Sox was passed in response to Enron. While that may have been a big failure, it had no effect on the wider economy. In fact Enrons scandal only came out after the 2001 recession ended... the economy grew during and after Enron’s failure.

What are you talking about. It was a massive drag on the California economy while they existed. They were literally shutting the power system for millions of people down to jack the price.

That was more a failure of the artificially constructed electricity market. It didn't allow longterm contracts.

Weirdly enough, cities that had their own power companies could have such contracts and didn't get rolling blackouts. I worked in Santa Clara at the time and lived in Sunnyvale. We never lost power at work but frequently found all the clocks flashing when I got home.

Which sort of suggests that centralization is the problem, not public versus private. We had a private company failing and public power companies unperturbed.

Yet some how the same regulated market didn’t experience the same problems after their bankruptcy? Come on, you’re really stretching here when there is an obvious answer.

You seem to be looking to blame centralization to fit a preconceived normative view of economics rather than just acknowledging maybe markets were not effective or efficient in this particular instance and in fact suffered a massive distortion specifically because a decentralized profit motive allowed one party to abuse market making mechanisms and hijack the price setting function so crucial to efficiency.

I think if you and I lived on the same street and everybody on our street decided to generate and distribute our own power, we would never create such dysfunctional rules.

And if we did, we would probably change it the day after it failed.

Centralization enables a lot of good thing but also some bad things. Lobbying thrives on centralization because it is easier for decision makers to scam people they don't know, more likely to happen with centralization.

Have you ever lived in a neighborhood with a home owners association? Any institution that is made up of more that a few people will come up with rules that seem stupid. Even in a small scale like that.

my knowledge comes entirely from the documentary, but iirc Enron both created the energy market, allowing energy futures to be daytraded for the first time, and manipulated the market with bidding.

the market itself was a massively cool idea, it's just that Enron had a massive conflict of interest and played both sides. they should have stuck to being a market maker and spun off their trading arm.

But that has nothing to do with SOX. If Enron didn't commit fraud, they could have continued being a drag on the CA economy for years longer.

The CA blackouts predates the Enron fraud and accounting scandal by at least 6 months. At no time during the blackouts was anyone aware of Enrons fraud.

SOX was regulation to prevent that fraud. Notice, it does and says absolutely nothing about the energy market. That's because SOX was not designed to address the cause of the CA blackouts.

Destroyed the pensions of many people, though.

Why are Americans invested in their own employer? It serms excessively correlated. My company pays my pension into index funds.

This has changed for many large US companies when it comes to their 401k plans which are often the main vehicle for retirement savings (https://www.thestreet.com/story/13151412/1/how-your-retireme...). There are still many opportunities for a poorly balanced portfolio.

Hedge funds bought shares because of the cooked books and unreal returns.

Many are too lazy to do the research, and sadly, many lack basic financial literacy.

Should the government have waited for another half a dozen “Enrons” before acting? The whole point of regulation is to avoid such occurrences not as an “I told you so”

Oh, there were.

Tyco International Adelphia Peregrine Systems WorldCom (which was a big one)

And there were many more.

And how much time lapsed between identifying the problem, notification, committee meetings, proposal, final draft, voting, and enforcement?

How much business was lost through the two summers of rotating brown-outs? Datacenter outages? Maybe Enron didn't impact America, but thanks to America's pro-business, anti-consumer laws, Enron really hurt California.

> for bad things that actually happened is just astounding.

you are not kidding.

"You mean we have to monitor for this because someone ACTUALLY tried doing that before...?"

Sure, bad things happen. But there's a trade-off between regulatory burden and economic vibrancy and adaptability. We all know that taxi regulations sort of existed because a lot of tourists would get taken advantage of. But then, the taxi companies and politicians exploited it to promote local monopolies and enforced it with limited edition, expensive taxi medallions that prevented people from starting up legitimate cab companies to compete with the incumbents.

That sort of thing happens all the time and that opportunity cost is not often talked about.

Agreed. Though it's tough to square the fact that bad things happen sometimes with desire to do something. The Onion actually had a good video on this a few years ago:

https://politics.theonion.com/truck-accident-that-killed-raf...

SOX exists because of Enron / Arthur Anderson / Tyco / half a dozen others, not banks.

OP was thinking of Dodd Frank.

Right sentiment; here's an editing tweak that lets you make the point more precisely:

SOX compliance is arduous but it only exists (and is as strict as it is) because some company built a $60 billion market cap in 2000 with financial-statement mischief that concealed a bankruptcy in the making.

SOX predates the GFC by a decade.