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IB TOK Enron Fallacies Essay

Throughout the life of Enron, the company’s executives have used logical fallacies on many occurrences throughout the company’s turbulent history and its inevitable crash. Enron was formed in the late 1980’s as an energy provider; routing oil and such to plants and later providing the energy to people. It steadily gained power throughout the 90’s and early 2000, but in 2001 the fall started and the floor was yanked from underneath the company. Throughout this period and the investigations that followed, logical fallacies were rampant in the upper echelons of Enron.
There are 10 deadly fallacies which are ad ignorantiam, hasty generalization, post hoc ergo procter hoc, ad hominem, circular reasoning, special pleading, equivocation, false analogy, false dilemma and loaded questions. At one point or another Enron had committed nearly every fallacy, with the possible exception of the loaded question. But throughout the company’s growth, apex, fall and subsequent investigation, Jeff Skilling and the others made rampant use of them to promote, protect, excuse and explain the company’s actions, their own and the growth.
Logical fallacies are often plausible and often are very convincing due to the fact that they seem to be completely justified when examined with a cursory glance, and the holes in the argument are not revealed unless you take a closer look at the facts and the argument someone is making. Fallacies are used to support someone’s position despite having gaping holes in their argument. Ad hominem is the most obvious example of this; attacking the person instead of the argument, which in and of itself does absolutely nothing to enhance their argument, but works because humans look less favorably on someone who has been discredited no matter how convincing their argument is.
Enron made use of this more than a few times. As seen in the movie “Enron: The Smartest Guys in the Room” after the Fortune Magazine article came out asking “IS ENRON OVERPRICED?” the company, instead of finding fault with the article itself and the argument made in it, they launched an Ad Hominem (attacking/supporting the person rather than the argument) attack on the journalist who published the article, questioning her motives and throwing her integrity and professionalism into question. These were formed and implemented by the upper echelons of Enron, including the CEO Jeff Skilling. This event occurred in 2000 a few months before the fall began and before Skilling resigned in early 2001. And this was not the first time that they utilized an Ad Hominem attack. Earlier that year, according to the movie “Enron: The Smartest Guys in the Room,” there was a trader a Goldman Sachs who began questioning Enron’s stability and urging people to start selling their stock in Enron. Skilling and the others soon went after him and eventually got Goldman Sachs to fire the trader in question.
Jeff Skilling was not picky about the fallacies he used protect himself. Shortly after it began to become apparent that a crash was inevitable, Jeff Skilling resigned due to “personal reasons” and later during the investigations of Enron, when he was questioned as to why he resigned, he used Ad Ignorantiam (claiming something to be true because it cannot be proved false) to defend his justification to resign, implying that he had resigned for personal reasons because they couldn’t prove he didn’t. This was also revealed in the movie the movie “Enron: The Smartest Guys in the Room.” As was also enlightened in the movie was the fact that Skilling had previously used Ad Ignorantiam to defend Enron’s policy of Mark-to-Market accounting, where they “estimated” future profits and displayed them as actual profits. They defended this estimating by saying that you couldn’t prove that they weren’t going to make those profits, and therefore they were going to make them.
Another favorite of Jeff Skilling was his habit of Special Pleading (using double standards to excuse someone). As was revealed in both the movie “Enron: The Smartest Guys in the Room” and Gladwell’s text, during the Congressional hearings and the trials, Jeff Skilling repeatedly avoided answering questions on Enron’s accounting practices and finances by saying “I’m not an accountant.” Preceding his resignation, if any trader had any questions about Enron’s financial statements all he had to do was “call up Jeff” to get the truth. So before the fall Jeff was intimately familiar with the company’s financial dealing, and then suddenly couldn’t remember any of it in the investigations that follow.
There may be circumstances where the use of informal fallacies may be acceptable to use. These may include government ads, ads encouraging people to donate money to good causes, though in a free speech society there is really no way to control the groups using fallacies. Then, considering Gladwell’s opinion that “It’s your fault as well,” the question must be asked “Is there a situation where it isn’t acceptable?” because if you believe it without justifying that belief, have they really done anything wrong? They merely defended themselves with an argument that doesn’t in any way actually prove anything. So the burden is on you to be able to recognize that and act accordingly, the gullibility of people does not mean that flimsy arguments should be outlawed; it just means people need to be more aware.
I myself have used informal fallacies in arguments before, mostly Ad Hominem, which is arguably one of the most effective. This usually comes up in a debate about politicians in general and, depending on whether I like them or not I have used details from their past to support or to demean said politician. I have also utilized the loaded question (a question that is biased because it has a built-in assumption) to a larger degree than the others to back those I was arguing with into a corner. Another one I myself haven’t used, but rather it has been used on me; the False Dilemma, which is usually used by someone when they’re trying to get me to do something I don’t want to do. Everybody uses fallacies, though we seldom realize it.
Throughout the Enron story, Skilling et al. used fallacies to duck questions, protect Enron and ultimately to get rich off Enron’s destruction. Fallacies have been demonstrated to be useful tools that can distract the crowd from the truth and bring them over to your side. This was crucial to the early success of Enron; otherwise it never would have become even a tenth of the company it was at its height.