Enron Essay

Informal fallacies are used in everyday life. We are constantly presented them from the media, and other sources of information. They have a huge impact on how we perceive the world around us and how people want us to perceive the world around us.

Informal fallacies are often convincing for many reasons. For one I think it has a lot to do with human flaws. Most people are willing to accept what the majority of people say because it is easier than to cause controversy. Unless a person is looking for a way to piss another person off then normally we tend to agree or not argue with that persons reasoning for things. For example, if a person were to was to state an ad ignorantiam fallacy (claming that something is true because it cannot be proved false.) any counter argument would cause much controversy, and also has no proof to it. Retaliating to something that has nothing to retaliate about would only create a useless argument that has no possibility of a solution. In my opinion, humans tend to avoid pointless arguments that they feel they have no chance in winning. A person is more likely to argue something if they feel that they have the upper hand and will not make a fool of themselves. If a person was to argue back to a fallacy like an ad ignorantiam fallacy then they themselves have nothing to back up what they are stating. Leading to a useless argument with no hope of winning. People are more likely to avoid a situation that they feel would cause useless drama in their lives, so they are less likely to responded to fallacies similar to this. On the flip side of this argument the people who are stating that fallacy are well aware that other people are less likely to respond against it, therefore letting their opinion be made and stated in such a way that they do not have to back up their ideas. In a argument containing an ad ignorantiam the person stating the fallacy would have the upper hand to the person over the person who is arguing against it. Both would have no clear evidence that what they view is correct or incorrect but since the person who started the argument is more likely to be more passionately involved in the statement itself, and would not want to be proven wrong. When people believe something that they have stated and they told it is wrong they tend to go into a defense mode over what was said. The person arguing back is less likely to have as much passion for the argument and since both have a side that can not be proved the less passionate person is the one who is more likely to give in.

Informal fallacies can also be plausible for many reasons as well. One of the more important reasons is authority. The movie talked about an experiment called the Milgram experiment. This experiment tested how far a person would go with shocking another person when it came to being told to do so by a ‘seemingly legitimate source’. Most of the people in the experiments were willing to shock to the death as long as they were being told it was ok by some higher and seemingly legitimate source. This is how fallacies are able to become plausible. Some higher or ‘seemingly legitimate source’ can make a type of fallacy statement and have no one speak up against them since people are much more willing to place the blame in someone else. Since the person in the Milgram experiment had more authority then the people in the experiment they were willing to behave inhumanely as long as they were told if it was ok and that the responsibility wasn’t on them. Our society is based off of responsibility. Punishment and law enforcement only takes place when we are not responsible and do not follow the laws. Our system is based off of us being responsible for our wrong actions, and when we commit theses wrong actions we are punished. However if the responsibility is lifted off of our shoulders and we are told a ‘bad deed’ is ok to do, then what is stopping us? In our society if we are not responsible for something then the results of what ever that something is does not matter to us. If you have a test in Latin on Wednesday, and someone in your class fails, it does not matter or effect you at all. However if you were told to tell this person about the test because they were not present when it was announced, and that was your responsibility (and you did not), then you are extremely likely to feel some amount of guilt when they fail. When responsibility is taken away from us, we are more likely to behave in a way in which we do not think about the actions that may occur. When a fallacy is used that takes away responsibility to think choose etc from the person it is being told to they are more likely to go along with it. This works even more when it is coming from some higher authoritative source that is thought to be trusted. This is how Enron was able to use so many fallacies and have the accepted by people.

Enron had many fallacies that they used to try and keep their charade of a good business going strong. They used ad homenium (supporting the person rather then the argument) to try to make Ken Lay seem like an innocent person who could never be involved in any of the corruption and crime that surrounds Enron. They played up the fact that he was the son of a preacher’s man. Here instead of trying to place facts about how he was not corrupt they played up how being the son of a preacher he could/would never be involved in such a thing. They also used false dilemma (assuming that only the two black and whites exist) with their employees. They created these ‘vacations’ in which people who were invited had to do crazy and risk taking stunts. If you said no to an initiation to one of these trips (even if you were only doing so out of fear of being injured) then you were viewed as against the company. This put employees in a place that forced them to have not be able to choose, so they would not be viewed as against the company. The company had a very Darwinist view. That only the strongest would survive. Employees would grade each other on a 1-5 scale and based on that scale 15% of people would get fired. Now being viewed as against the company, no matter how untrue or how much of an asset you may be, would significantly lower you in the eyes of your fellow coworkers. This could only decrease your chance of being able to hold onto your job for much longer. Another fallacy that was used was ad ignoratum (claming something is true because you cant prove it’s false). This was mentioned in both the movie and the Gladwell excerpt. Both go into detail about Mark to Market accounting. Mark to market accounting made it so Enron could make deals based off of predicted measurements of the stock market and make money that way. They wanted to have investors and other companies ‘forget about how much oil there really is’ and to believe that the stock would continue to keep rising, ‘you can’t prove I’m not gonna make it in the future.’ When explaining mark to market Gladwell states, “You aren't going to get paid for another ten years, and you aren't going to know until then whether you'll show a profit on the deal or a loss.” Here Gladwell shows how uncertain mark to market accounting is. However by using ad ignoratium Enron was able to get people to invest and believe in what they were doing because they had so much success in the past.

