I decided to watch the documentary Enron: The Smartest Guys in the Room, directed by Alex Gibney and written by Fortune magazine reporters Bethany McLean and Peter Elkind (based on their book). I've been wanting to see this movie for a while, so our assignment provided a good excuse. The movie tells the story of the rise and fall of Enron, once the seventh-largest company in the US, which declared bankruptcy on December 2, 2001.
The film was awarded Best Documentary Feature at the 2006 Independent Spirit Awards and was nominated for an Oscar as well. I can see why: it is lively and engaging, and is structured as a compelling story with plenty of greed, tragedy, hubris, and even strippers.One of the stylistic things that I think worked both for and against this movie is its use of supporting visuals. For example, when an interviewee talks about how Enron was gambling away all of its money, the film shows footage of dice rolling, or a roulette wheel spinning. This was mostly a harmless technique that prevented the movie from becoming just a string of talking heads, but I thought it was taken a little too far with extensive video of BMX bike racing (played over a discussion of how Jeff Skilling liked to take colleagues on adventure vacations); and quite explicit images of strippers accompanying the explanation of how Enron Energy Services CEO Lou Pai enjoyed strip clubs and eventually divorced his wife to marry his stripper girlfriend. I personally thought the story was plenty sordid without having to actually watch several minutes of topless pole dancing, but perhaps the filmmaker took the idea of "making finance sexy" a little too literally...
One of the main things that struck me while watching this was that, as much of a punchline as Enron became, and as much as everyone came to understand about the rampant greed and fraud and permissiveness that allowed it to do what it did, nevertheless two years after this movie came out we had our gigantic financial system collapse based on some of the very same issues. As Sherron Watkins put it (she was a vice president at Enron who was arguably the main whistleblower for the case), "It's all about the rationalization that you're not doing anything wrong." That kind of rationalization was rampant throughout the mortgage industry (and the investment industries precariously based on it) leading up to the fall of 2008, including deregulation, short-sightedness, manufactured demand, black-box accounting, and any number of other parallels with the energy industry at the time of Enron. And yet, apparently, nobody in a position to do anything about it actually learned from Enron. I guess they figured (if they thought about it at all) it was somehow an isolated case. And the people who did want to learn from it weren't the ones in a position to make any widespread changes.
It's all pretty disheartening, unfortunately.
Back to analyzing the movie: overall I think the filmmakers did an excellent job of interweaving interviews, news footage, archival photos, and limited narration to piece together the story of how everything that happened, happened. They make no pretense of being "even-handed": they show footage of people like Ken Lay and Jeff Skilling giving congressional depositions, but they do not interview them separately for the film and it is clear that from the perspective of the film, they are mostly lying. I think this approach makes perfect sense, though, since by the time the movie came out there had already been various criminal convictions for fraud, conspiracy, etc., so bending over backwards to represent more of their side of the story would have seemed disingenuous.
I thought some of the most interesting material was about the corporate culture of Enron, how it was extremely aggressive and competitive (at least for a while, they had a policy of firing the "worst" 10-15% of their employees per year, just to foster a competitive atmosphere). The other really foundational thing that most amazed me was the concept of mark-to-market accounting, wherein (if I understood correctly) the company could base its financial statements on the profit it expected to make on some idea or endeavor, and completely disregard any actual performance. On the one hand this is astonishing to me, and on the other, it again reminds me of the recent mortgage crisis, partly based as it was on things like No Income No Asset mortgages...
Overall I would definitely recommend the movie, as an educational and enlightening view of how Wall Street can work, and as a reminder that our country's current situation is absolutely nothing new. By the end, I came to realize that the title is meant at least half-ironically: while Ken Lay, Jeff Skilling, et al. were indeed very smart, and knew it, and people like Lou Pai got away with hundreds of millions of dollars, this "smartness" led to the perpetration of elaborate frauds and the ruination of thousands of people's pensions, savings, careers, and even lives. The movie is bookended with discussions of Enron executive Cliff Baxter, who committed suicide in January 2002.
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We're also supposed to develop a short activity for students about documentaries. I would encourage students to choose some recent event at their school and propose two different documentaries about it, told from two different perspectives. For example, a change in lunch prices could be portrayed entirely from the perspective of disgruntled students (a protest against unfair charges), from the perspective of harried lunch workers (a protest against unfair student complaints), from the perspective of heroic administrators (a positive story on how the school is working to raise more money for its programs), or a more complex fact-finding news story (with various perspectives given essentially equal weight, and pro and con opinions voiced by each demographic). By considering how they would structure each "version" of their documentary, students would get a sense of how storytelling and editing play a role in documentary filmmaking, and how as filmmakers they have choices to make about what kind of story they are going to tell.
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