A Case Study of ENRON in Support of Australia's Adoption of Pro-Globalization Policy

Executive Summary

In relation to the statement of the Minister of Youth Affairs to the Federal Standing Committee which shall provide the general consensus of Australian youth as to why Australia should not support a policy of globalisation, a report has been compiled outlining the adverse affects inherent in globalisation. The report, commissioned by the Youth Minister, will outline the issues surrounding of Globalisation, discussing in detail both the advantages and disadvantages of adopting such a policy. A case study of the former multi-national corporation ENRON will be used to show why Australia should adopt a policy to support Globalisation.


The International Monetary Fund, from the Oxford English Dictionary defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology”.(1) Globalization is caused by four fundamental forms of capital movement throughout the global economy. The four important capital flows are:

  • Human Capital (i.e. Immigration, Skilled Workforce)
  • Financial Capital (i.e. Aid, Unrequited Transfers)
  • Resource Capital (i.e. Energy, Metals, Minerals, commodities
  • Power Capital (i.e. Security Forces, Alliances, Armed Forces, etc)

The best part thereof the complexities and issues that arise in the general macro undertakings of countries, communities and the key relations between can be traced to capital flows.(2)

“Globalisation has been perpetuated the corporation which derived it’s overwhelming power from the industrial age which began in 1712. In which machines were used to produce more goods and service for trade per man hour.

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Today the concept is much the same, merely with more sophisticated goods and services.” (Ray Anderson, CEO Interface, world’s largest commercial carpet manufacturer). (3)

Put simply globalisation is an inevitable occurrence whereby as countries economies, populations and technology grow their desire to trade and compete on a world scale is amplified. Resulting in the need to outsource labour to developing countries in an attempt to be more competitive, lowering trade barriers, and opening up the market to privatisation eg utilities, fire brigade, hospitals. Capitalism is the driving force behind this phenomenon though laden with many positives it does have an equal amount of flaws as our outlined in the report.


There are many advantages inherit of globalisation including:

  • The percentage of people in developing countries living below US$1 (adjusted for inflation and purchasing power) per day has halved in only twenty years [4], although some critics argue that more detailed variables measuring poverty should instead be studied [4].
  • Life expectancy has almost doubled in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Child mortality has decreased in every developing region of the world. [4] Income inequality for the world as a whole is diminishing. [4]
  • Democracy has increased dramatically from almost no nation with universal suffrage in 1900 to 62.5% of all nations in 2000. [5]
  • The proportion of the world’s population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s. (6)
  • Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000. (9)
  • The percentage of children in the labour force has fallen from 24% in 1960 to 10% in 2000.(4)
  • There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water. (3)
  • Increase in international trade at a much faster rate than the growth in the world economy.(4)
  • Greater international travel and tourism due to labour mobility and reduced trade barriers.(4)
  • Spread of local foods such as pizza, Chinese and Indian food/Pakistani Food to other countries (often adapted to local taste) (6)

These advantages are on offer for the nations, such as Australia, whom adopt a policy of globalisation. The advantages will benefit the country and contribute to Australia’s continued economic growth and prosperity.


Globalisation is however does have some serious faults and flaws:

  • Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labour 
  • Increased likelihood of economic disruptions in one nation effecting all nations (7)
  • Corporate influence of nation-states far exceeds that of civil society organizations and average individuals (2)
  • Threat that control of world media by a handful of corporations will limit cultural expression
  • Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage (6)
  • Greater risk of diseases being transported unintentionally between nations 
  • Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity
  • International bodies like the World Trade Organization infringe on national and individual sovereignty 
  • Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources 
  • Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries. 

If Australia is to adopt a policy of pro-globalisation she opens up to many negative repercussions. The environment, national sovereignty, and human rights will be severely tarnished. The government is aware that it is imperative for the success of such a bill that strict guidelines and legislation be put in place to deal with the impact of these detrimental issues. However with the gargantuan turnovers of the corporations driving globalisation and the firm grip globalisation has formed on the planet, such legislation would be difficult to attain.

Protagonist or Instigator

This report is to outline the views of Australian youth in reference to globalisation and is to be done by selecting a corporation which perpetuates it, thus the initial question is posed, what is a corporation?

