A long long time ago your loyal scribe found himself in the wilds of Australia.  I was a young man then.  Somebody called Pierre Trudeau was Prime Minister.  Middle age was something I thought was in the history books.  I had a steep learning curve ahead of me.  However, I was so young and naïve I didn’t even know that.

On my way up to the Gold Coast we stopped in Canberra to visit some friends from Guelph.  She had been send to Canberra to work at the Canadian embassy.  Her husband was working for an Agricultural Economics Institute down under.  Life was different then.  Over a game of pool, we chattered about the world of agricultural economics down under.

The story I was told that day has always stuck with me.  My friend told me he was charged with finding out why sheep prices were erratic at various sheep markets across Australia.  We discussed market volume, prices etc., but at the end of the day it came down to a bit of funny business.  Things weren’t, as they seemed.  The free wheeling Australian sheep market wasn’t as free as we once thought.

Fast-forward over 20 years to the free wheeling modern free market world of North America.  Last week’s guilty verdicts against the disgraced energy trader’s founder, Kenneth Lay, and its former chief executive officer, Jeffrey Skilling, was telling for how the free market private enterprise system can go so seriously wrong.  About $60-billion worth of Enron’s stock market value was went up in smoke, as were $2.1-billion worth of pensions and 5,600 jobs.  The rest as they say is history.  The wake from this tsunami fraud found its way all the way to places like Chatham-Kent.

What you say?  Did you forget? Think about your local bank.  As I’ve written before our very own Canadian bank the CIBC was caught in that fraud.  They paid the U.S. Justice department for their part in that fiasco.  That was an aside to the $2.4-billion it paid last summer to settle a class-action lawsuit by angry Enron investors.  It was a real comedown for local CIBC staff.   Mention it in a local bank and the subject was changed quickly.

That’s no condemnation of any of our local bankers.  Those people are put in the trenches as the liaison between customer and banks.  I’m sure they mostly felt a queasy embarrassment.  The bottom line is banks get to pass on those “Enron costs” on to their customers.  From a customers perspective paying for the Enron dalliance is a real dead end.

So tell me.  Is the Enron debacle an aberration?  Or is it like those Australian sheep?  Or is it just something we should expect, a so-called “negative externality” of the free market system?  Are there more or many more to come?

At first glance I’d say Enron was an aberration.  Fraud on any level is a fool’s game.  However, when there is that much money involved a lot of good people made a bad call.  Unfortunately, that what probably happened with CIBC.  Ken Lay and Jeffrey Skilling got what they deserved.  The problem is deep down; even they probably thought they weren’t doing anything wrong.

So what’s up with this?  Should we put our hammer and sickle on our lapel pin and hope for a changed economy with ever-greater government control, a kind of socialist Canada.  I don’t think so.  There is nothing wrong with a well-oiled and well-regulated economy where incentive is key.  The important thing is well regulated.  If our economy had no regulation, there would be a lot more Enron’s and too many sheep in the wrong places.

So that leads me to Stephen Harper.  He’s done well in his first few months.  However, there are some in our economic world who think the election of a Conservative Prime Minister is a green light for business to do what they want.  The energy business comes to mind and maybe the banking business too.  Or maybe there is nothing to this.  Maybe I’m counting sheep, which really aren’t there.

Some of you might say, what’s up with all this Phil?  From time to time I like to throw a wrench into the economic soup.  Trust is an important tenant in our economic world.  Enron and even political scandals like the sponsorship debacle breach that trust.  Yes, our economic system should work seamlessly.  However, most of the time things aren’t necessarily what they seem.  The challenge is to question and probe the many economic paradigms we have come to take for granted.  At the end of the day, what might look like a sheep might be a wolf in lambs clothing.