Thesis statement Corporate scandals have resulted in a loss of trust in the state of business affairs in the U.S. creating a cultural stigma directed against American Big Business

Most leading businesses today supposedly follow a set of ethics when it comes to their business dealings with there business partners, suppliers, customers and clients. As such when entering into any dealings whatsoever with anyone there is a sense of joint reciprocity between the business and the client where it goes without saying that if a business commits to a particular form of business and the client pays for it the business is suppose to deliver on its commitment with the client by providing the service or order requested. This has been one of the fundamental building blocks in the current culture of economics that the world has been enjoying so far for without a mutual sense of trust between the two parties involved in a deal then nothing would ever get done due to mutual distrust. Under the theory of virtue in normative ethics it states that morality consists of following a defined set of rules of conduct whether they may be spoken or unspoken (Anscombe 1981). It assumes that individuals will follow a precise code of conduct that is generally accepted by all under the presumption that the other person will do the same as well. When taking this into account and combining it with the concept of business ethics then the code of conduct applicable to the relationship between businesses and clients is the promise of giving goods or services in exchange for a form of compensation. It is this form of morality that is described in the theory of virtue in normative ethics that forms the base of every and all business transaction that is performed in the world today. One must wonder though what would happen should one part refuse to adhere to this practice of reciprocity, that instead of a give and take relationship of meeting ones commitments what happens is one that is pure take without the act of giving back (Anscombe 1981). An example of this would be the ENRON scandal which is one of the most memorable if not the most infamous of corporate failure in the history of the United States. It led to thousands of people losing their savings, investments, even their livelihoods and resulted in the immediate demise of Arthur Andersen, one of the biggest audit firms in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure. The whole collapse was mired by incredulous accounts of grave misdeeds on the part of its executive circle as well as a conspiracy with the auditing firm that was suppose to act as check and balance system but rather contributed to problem itself. What this paper will seek to examine is the reasons behind the ENRON scandal and why it occurred and the resulting lack of trust in American business. This paper will also seek to examine why this lack of trust and this cultural stigma directed at U.S . businesses has caused a collapse in the American economy.

The Enron Scandal
Enron was formed in 1985 through a huge merger between Houston Natural Gas and InterNorth which were two of the largest natural gas pipeline companies at the time (Healy and Palepu, 2003). The 1990s saw Kenneth Lay, the founder and CEO, initiate the sale of electricity at market prices and after lobbying continuously helped in influencing the decision of  congress to pass a motion on the deregulations of sales of natural gas (Fusaro and Ross, 2003). As such, the company was able to sell energy at a higher price than it was previously capable of doing which ushered in an era of growth for the company. Despite outcries of overpricing, ENRON in unison with other energy companies were able to make the necessary steps to retain the current free-market system that enabled them to sell their products and services at much higher deregulated prices. In 2001 ENRON adopted a diversification strategy which resulted to it owning and operating gas pipelines, pulp and paper plants, broadband assets, electricity plants, and water plants worldwide (Toffler  Reingold, 2004). The corporation also traded in financial markets for the same types of products and services (Healy  Palepu, 2003). It was due to this expansion that Enrons stock went up 311 percent in a span of 8 years, which was considered markedly high in the SP 500 index (Toffler and Reingold, 2004). Unfortunately though Enron was not transparent with its financial statements and did not clearly share its finances and plans with its shareholders and analysts which was actually an indicator of things to come regarding the company. (Healy  Palepu, 2003). Moreover, the complex expansion of the company required them to use a system of accounting that was adjusted in such a way that it showed a better quarterly statement that what suppose to come up (McLean and Elkin 2003). To sum it up it can be said that the Enron scandal grew out of a steady accumulation of regular habits, traits and actions that  started during its formative years and finally spiraled out of control into what we know it as today. The key players here, who are the executives, often changed financial and accounting data in order for the company to appear better in the eyes of current and potential shareholders which in the end resulted in the company amassing considerable debt privately while publicly was supposed to be one of the strongest companies within the U.S.

