In 1970, a PhD candidate submitted his dissertation to the Economics
Department at the University of Houston. The thesis, ‘‘The Measure-
ment of the Timing of the Economic Impact of Defense Procurement
Activity: An Analysis of the Vietnam Buildup,’’ set out how defense
contractors and procurement policies of the U.S. Department of De-
fense worked to undermine economic stability:
It is the purpose of this dissertation to demonstrate that sufficiently accu-
rate information about the timing of the impact on economic output of
defense procurement activity did not exist during the Vietnam buildup. As a
result, national stabilization policies were inadequately restrictive to com-
pensate for the increases in defense production and, hence, contributed to
the unstable economic conditions of the late 1960’s. The model which is
developed in this dissertation would have provided more accurate informa-
tion about the timing of this impact and would have improved national
stabilization policies. (1970, 2–3)
Unfortunately, models that show how to improve economic stability
through better information can be flipped into a road map to create
more instability and market power by withholding that information.
This economist was Ken Lay, later head of Enron.
If economic theory tells us that monopoly power, asymmetric infor-
mation, public goods, and negative externalities reflect market failure,
what more do we need to know by way of a starting point if we want
markets to fail our way? Their mess is our profit. Yes, those novel
financial models and instruments that Enron pioneered led to its col-
lapse. But matters didn’t stop there. The same innovations resurfaced
as major causes of the 2008 financial meltdown, as if Enron had not
happened. We will see that the very same innovations are involved as
well in some of the more dangerous messes we are in today. ‘‘It’s not
the tragedies that kill us,’’ the American wit Dorothy Parker insisted,
‘‘it’s the messes’’ (quoted in Miller 2004).
But that’s not quite right, is it? Not all messes are bad, be they in our
personal or our professional lives. Even in policy, some messes are
good from the start. There are some that can be managed for the
better, and it is clear that others are made much worse from mis-
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