Corporations were originally associations of people who where chartered by a state to perform a particular function, such as building a bridge and were viewed as relatively insignificant institutions. Corporations now as a collective hold unrivalled power and influence much like religious powers, the monarchy and communist party at other periods in time; the corporation is now the dominant institution. Chartered corporations originally were constrained to the perimeters of their charters. Limited turnovers, assets and goals in which stockholders where held accountable. After the passing of the fourteenth amendment which was intended to ensure equal rights for African Americans states “No state can deprive any persons of life, liberty or property without due process of law”. In the first year three hundred and forty nine cases were lodged, seventeen of which were done so by African Americans, the remaining three hundred and thirty two by corporations whom argued they where people and fell under this amendment. 

Corporations are viewed as a paradox that creates copious amounts of wealth for its shareholders also causing unprecedented and often hidden harms to which no individual or group can be held accountable. Corporations have the interests of their bottom line, shareholders and short term profits held high as opposed to the long term effects and impact on the stakeholders, whom are ironically one in the same.

With the recent mapping of the human genome the corporate race has now began of finding the treasure hidden on this map. A corporation may patent any living form bar that of a partially or fully developed human being. To date pharmaceutical corporations have patented genes such as Cystic Fibrosis, Leukaemia and Alzheimer’s as intellectual property. It is predicted that over the next ten years the most basic genetic and molecular make ups of human beings will be patented by corporations as intellectual property. The very fabric of human existence will be owned by various corporations. 

Media and the news in both electronic and print form is the process by which the global society is informed of world events and current affairs. Currently, falsifying the news is not illegal and therefore does not fall under the whistle blower status thus the news is dictated by the owner of the rights of the station and influenced heavily by the corporations that provide the stations with their advertising revenue. Furthermore corporations the Allied forces of World War two faught to defend colluded with Nazi Germany to allow continued capital flow during the war. Examples such as:

General Motors – Opal

Ford – Mercedes Benz

Coca Cola – Fanta Orange

Most disturbing of all was IBM’s Punch Card System, due to the fact that computers did not exist during the 1940’s nor did over the counter software. American engineers created the rudimentary yet efficient Punch Card Systems which allowed Nazi Germany to undertake the “Extermination by Labour” system to eradicate the Jews and any other enemy of the Third Reich.

With corporation’s currently holding unrivalled power and influence and aggregate turnovers which put third various countries to shame, the question is posed, due to the fact that the corporation is deemed and viewed as a person, what type of person is the corporation? One who displays callous disregard for the feelings, safety and well being of others, an incapacity to experience guilt, failure to conform to societal norms with respect to peaceful behaviour and deceitfulness – repeated lying and conning for profit. These character traits do not affiliate themselves with that of a stereotypical honourable leader but instead a tyrannical sociopath. 

Company Outline

Enron Corporation was an energy company based in Houston, Texas. Prior to its bankruptcy in late 2001, Enron employed around 21,000 people and was one of the world’s leading electricity, natural gas, and communications companies, with claimed revenues of $101 billion in 2000. Fortune magazine named Enron “America’s Most Innovative Company” for six consecutive years. It became most famous at the end of 2001 when it was revealed that it was sustained mostly by institutionalized, systematic, and well-planned accounting fraud. Its European operations filed for bankruptcy on November 30, 2001, and it sought Chapter 11 protection in the U.S. two days later, on December 2. It still exists, operating a handful of key assets, and making preparations for the sale or spin off of remaining businesses. Enron emerged from bankruptcy in November of 2004 after one of the biggest and most complex cases in US history. It has since entered the zeitgeist as a symbol of wilful corporate fraud and corruption. (10)

Enron, founded in 1930 as Northern Natural Gas Company, was a consortium of Northern American Power and Light Company, Lone Star Gas Company, and United Lights and Railways Corporation. The consortium ownership was gradually dissolved between 1941 and 1947 through a public stock offering. In 1979, Northern Natural Gas was restructured under the ownership of a new holding company, InterNorth Inc., which replaced Northern Natural Gas on the New York Stock Exchange. (10)

