges this was yet another shell institution by which Enron could coopt and schmooze journalists for money. And those journalists took it – eagerly. As to my request for full disclosure from Irwin Stelzer, a journalist, it’s now around noon on Wednesday and no response.
THE WAGONS CIRCLE: Odd thing at the New York Times site this morning. If you try and join an online discussion of Paul Krugman’s columns, you get the following message: “The item ‘.f20ac13/0’ does not exist, it may have been deleted.” Free speech halted at the Times? Say it ain’t so.
PUNDITGATE – YOUR TURN: An email worth sharing in the Dish:
“The tale of Krugman and Enron illustrates an interesting point that isn’t widely known: conflict of interest rules are typically much tougher for journalists than for academic economists. My understanding is that staffwriters for magazines like Business Week are very nearly forbidden from taking any money from anyone for speaking engagements or “advisory” services, and required to put most of their investments into indexed mutual funds. But academics can basically take money from whoever offers it, and during the 1990s, a fairly large number of high-powered economists at top universities sought ways to cash in. Krugman was well within academic standards for conflict of interest, but he is skating the thin edge (at best) of modern journalistic standards. I think the big money available to top academic economists has fractured the old social contract, where a professor viewed lifetime job tenure as a reason to put their ideas in the public realm at low cost, and was willing to get by on a college paycheck, along with maybe a little money from writing books or a $500 speech honorarium here and there. Now there’s a sense among many top professors that the academic salary is just a base, and seeking compensation for everything else is how to play the game. If you could check the tax returns of the economics and B-school faculty at Harvard, MIT, and other places, I suspect that Krugman’s $50,000 payment for the Enron advisory board is just the tiny tip of a very large iceberg.
The Dish 