The Enron fiasco has a positive side.
Accountants will think twice if not thrice before approving the aggressive accounting tricks that eventually brought the Houston energy-trading company down.
If the profession does not impose tougher accounting standards on itself quickly on a self-regulatory basis, Congress will step in and get it done. The Securities and Exchange Commission last week proposed a new body dominated by outside experts to police accountants. But some experts say that plan won't do the job properly.
"Something is going to happen," says Robert Litan, a regulatory expert at the Brookings Institution, a Washington think tank.
Another almost certain reform is that Congress will pass legislation to further safeguard retirement savings, in particular 401(k) and employee stock-ownership plans. The political impact of the contrast between Enron executives reaping $1.1 billion in profits from stock sales and thousands of Enron employees losing the bulk of their retirement nest eggs is too great for either Democrats or Republicans to ignore.
President Bush last week set up a task force to make recommendations for reform.
Mr. Litan suspects Congress will pass new rules requiring these "defined contribution" retirement funds to diversify their assets. That is already the rule for the regular "defined benefit" pension plans that many companies provide their employees.
Also, the new law will enable employees to freely sell their company stock in a 401(k) plan, even if contributed by the company as a match to the tax-advantaged deduction from an employee's pay.
In a broader way, the Enron debacle has given fresh ammunition to those analysts and advocates who argue that regulation of the nation's corporations is inadequate.
"We need regulation to keep our markets in check, to keep them more efficient and responsive to the public interest," says Douglas Heller, a consumer advocate with the Santa Monica, Calif.-based Foundation for Taxpayer and Consumer Rights.
For decades, liberals and conservatives, Democrats and Republicans, have fought over the appropriate level of government regulation of business. More often than not, deregulators have won the battles.
Old-style liberals now maintain that business has acquired excessive power through its campaign money and the weakening of trade unions.
"Large corporations have too much freedom from control and regulation," says John Kenneth Galbraith, an economist emeritus at Harvard University in Cambridge, Mass. "Is it possible to suppose that the money Enron gave to Republicans and a few Democrats was just a charitable contribution?"
On the other side, free-market advocates argue that reduced regulation has improved the communication, airline, trucking, and other industries.
For this year, the administrative costs of federal regulations amount to $20.3 billion, according to Melinda Warren, a budget analyst at Washington University in St. Louis.
It's "small" as a percentage of the $2 trillion total federal budget, notes Ms. Warren. But she expects it to grow. The Federal Aviation Administration's budget, for one, will certainly increase to address new domestic security concerns after Sept. 11.
Compliance to regulation is a far bigger, direct cost to business and consumers. It came to $843 billion in 2000, reckons Thomas Hopkins, dean of the Rochester Institute of Technology's business school.
That's 8 percent of gross domestic product, the nation's output of goods and services.
This proportion sounds huge. It may seem less so once one considers the value of the benefits of regulation - relatively safe food, airports, highways; sound financial markets by world standards; some consumer protections, and so on.
Despite the storms over deregulation, compliance costs as a proportion of GDP have not changed much in recent decades.
"We need better regulation," says Mr. Hopkins. "We have been cluttered over the years with poorly conceived regulation."
With regard to the Enron debacle, Hopkins's attitude is that if the accounting industry doesn't look after itself, "the federal government should not be far away."
Enron has also raised questions about the moves to make the electricity industry competitive.
Mr. Heller holds that electricity is so vital to the economy and public safety that full regulation is the best way to assure affordable and reliable service. The promise that competitive electricity will reduce consumer bills has not been fulfilled anywhere in the nation, he charges. Rather it has added a layer of costs at the trading level.
But Murray Weidenbaum, who was a top economic adviser to Ronald Reagan, argues that the Enron/California power-deregulation troubles are not "pertinent models" because of poor design factors. Nonetheless, some states are rethinking plans to make the electricity business competitive.