I think fallacies are completely justified. We live in a society of free speech, and should be allowed to use fallacies in any way we want. Fallacies are used a lot when it comes to speeches and public advertising, just like in Enron. People only became upset with Enron’s fallacies when they claimed that they were not being told the truth, when in fact they were just to lazy to uncover it. Its sad but the use of informal fallacies helps to make our society thrive. Politicians put them in constant use, helping them gain support through vague promises and other fallacies like circular reasoning. It would be interesting to see how an election would pan out if every single candidate did not use and fallacies and directly stated their views and plans. It would be extremely harder to win over votes of the majority of the people, with out offending, or even including a group. Also it would be interesting to see if commercials would work as well if there were no fallacies used. I have not seen a single charity commercial that does not have some type of fallacy used that makes people feel guilted into donating money. It would be interesting to also see if these charities would thrive as much as they do with out fallacies. I think fallacies are defiantly justified in using because we know they are there. We could easily find truth to what is being said behind the fallacy if we merely looked. I fully agree with Gladwell when he says “Its your fault as well”. People could claim that fallacies should not be used because it tricks us into believing things, but however all that has to been done is question what is being presented in front of you. When fallacies are presented to us we make the conscious choice of whether or not to believe them. Fallacies are completely justified to be used; it is up to us how to take them.

I have used informal fallacies before many times whether or not I was conscious of the fact that I was using them. I think that there most likely is not a single person who has not used one sometime in their lifetime. When I was little I probably constantly used ad ignoratum to prove a point. Being little I didn’t know I was using a fallacy but when one of those “nuh uh….yeah huh” arguments would come across I would say “prove it” when in fact it could not be proved.

Over all fallacies are something that we are presented to in everyday life. What really matters about them is what we do with them. If we chose to accept them, or if we chose to find the truth behind them.

Enron #3

1. What does Gladwell mean when he says that, 'Puzzles are "transmitter-dependent"; they turn on what we are told. Mysteries are "receiver dependent"; they turn on the skills of the listener.'?

When Gladwell says that puzzles are transmitter dependent because in order to figure out the end result of a puzzle the outcome is completely dependent on the person who made it, not the person who is solving it. Mysteries are receiver dependent since it is up to the receiver to understand the information and be able to find the outcome.

2. Why didn't Enron have to pay taxes on their S.P.E.'s? What would be Enron's defense? Can you name the Illogical Fallacy present?

Enron was able to get away without paying taxes on its S.P.E’s because it wasn’t real money, so it couldn’t be taxed. Enrons defense was that they could still post it as a gain in the stock market, since they would eventually make the money. The Fallacy would be Equivocation because the idea of earnings is viewed in two different ways here. The IRS looks as earnings as something that is real or tangible while the stock market does not.

3. Did Enron try to hide the fact that they weren't paying taxes?

Enron tried to hide the fact that they weren’t paying taxes because people would start to question why, and learn about all of the “fake money” being made in S.P.E’s

4. Why does Gladwell claim that, 'Woodward and Bernstein would never have broken the Enron story.' Why don't you think anyone asked about Enron's financial statements? Is there a fallacy at work here?

Gladwell claims that ‘Woodward and Bernstien would have never broken the Enron story’ because he feels that they only had the pieces to put the puzzle that were given to them from a source. Woodward and Bernstein would have had to interpreted the information that was given to them, since Enron is a mystery not a puzzle. I think no one questioned Enron’s finical statements because they were such a large and trusted company. This is a fallacy of circular reasoning.

5. Gladwell claims that, 'Mysteries require that we revisit our list of culprits and be willing to spread the blame a little more broadly. Because if you can't find the truth in a mystery—even a mystery shrouded in propaganda—it's not just the fault of the propagandist.It's your fault as well.' Do you agree with the implications of this statement?

I do agree with this statement. In a mystery it is up to the people who are solving it to find the truth. If all the information is there for it to be solved, but no one is willing to search hard enough for the truth, then it is his or her fault as well. Since they are letting whatever happen happen while the information is right there.