In 1985, InterNorth acquired competitor Houston Natural Gas Company in a transaction engineered by HNG CEO Kenneth Lay. Although InterNorth was the purchaser, Lay emerged as CEO and promptly renamed InterNorth as Enron Corporation, with headquarters in Houston rather than InterNorth/Northern Natural Gas’s base in Omaha. Initially, the company was to be named Enteron, chosen for the positive connotations of “enter” and “on”, but when it was pointed out that the term meant “intestine”, it was quickly shortened. (10)

Enron was originally involved in the transmission and distribution of electricity and gas throughout the United States and the development, construction, and operation of power plants, pipelines, and other infrastructure worldwide. In 1998 it moved into the water sector, creating the Azurix Corporation, which it part-floated on the NYSE in June 1999. Azurix failed to break into the water utility market, with its only major concession, in Buenos Aires, Argentina, a large-scale money loser. In April 2001 Enron announced its intention to break up Azurix and sell its assets. (10)

Assessing the Global Impact

To assess the impact of globalisation on an economy it is imperative to determine the impact on a variety of areas within society. The predominant of these criteria this report has chosen to assess globalisations overt impacts are: The Economy, Environment, Human Rights and Individual Culture.


The positive economic benefits of globalisation appear to be boundless, providing governments with free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, this leads to lower prices, more employment and higher output, also providing increased variety of goods and services onto the market which is mainly due to an influx of competition. Thus increasing not only efficiency but also creating a huge capital flow directly into the foreign sector and out of a countries economy. Influxes of migrants adding to urban slums and with sweatshops seen as god sends by the third world we see that capitalism, without which globalisation would not exist, is flawed, as it sees the rich become richer and the poor poorer and the gap between grow larger and larger daily. The distribution of income is not equal.


Many businesses today treat the ‘environment’ or ‘community’ as additional tasks alongside production, marketing, sales, finance. Whereby a few meetings are arranged, press releases and publications are prepared to show how much the company is apparently doing for the environment. Meanwhile back at the ranch business operations are carrying on as usual. never the less there is

indeed light at the end of the tunnel due to the fact that as corporations increase globally their operations, actions and corporate agendas become much more publicised and the need to conform to the will of the people increases also. Globalisation increasing competition and brand awareness provides incentives for companies to conform to the general publics expectations and using their resources much more effectively. This is not to say that humans must return to the mythical golden age in which they resided at one with nature and there was no waster and no pollution. The only feasible concept is to sustainable supply people’s needs whilst causing no harm to the environment. As if current trends continue we as a global community will witness total extinction – the death of life.

Human Rights

The UN’s Declaration of Human Rights at present appear to be a point of reference by which countries and companies alike come to compromises at best, in the capitalistic world in which globalisation thrives human rights are not only being disregarded they are also are faced with becoming patented intellectual property of corporations. Basic human rights appear to be left at the factory doors of some sweatshops with corporations showing a blatant disregard for peoples rights to be safe, free from harm, abuse and discrimination. Not only do the rich become richer and the poor poorer but the rich abuse the poor as the poor believe they are being blessed. At present basic human rights are protected by the UN and strong government policy, more so in highly developed nations than that of developing nations.

Individual Culture

The effect globalisation has on individual culture can be describes as an integral component of national sovereignty, globalisation all but destroys culture. By forcing American ideals and advertising as a global product itself, America is guilty of a trend known as ‘Americanisation’ a process by which via trade and availability American culture is forced onto other cultures resulting in that particular culture being phased out and being assimilated into that of American culture. This trend is inherent of globalisation and will result in a singular global culture, discerning all other forms of culture, reiterating aspects of a global citizen’.

This can also be seen in the “export” of culture whereby an increased variety of goods and services become available on the world market, also then followed up with it being assimilated into popular culture. An example of this is in relation with the highly successful McDonalds Corporation, whereby they target children at young age and do all that they can to imbue them with the concept of customer loyalty.(3) Especially in relation to birthday parties, in that there are few children and adults that have not hosted or attended a McDonald’s birthday party. Also the infamous McDonald trademark and logo is that of the fictional character Ronald McDonald, this character is recognised by more children when showed pictures than those of figures like:

  • John Howard
  • Albert Einstein
  • Ned Kelly
  • Jesus

Though can corporations be criticized for having creative and effective marketing techniques? Is loss of individual culture a fair trade for lowered infant mortality rates, higher literacy levels, less depravity and greater humanity shown to suffering nations?

