Informal fallacies are often plausible and convincing because of a few different factors. It is easier and less time-consuming to believe a fallacy that someone has told you than to go and do the research and find the real answer out yourself. Also, in Enron's case, the people formulating the fallacies can appear to be so smart and we so ignorant that we naturally trust their authority (as a justification of the "truth"). Many times we assume that government, large corporations, etc. will tell us the truth because that is their job, and if they twist the truth, that is wrong, so obviously they must be telling the truth. If Enron says they are making money, and their books show it, they must be right. However, in Enron's case, this was not the case.
Ken Lay and Jeff Skilling used circular reasoning and the fallacy 'propter hoc ergo hoc' with their accounting books, using mark-to-market accounting to make Enron's money. As Gladwell says, "With mark-to-market accounting, you estimate how much revenue the deal is going to bring in and put that number in your books at the moment you sign the contract." Enron used mark-to-market accounting to say they had money from deals before they actually got it, and then the price of their stock went up on the basis that they were already high and therefore Enron must be making money. Enron's view on these things was: "we made the deal, we WILL make the money, so it's like we already have that money to use, and therefore we're doing well, so therefore stock prices should rise." 'Propter hoc ergo hoc' combined with Enron's circular reasoning to lead to the idea that because they had money in their books, they were making real money and they must be a good, prospering company worthwhile for investment in stocks.
A fallacy not really formulated by the company but rather a product of the circumstances and society/human nature, was how the public avoided questioning Enron because of the fallacy known as "ad ignorantiam". Because the company wasn't actually doing bad then and their books said they were still making money, noone thought there was anything wrong, and because there was nobody waving Enron's false deals in front of the public's face, nobody suspected any false dealing or thought to ask how Enron was making their money, their real money. "We went on the information that was available at the time", said the stock analysts from Wallstreet in the film "Enron: The Smartest Guys in the Room". The stock analysts trusted the integrity of the company and hence fell prey to the thinking "since there is no evidence of Enron's false dealings, that must mean there is none." Gladwell says, "the prosecution said... Senior executives withheld critical information from investors." Stock analysts, investors, and the like thought (after the fact) that the situation was a 'puzzle' and they were not being told enough and did not know enough, and that was why they hadn't acted and questioned Enron, when in reality they just needed to start asking questions and interpreting the information they had differently.
The "ad hominem" fallacy was used multiple times by different people in the case of Enron. When Jeff Skilling was asked why Enron was the only company that couldn't produce a balance sheet, because he didn't have a good argument to attack the opposing argument, Skilling instead attacked the man, calling him an "asshole". People fall back on this technique when they know they don't have anything valid to say, but it doesn't accomplish anything, as Skilling found out when they brought up his little name-calling episode in court. On the other hand, Skilling used "ad hominem" tactics to boost his own image in Enron ads, and used the support of himself and the other men rather than the goodness of the company itself, emphasizing that they were very smart people, not necessarily that they were making good deals and money. Ken Lay sort of did this too when, on a CNN interview he reiterated the fact multiple times that his father was a Baptist minister from the time Ken was little, implying his own holiness and inability to do wrong. Furthermore, Enron commercials on TV showed Enron representatives shaking hands with representatives from countries like China, emulating the so-called "integrity" with which Enron supposedly treated all its customers. Because they had no real foundation of positive traits and success for their company to stand upon, Enron (owners) used the ad hominem approach to boost themselves up when they had no real integrity to stand upon, and to attack the "askers" when they couldn't tackle the questions.
I don't think the use of informal fallacies is ever justified because it is the responsibility of authoritative figures (e.g. large businesses, politicians, etc.) to present the truth to the public in an understandable and non-misleading manner. I think when the case is very obviously misleading and the "consumer" ought to be aware, it is the viewer/consumer's fault as well. If a campaign gives a really backwards or circularly reasoned example of why you should donate to them and yet you let yourself fall pray to this fallacy, obviously you are to blame for your lack of common sense and logic, as well as the company for their lies or misrepresentation of the truth. As Gladwell says, "Because if you can't find the truth in a —even a mystery shrouded in propaganda—it's not just the fault of the propagandist." The implications of this are that it is not fallacy-formulating companies like Enron who are to blame, it is the consumers, who have the responsibility to "do their homework" and research if what those companies saying is correct. This would mean that perhaps Skilling and the rest of his gang shouldn't have been punished and tried in court for "lying" to everyone, it was the investors and such who had been punished for their lack of intelligence and initiative to ask "why". It was their job to "say 'no'" and and ask the questions, and it's not Enron's fault that they didn't do so. However, the counterclaim to this is that A) companies and other figures in society have the responsibility to tell the truth openly and maintain the trust of the public, and B) consumers do not always have the means to ask "why" and to find their own answer, so they should not be blamed. If an uneducated people is being told something that, according to the knowledge they possess (some people have less educational opportunities available to them), does not sound way out of wack, or if something that the average person is not capable of interpreting or researching is told them, and they fall prey to it, that is unjust and I don't think the people should be blamed for their ignorance in their circumstances. Also, if the company/figurehead is presenting the "correct" information, but in a confusing or overwhelming manner that obviously needs the wisdom and interpretation of experts (e.g. Enron's hundreds and hundreds of pages of complex business deals that no one outside the transactions would understand), it is not the fault of the consumers who cannot possibly be experts in every walk of life, prepared to deal with fallacies from whoever deems it necessary for their own success. According to Gladwell's article, the Powers Committee noted that Enron "did not communicate the essence of the transactions in a sufficiently clear fashion to enable a reader of [Enron's] financial statements to understand what was going on." so how could this be the fault of the potential "readers" of Enron's statements? No matter what sort of cause it may be for, or how much the "propagandist" thinks the receiver should be able to filter the propaganda, I think truth is a right of humans, especially coming from figures of authority, or else it will create a world of confusion and mistrust.
On occasion I myself have used some informal fallacies, such as when I sort of "specially pleaded" or held a double standard for myself once I got into Sturgis and the workload became difficult. I thought "since I skipped a grade, I missed a year of education, so I should get more leeway with school and all this stress, etc. And since I'm so young, I shouldn't have to be looking at colleges right now...". I thought that the other kids should be working this hard because they were more developed and could handle it, while I was a year younger so I shouldn't have to deal with all that stress yet. I also often "pull a Jeff Skilling" with an ad hominem attack: when my friends and I get into pretend arguments and I can't think of any come-backs, I'll just say "well, you're stupid!" or something to that effect. I think many people do that because it is human nature not to just take an insult and not say anything, yet if we have nothing valid or intelligent to say, what is left?
Humans do not like to be proven wrong, we like to be in full control and have people view us in the light we want to be portrayed in, so in times of desparation, many people (such as Skilling and Lay when Enron was going down the tubes), resort to informal fallacies to get away with their own mistakes, faults, and lies. While this chronic use of informal fallacies by humanity is never ok and should not be allowed or happening, sadly it is the truth.
Bibliography:
"Enron: The Smartest Guys in the Room" (HDNet Films)
"Open Secrets", The New Yorker.
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