Global Policy Forum

By Micah L. Sifry

How did Enron happen? As investigators pore through the wreckage of America's biggest corporate bankruptcy, one explanation we're not likely to hear is this: Enron happened because America's two-party duopoly has fostered a culture of impunity in business and politics, rather than a culture of accountability.

A duopoly is a market with just two sellers. Picture a beach with just two ice cream stands. While the vendors may start out anywhere, eventually they will locate in the middle of the beach where they will each be closest to half the bathers. In addition, as long as they can lock out any other competition, they can jointly act to raise their prices, lower the quality of their ice cream, and even take a vacation at the same time. An investor can come along and give both vendors a lot of money to sell only one kind of ice cream, or to keep another brand from being sold. As long as this is the only beach to swim at, the bathers will be stuck.

What makes the Republican-Democratic duopoly especially invidious is not only how both parties tacitly divide the market for votes, but their ability, as lawmakers, to write government regulations to protect themselves from competition. First they pick their voters before the voters pick them, in the process known as gerrymandering. Then, through laws they have written and customs they enforce, they restrict the access of other parties to the ballot, to campaign funding, and to the media. The result: alternative voices have immense difficulty reaching voters.

Without meaningful political competition, the idea of accountability becomes a joke. Tough questions don't get asked -- a process that reached its epitome with the physical exclusion of corporate critic Ralph Nader, the Green Party's presidential candidate, from the 2000 debates. The word "bipartisan" takes on a new meaning, as in "buy one party and get the other one free." Incumbents with little fear of being punished at the polls can act with impunity.

Take Rep. Billy Tauzin, the Republican chair of the House Commerce and Energy Committee, who has taken a leading role in the Enron investigation. He is the number one career recipient of contributions from the accounting industry currently serving in the House, receiving $57,000 from Arthur Andersen and $6,500 from Enron, according to the Center for Responsive Politics. His spokesman says the money never affected his judgment. "We're not giving away the contributions nor recusing ourselves from the investigation," he says. "To do so would imply we had done something unethical."

One thing that Tauzin did do is lobby hard against changing SEC rules to prevent accounting firms that audit companies' books from also selling them lucrative consulting services. In a July 20, 2000 letter to the SEC that was prompted by the accounting lobby, Tauzin wrote "... there is no evidence... that even suggests there is a problem caused by a broad scope of services, let alone a problem that needs to be addressed right now." Fifty-one other members of Congress joined him, in what former SEC chair Arthur Levitt says was "the fiercest, most vitriolic, political opposition campaign I have ever experienced."

The pressure was effective. Fearing a loss of funding, the SEC drastically watered down its proposal. A crucial check on the credibility of financial reporting was blocked. Investors were to lose at least $60 billion in Enron share value before the problem could even be discussed again in Washington.

But the chances of holding Tauzin accountable for his actions are next to nil. In his Louisiana district, he ran unopposed in both 1996 and 1998. In 2000 he creamed his three minor party opponents, raising almost $1.2 million to their peanuts. And Tauzin is typical. Of the 38 House members who wrote SEC on behalf of the accounting lobby, only five could be said to have had real political competition for office in 2000, measured in either votes or money. Six had no major party opponent whatsoever. Only one lost his bid for re-election.

This is just one example of a systemic problem. Ironically, while the Enron scandal is pointing toward the need for greater government regulation of business, it ought to also teach us to seek the deregulation of electoral politics. Give third parties equal access to the ballot and the media, end partisan gerrymandering, and free politicians from their dependence on big money from special interests. Then maybe we'll see some real accountability from our elected officials.

Micah L. Sifry is the author of Spoiling for a Fight: Third-Party Politics in America (Routledge, February 2002), and senior analyst with Public Campaign.

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