Case Study Evaluation

Human Rights

A prime example of how human rights are being exploited by large multi-national companies such as Enron is in the case of widget production via a subsidiary of Enron’s. Documents revealed during extensive investigations post Enron’s collapse in 2001 found that in a particular plant in the Dominican Republic the steps of production in direct relation to the widgets had been broken down, twenty two operations in total broken down further into 10,000ths of seconds equating to 6.6 minutes to produce the widget. Therefore with the minimum wage of the Dominican Republic being 70c per hour, the factory workers were making three tenths of one percent of the retail price. (3)

While the western world view as sweat shops as grotesquely underpaid working environments, countries such as the Dominican Republic view as god sends as they provide work, lowering unemployment figures and provide families with incomes that would otherwise have none. This relieving strains on government in relation to social security for basic necessities such as food, water, education, healthcare etc. Countries that are not rich in resources but poses vast cheap sources of labour are now becoming more and more sought after. Nations that are “victimised” by globalisation are more developed than those without, this is clearly portrayed in relation to The Peoples Republic of China whom are hosting the 2008 Olympic Games, even slight consideration of such a feat was unheard of a decade ago.(7)

Thus displaying that with legislation and restriction globalisation can have a positive effect on developing nations.


It has been suggested that two thirds of the worlds population will not have access to clean drinking water by 2025 has sparked a fierce competition for control of water itself. Also proving that in a capitalistic market, something only has value when there is demand, a marketplace and a vendor ironically sustaining future commodities is not apart of any corporate agenda.

When Bolivia sought to refinance the public water service of its third largest city the World Bank required that it be privatised which is how Bechtel, another subsidiary of Enron acquired control of all water, even that which fell from the sky. These laws prohibited people from collecting rain water. With wages so low yet the costs of water refineries so high, families had to chose between eating less, stopping sending their children to school or paying water rates that exceeded twenty five percent of the minimum wage. (8)

The United Nations Environment Programme states that no one entity can be fined in excess of $250,000 daily, yet for companies making in excess of $25 million a day this is merely an expense gladly payed. This blatant disregard for authority and incapacity to feel guilt for the environmental infringements undertaken by multinational corporations leads back to the personality that dictates the nature of globalisation in direct relation to the environment. (8)

This showing the effects un-regulated global companies can have on the surrounding environment, and reaffirming the point that only with strict guidelines could globalisation have a positive effect on the world’s environment.


Deceitful transactions by trans-national Corporation’s such as Enron undermine the ethics by which economies run. Post Enron’s untimely collapse the US treasury Department uncovered classified documents that showed records of transactions in which in any one week Enron was trading with up to and exceeding fifty seven or more known enemies of the USA. (10)

The economic benefits to individual nations are boundless, providing employment, tax revenue and thus economics growth.

Individual Culture

With Enron’s former CEO being the disgraced Kenneth Lay and his well publicised close relationship with George W. Bush a grant was issued by the Bush government by which studies could be conducted on how the general American population felt about “Global Warming”. Due to the fact that this study was undertaken by Enron and its subsidiaries it was patented as intellectual. Enron proceeded to use the data gathered in various marketing campaigns, all of which was payed for on government grant under political sanction and privilege. (3)

The loss of culture due to globalisation is an epidemic sweeping the third world. Unfortunately so are diseases like AIDS, Avian Bird Flu and trends such as increasing infant mortality, malnourishment, unemployment etc Globalisation stands to aid in relation to these problems and allow nations to establish themselves as competitive states in a global community. Though appearing to be appealing in the short term will it prove to be for the better in the long term in relation to Economic factors, Environment, Individual culture and Human Rights?

Conclusion and Evaluation

The International Monetary Fund defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology”. This report commissioned by The Minister of Youth Affairs to outline the views of Australian youth on the topic of globalisation and wether a statement made to the Federal Standing Committee should be in support of or against Globalisation.