Explaining the Enron Scandal
The Enron scandal can be defined as a situation where a breach of trust occurred namely that between the company, the clients and shareholders that the company was supposed to be committed to providing a reasonable return on their investment in it. Enron actually violated the basis for all business transactions namely the underlying trust that the client or customer has in the ability of the company to deliver on its promise. What must be wondered is why did the executives of Enron allow such practices to continue and why did they even encourage it in the first place Psychological egoism under the consequentialist theory of ethics states that all people have but one ultimate goal and that is their own welfare (Broad 1971). Such a statement is echoed in the movie Minority Report, where in one scene the main protagonist encounters a botanist who states when the chips are down people will always look after their own self interest. Using this in conjunction with the actions of the executives at Enron which lead to the collapse of the company it can be said the executives were merely following their baser instincts as noted in psychological egoism which was their own welfare. An argument against this is that why then dont other people follow the examples of the executives and follow their example The truth of the matter is other people have followed in the actions of the executives in the past and will do so in future the trigger for this is the opportunity to do so. Take for example life in a community, it is towards ones best interests to get along with other members of the community since to do so would facilitate advantages for oneself and the avoidance of future conflict. People make friends because it is to their advantage to do so since having more people around you makes life more interesting. The reason why not all executives follow the example of those from Enron is that to do so would not be advantageous for their welfare since there are probably methods of checks and balances within the company that prevent them from doing any such action (Slote 1984).

Public Views on the state of business in the U.S.
As a result of the actions of the Enron executives which was spread via popular media the populace became aware of the corruption that pervaded a system that they had put trust in. The problem in the case of Enron was that not only did the company itself go bankrupt but with it went the savings of thousands of individuals who had invested in the company either through direct investment or employee stock options. The fallout from the collapse of the company and the unreliable methods of investigation that were there to prevent such an event from occurring created a jaded view of the populace towards corporate big business. Statistical surveys have shown that a large percentage of the population mostly from the working class have expressed revulsion at the sheer amount of money that had gone to waste over what apparently was a case of human greed and insufficient investigation. This view has actually carried on to the present where the working class which makes up the majority of the population of the U.S. state that they dislike the concept of being lorded over by executives that dont understand the hardship that they go through and who through human greed could possiblly put them out of work. This distrust in the American system has created doubt for investors as to the reliability of their investments should they continue to place credence on U.S. stock.

Affect on the Morals and Psyche of the American people
There have been recent news reports over the past couple of months of an increase in the number of shoplifters in the numerous department stores located within the U.S. The reasoning behind these thefts is usually due to poverty and an inability to pay for those goods however what is interesting is that some people actually justify their shoplifting under the pretenses of getting back at corporate America.  Shoplifters who have confessed anonymously state that they feel little guilt from stealing from a store that is successful since for them American corporations are supposedly robbing them blind anyway and this is just their method of getting back at them (Egan 2010). Under the concept of utilitarianism under the consequentialist theory of ethics an action is deemed morally right if it is more favorable than unfavorable for everyone (Kavka 1986). Using this as a basis since most people assume that they are not taking anything away from anyone else except from big corporations that steal money from people and just waste it then their action of shoplifting is for them morally correct. It is the lack of trust in the American corporate system due to several instances of financial scandal where people see individuals in big corporations stealing money that they assume other individuals in other equally large companies are doing the exact same thing (Egan 2010). As a result this produces a different method of awareness and a sense of morals that in other circumstance would have been considered by them as immoral but due to recent events seems moral and just to them.

How Americas economy is faltering.
With doubt in the stability of American corporations in light of past and current events investors are more reluctant than ever to invest funds into U.S. businesses. In order to invest into a particular business the investor must first make sure that he will get a return on his investment otherwise it will have meant nothing. As such the ability to guarantee this investment would be a stable one is of utmost importance to most companies. In light of the recent loses in the U.S. stock market due to corporate mismanagement investors are more reluctant to pour capital into U.S. businesses that need it the most which has resulted in a slow down in the U.S. economy which might continue due to the continued concern of the vulnerability of U.S. based investments.

Throughout the paper the issue of a loss of trust in American business has been brought up time and time again. This is due to that fact that the violation of the reciprocity between businesses and clients has caused the base by which all business that is conducted is based upon to crack. Through the Enron scandal and the numerous ones that came after that that were brought about due to the self interest of the unscrupulous, people have begun to lose faith in American big business as a whole. This has resulted in a view that all of American business steals from the consumer, this has created a morally and ethically askew perception of the relationship between customer and corporation which has even lead to people stealing from the company justifying it under the guise of getting back at the people who are stealing from them. Not only that but the lack of confidence that the consumer has for the company has spread to the investor resulting in a reduced flow of investments into the company. If this situation is to be resolved the U.S. needed to put better countermeasures of investigation and an open book policy to counter such threats and to reestablish customer and shareholder trust in U.S. companies.


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