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Wednesday, June 22, 2011

Burn Baby Burn: Moral Hazard & Fairness

On a call with another of the company’s traders when a wildfire in California was putting some electric wires at risk, an energy-desk trader at Enron quipped, “Burn Baby Burn!”  The loss of the electricity wires would have decreased supply, thus jacking up the price of electricity, which Enron was only too glad to provide.  Similarly, “Burn Baby Burn!” can be put in the mouth of any one of the firefighters of the South Fulton fire department in Tennessee who watched Gene Cranick’s home burn to the ground because he had not paid the $75 annual fee that residents outside of city limits had to pay in order to receive the “service.”  When Cranick called 911 as his house was on fire, he was essentially told, “I’m sorry, sir, but you are not on the list for that service. Have a nice day.” 


The full essay is in The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.com.