The report outlined the “Driving force behind capitalism and therefore globalisation” as stated by Ray Anderson, CEO Interface, the world’s largest commercial carpet manufacturer, was as a collective “The Corporation”. Due to the fact that these corporations are viewed and treated as persons and individual entity’s what type of people are they? The report uncovered that the driving force behind globalisation are “persons” that share the personality traits of psychopaths exhibiting traits such as a callous disregard for the feelings, safety and well being of others, an incapacity to experience guilt, failure to conform to societal norms with respect to peaceful behaviour and deceitfulness – repeated lying and conning for profit. This arrises the question of is this the institution by which Australian youth wish to perpetuate economic growth, increased productivity and competitiveness for the global community at the expense of the environment, individual culture and human rights?

To further this, globalisation thrives on a concept known as an externality. As defined by Milton Freidman a Nobel Prize winning economist “an externality is the effect of a transaction between two individuals and a third party that has not consented to nor played any role in the carrying out of that particular transaction”, generally to the detriment of the environment, economic climate of a country, human rights or individual culture. This once again adding to the persona of globalisation, that it be one of possessing a callous disregard for the well-being of others, and one the youth of Australia do not support

In the case study of the former trans-national corporation Enron it was uncovered that creative accounting and a remorseless corporate agenda caused the former giant to fall like a card castle. Ironically it was a fundamental flaw in human nature which pulled Enron to the brink of destruction, greed. In short Enron’s activities internationally were that of deception, greed and a callous disregard for those trampled on to make their dividends acceptable.

Though the youth of Australia believe that corporation’s goals are selfish and greedy, it is also the general consensus that getting rid of them all together is not the solution. The solution is sustainable development and this is achievable only with strict guidelines set in place to ultimately change as a collective “The Corporations” way of thinking. To change the corporate culture from that of traditional business to sustainable business in that corporations shift from looking strictly at the financial bottom line and look toward triple bottom lines – economic, social and environmental, shifting from physical and financial capital to economic, human and natural capital. Tangible and owned assets becoming intangible and borrowed assets and possibly the most important of all the main focal point changing from shareholders to the stakeholders of a company as they are ultimately one in the same.

The flaw of capitalism, human nature and corporate culture is greed in that the corporation would sell the rope to hang it’s self with if it was believed they would make a profit. With three billion of the world’s population still immersed in poverty, more than half of which are children it can be said that though capitalism is doing well it is leaving many behind. It is believed by the Youth of Australia that globalisation is a viable option to complete this puzzle but at the same time if it is the only piece it will not work. Strict guidelines and restrictions must be set to change corporate culture as to embrace the positive attributes of globalisation and phase out the negative, globalisation is the first step of many toward a sustainable future. Thus in conclusion the youth of Australia support Globalisation under the pretence those strict guidelines are put in place to ensure sustainability in the future.


  1. F. G. Fowler, H. W. Fowler, Revised by E. Mcintosh. (2003) “The Oxford Dictionary”. The University Press, Great Britain. (Book)
  2. M. T Hariot (2004) “Globalisation – good or bad?”. Penguin Publishing, United States of America (Journal)
  3. J. Abbott, M. Achbar: “The Corporation”. (2004), Big Picture Media Corporation. United States of America [Digital Versatile Disk: DVD]
  4. J. Wolfensohn, President of the World Bank. “Globalization, Growth and Poverty: Building an Inclusive World Economy” (2004). The World Bank, France. (Essay)
  5. S. Howard (2006) “Globalisation”. [Internet). Encyclopaedia Britannica Available From: < http://en.wikipedia.org/wiki/Globalisation> [Accessed 8th May, 2006] (Website)
  6. “Dark September Rain” Geoffrey L. Breedon (2006) 20th Century Fox, USA [Digital Versatile Disk: DVD]
  7. Pfeffermann, (2004) “The Eight Losers of Globalisation”. Penguin Publishers, USA. (Book)
  8. A. Shah, “Structural Adjustment–a Major Cause of Poverty” (2005) The International Monetary Fund, England. (Journal)
  9. Gowe: “Globalisation and You” (1999) Penguin Publishing, USA (Book)
  10. P. Elkind, P. MacLean “Enron the Smartest Guys in the Room” (2004) Magnolia Pictures, United States of America

Cite this page

A Case Study of ENRON in Support of Australia's Adoption of Pro-Globalization Policy. (2021, Sep 25). Retrieved from https://studymoose.com/a-case-study-of-enron-in-support-of-australia-s-adoption-of-pro-globalization-policy-essay

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