The Wall Street Journal’s ($) Holman Jenkins’ weekly column today addresses the different troubles facing former Enron Chairman and CEO Kenneth Lay and Pfizer’s CEO Hank McKinnell.
First, Mr. Jenkins examines the indictment against Mr. Lay and observes that it essentially charges him with the crime of making false public statements in carrying out his duty to save Enron. That duty to Enron’s shareholders, investors and creditors conflicted with Mr. Lay’s other duty to tell the truth to those same folks:

Much will depend on what he was told by Enron employees in the weeks between his return to the CEO’s job and Enron’s collapse a few weeks later. The famous Sherron Watkins memo and follow-up meeting may have put Mr. Lay in the proverbial double bind. He could have told employees and investors that Enron had many sound businesses but, alas, the accounting mess would likely provoke a crisis of confidence among lenders and trade partners, driving the company out of business for lack of credit to continue its day-to-day operations.
Saying as much, of course, would have precipitated the very implosion that it was Mr. Lay’s mission to prevent for the benefit of employees, creditors and investors. “Oh well,” he might have said, “I saw my duty and did it. I disclosed all the material facts that investors deserve to know, even if it means the stock will go to zero before they can act on it.”
Failing to do so is what he’s being prosecuted for now, in good part. The indictment dwells most heavily on his public statements of confidence in the company after he reclaimed the helm of a sinking ship. No, we wouldn’t even try to guess at a solution for this problem. In theory investors deserve the truth, even when it hurts. Please, can’t somebody in the economics department figure out a way to measure how many companies lied their way back to solvency, saving their shareholders a total loss?

The other trial that Mr. Jenkins addresses is a financial and political one, which Pfizer and other drug companies face in a marketplace that increasingly limits the ability of U.S. drug companies to generate profits and fund research and development on new drugs:

By decade’s end, the last major market where prescription drugs aren’t currently subjected to price controls — the giant U.S. market — will feel the touch of the visible hand. Perversely, the industry can thank George W. Bush. Whatever he intended with his Medicare reform, the government sooner or later will try to limit its pharmaceutical spending on seniors by dictating prices.
History is replete with industries with high fixed costs and low marginal costs that embraced government regulation, believing they could capture the regulatory process and assure themselves an acceptable rate of return. Some say the drug companies will manage the politics of price regulation too, making up on volume what they lose in dictated prices. Don’t bet the cat on it. That approach ended badly for the railroad and electric power industries, and both could at least demonstrate clearly for regulators the relation between capital going into the pipeline and services to the public coming out the other end. Drug investment, by contrast, is a speculative shot in the dark, unfit for any kind of regulatory review that we can think of.

Mr. McKinnell at least sounds like a man who believes this future can be avoided, pressing for the U.S. to challenge price controls in other countries so Americans aren’t stuck bearing the whole cost themselves of the industry’s massive R&D budgets.

Inasmuch as the Bush Adminstration lacks a coherent approach to reforming America’s health care finance system, count me as skeptical that this administration can develop a sensible plan to require other countries to fund a fair share of drug R&D costs.