Edwin Stone

Mgmt 335
Professor Phillips

Enron Video Analysis

This was the third time I have seen the video, “Enron The Smartest Guys in the

Room.” I’m old enough to remember the rise and fall of Enron. I’ve always followed the

stock market a little bit since I was a teenager. In this summary I will analyze the Enron

collapse from the Act and Rule Utilitarian views and the Kantian view.

First let me summarize the video. Some would think is a story about money and the

down fall of one of the largest corporations in the world. If you look at the numbers its

understandable, $65 billion in assets and bankrupt in 24 days, but you have to look even

closer at the situation. Enron employed 20,000 people and when the company went

bankrupt they not only lost their jobs but they also lost their medical insurance,

retirement plans, which totaled more than $2.1 billion, and retirees lost $2 billion in

pension funds. Even the severance packages were a joke. The average employee received

about $4,500 while the top executives got a total of $55 million. So, it is a story about

numbers, but the true story is about the human tragedy of the Enron employees. They

were told at about 9:30 am that they had been let go and they had 30 minutes to leave the

building. What a shock for employees that had been there for even a short time. Their top

executives kept telling everyone that the company would pull through and not to worry,

obviously this wasn’t true. They were even telling their employees to invest in the

company still. In the end their stock was worthless, but Enron’s top executives cashed in

$116 million in stock. There was nothing anyone could do but sit back and watch

everything unfold.
 Edwin Stone
Mgmt 335
Professor Phillips

Act Utilitarianism is, “We must ask ourselves what the consequences of a particular

act in a situation will be for those affected,” if the consequences bring more total good

then those of any alternative course of action, then this action is the right one and we

should perform. If you look at Enron in this way, there is no way the ones making any

decisions could be doing what they did for any greater good other than for themselves.

The people at the top were making millions off of those at the bottom. This was not the

Act Utilitarian way.

Rule Utilitarianism maintains the utilitarian standard should be applied not to

individual actions but to moral codes as a whole. A rule-utilitarian thinks the right actions

are the kind permitted by the moral code optimal for the society of which the agent is a

member. Optimum moral code encompasses both the benefits of reduced objectionable

behavior and the long-term costs. If you look at Enron this way, again the ones at the top

were not concerned with optimum moral code. They were looking for short-term profits.

They did not care about the society as a whole, they wanted money and they wanted it

now. This was not the Rule Utilitarian way.

Kant’s categorical imperative is we should always act in such a way that we can will

the maxim of our actions to become a universal law. Maxim is the subjective principle of

action, principle rule people formulate in determining their conduct. If what happened at

Enron was universal law, businesses would fail every day.

Kant’s universal acceptability is a rule or principle is a moral law if we can as if what

the rule commands would be acceptable to all rational beings. An act is right only if the
 Edwin Stone
Mgmt 335
Professor Phillips

actor would be willing to be so treated if positions of the parties were reversed. This ones

a no brainer, if the roles were reversed there is no way these top executives would have

thought it was fair.

To sum it up, it all depends on your ethics. Each of us has different views on every

aspect of each situation. That’s what makes us who we are. Some will do good for society

and some will do good only for them selves.