6. What was the advice of the Cornell students to anyone who held Enron stock?

The advice of the Cornell students to anyone who held Enron stock was to sell it right away since their investigation started to show that there was something strange and not right for the company to have grown so quickly

Enron # 2

1. How does a Special-Purpose Entity (S.P.E.) work? Why does the "partnership" giving money to your company make a big difference?

Special-Purpose Entity is when a company needs to borrow money, but does not want to do so because of the high interests rates a bank will put on the loans. However, if you have leases on some product that are sure to raise the amount you need of the next few years you can give them over to the SPE that has been set up with outside investors. This way the bank will lend you the money with a lower interest rate and the partnerships you have created will gain you money also.

2. How did Enron pit "twists into the S.P.E. game?" What does it mean that Enron "didn't always put blue-chip assets into the partnerships"? What was problematic about Enron using its own executives to manage the S.P.E? What was Enron's guarantee?

Enron put many different twists in the SPE game, or did things that went against what it was supposed to be used for. When Gladwell says that Enron “didn’t always put the blue-chip assets into the partnerships” he means that Enron would put in leases that may not reliably create income, or it would not always sell them to outsiders but to executives in its own company. Enron would then pay back something if it had declined in value in stocks, so it was paying itself back with itself, which is extremely problematic.

3. How did the world come to learn of Enron's use of S.P.E.'s? Is Gladwell correct in claiming that this is another example of a mystery? Explain.

The world came to learn about Enrons use of SPE’s from the reports of Weil’s colleagues at the Wall Street Journal. They found all of this out by reading what had been published in Enron’s public filings. This is defiantly another example of a mystery because all of the information was right there to be analyzed but it just doesn’t come together cleanly.

4. What is the difference between "scrounged up" and "downloaded?"

The word downloaded means simply to obtain with out to much struggle (on the internet), Scrounged up however seems to imply that he had to dig around through some sources before actually reaching it.

5. Why does Gladwell claim that "It scarcely would have helped investors if Enron had made all three million pages public."? Explain what Gladwell means when he says, "But here the rules seem different." Who is Andrew Fastow?

Gladwell says that "It scarcely would have helped investors if Enron had made all three million pages public.” Because he is stating that if they had realsed all of these documents it wouldn’t have really helped anyone. When the finest legal talent in the nation tried to summarize it all they made two hundred highly complicated pages that would have done little good to investors because of its complexity. When Gladwell says "But here the rules seem different." He means with each piece of evidence that is given about Enron the puzzle only seems to get bigger. Andrew Fastow was Enron’s chief fincial officer and he didn’t fully understand the implications of the deals.

6. Why has he "Disclosure Paradigm" become an anachronism?

It has become an anachronism because now a days the more complexity a company has the more it tells us about its business.

7. Why did treating the German secret weapon as a mystery prove to be more useful? Specifically, how did the "propaganda analysts" (the batty geniuses) use reason to uncover the Nazi V-1 Rocket?

By treating it like a mystery they stopped looking for puzzle pieces and in turn just went into further analysis of what they already had. The propaganda analysts studied Nazi propaganda and used repeating patterns in their propaganda to figure out what was true and what wasn’t. They learned from the German U-boats that Goebbels would not lie about something to his people that he was using to boast morale, so they came to the conclusion that there was a secret weapon. They then used the tone of the Germans when taking about it and the amount that it was talked about to figure out the expected date for it to be done.

8. How has diagnosing Prostate Cancer transformed from a puzzle to a mystery?

It used to be a puzzle because doctors would just simply look for the symptoms. However now doctors try to catch the disease before symptoms occur. They look for things that have a possibility of becoming Prostate Cancer, but do not necessarily mean you have or could have the cancer. Not only do different doctors agree and disagree on the signs but they also agree and disagree on the benefits of treatment.

9. Following the fall of the Soviet Union, how has "the situation facing the intelligence community has turned upside down?"

The worlds information has become less closed and more open, creating more mysteries and less puzzles. The need for spies is less but there is a huge demand for greater analysis and problem solvers to figure out things from the information already given.

10. How does Admiral Bobby R. Inman believe the U.S. should strengthen the U.S. intelligence system? Why was his answer seen as unusual?

His answer was unusual because most people think that the more spies and information you have the better off you are. However he thinks that we just need more people who understand the culture of what we are looking into, and then they will be able to solve the mysteries better.

11. Gladwell writes: In a post-Cold War world of "openly available information," Inman said, "what you need are observers with language ability, with understanding of the religions, cultures of the countries they're observing." Inman thought we needed fewer spies and more slightly batty geniuses. Does this curriculum sound familiar?

This defiantly sounds familiar. Instead of using the traditional methods of finding information it is talking about how we need to look at the views of the people who we are trying to get the information from, and just simply depict it from what we already know. This reminds me a lot of TOK, because in TOK instead of trying to find all of the information to everything we try to look at things from different angles and solve problems that way.