Enron and the Democratization of Ideas

“If the popular sensation keeps building, Enron will rise in price even more. But popular sensations are dangerous — whether political or financial. People surrender their own individual judgment and personal knowledge to a kind of mass, herd-thinking.”

— The Daily Reckoning, Sept. 12, 2000

Addison WigginDear Reader,

On this day in 2001, Enron declared bankruptcy… the final chapter in a story that had seen its share price run up as high as $90.75, only to fall to just $0.26 at the end.

The company had started in the oil and gas business, delivering electricity and natural gas using an extensive pipeline network. Then it made money by trading its products, treating them more like investment vehicles than commodities.

Finally, it became a tech company, hoping to use its knowledge of pipelines to create fiber optic networks.

Each step of the way earned the company accolades for its creativity and innovation. Its efforts seemed to be paying off, too, with its earnings and income announcements filled with good news.

Naturally, it became a poster child for the “New Economy” — an old-school business that had successfully adapted to thrive in the burgeoning internet-connected world.

Of course, not everyone bought into the “New Economy” hype. It was actually one of the reasons Bill Bonner and I started The Daily Reckoning — to warn people that the age-rules for making money still applied.

While we didn’t know the company was cooking its books, we could tell that Enron’s business strategy was largely built on wishful thinking.

But at the start of the 21st century, the idea of sharing our ideas through email was still new. It was a challenge figuring out how to reach people… and convince them that our opinions were worth reading. At times, we may have come across as more smarmy than we needed to be.

Maybe if we had mastered the art faster, fewer people would have been caught by surprise when the “New Economy” promises fell apart.

Still, our format caught on. Before long, every financial organization was sending out a daily email. Amateurs found ways to get in on the act, too. The ones who had something to say stuck around, while the rest quietly faded away.

Today it’s much easier to get your message out there. Just about anyone can start a blog or a podcast on any of a number of social media sites.

As we’ve discussed, however, those sites aren’t actually designed to foster meaningful conversation. Facebook, Hidden Forces Demetri Kofinas tells me in this week’s Session, is “constructed to drown out more intelligent conversations.”

So ”the vast majority of people use social media just to safely lob invectives and offer really unsubstantiated or thoughtless opinions,” he says.

I’d argue that those other voices are essential to the democratization of ideas. We need places where everyone can say their peace — no matter how inane it might seem to others.

But that can’t happen if those ideas are being policed by unthinking algorithms or restricted by central authorities — whether the government or corporate boardroom. Give everyone equal access to it all… and trust people to tune out anyone who isn’t contributing to the discussion.

It’s the natural end to the “peak centralization” that Mark Moss discussed with us a few weeks ago.

The downside, of course, is that it will be much harder to stand out when everyone has equal footing.

That’s actually one of my concerns as we try to bring The Wiggin Sessions to a wider audience.

Right now we worry we may be shut down by the central planners. But as ideas become democratized, we have to consider whether our work will be dismissed as pointless blathering. And even if we’re saying worthwhile things, will our ideas make any difference in the world?

Please let me know your thoughts at Feedback@TheFinancialReserve.com.

Demetri, at least, believes the work is important. “These ideas absolutely have an influence,” he says. “And I do think we’re moving more and more towards that point in American history where they’re going to matter more and more.”

He reminds us that “a lot of the ideas that were fringe during the financial crisis have come much more into the mainstream today.”

Ideas like one of the biggest companies in the United States couldn’t keep growing by going hopelessly in debt.

Rest in peace, Enron. We hope fewer investors are surprised when the latest promises of a “New Era” turn out to be just as illusory.

Follow your bliss,

Addison Wiggin

Addison Wiggin
Founder, The Financial Reserve


Addison Wiggin

Addison Wiggin

Addison Wiggin is founder and executive publisher of Agora Financial LLC, an independent economic forecasting and financial research firm. He and Bill Bonner began writing the firm’s flagship Daily Reckoning in the midst of the tech boom and bust. It was one of the first widely distributed email newsletters on the Internet. The publication’s critical eye on finance and economics continues today. He’s also creator and editorial director of Agora Financial’s daily missive The 5 Min. Forecast.

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