photo by tracy_olson
As I surf the blogosphere, I’m frequently confronted with bloggers who believe in the sanctity of the free market: if government would just get out of the way, business leaders would do what was best and creative destruction would take care of the rest. It’s regulation that hampers economic growth.
The real problem with big business isn’t regulation. It’s untempered greed. The goods and services sold to consumers are not the end goal. Though new businesses and industries have popped up throughout American history to fill a perceived need by consumers, at some point the goal of creating useful products fell by the wayside, with attention turned to how big a pile of money can one company accrue. How much is enough? Based on the hubris of Wall Street, never is enough enough.
A minimally regulated Wall Street left the finance industry on the brink of collapse. And a $350 billion infusion seems to have merely slowed the devastation, while the new administration figures out what to do next.
Yes, the finance whizzes were left to their own devices and attempted to outmaneuvered each other in a string of bad decisions that just about autoasphixiated the lot. Could the laissez-faire loving peeps explain how to compensate for people like Bernie Madoff, Nicholas Cosmo, Jeanetta M. Standefor and Arthur Nadel? Should we all just walk around with our fingers crossed that our banks and our financial advisors aren’t crooked? If they are, sorry, no retirement in your future?
And it’s not like financial services is the only industry to breed arrogant incompetence in the face of monetary opportunity. Look at the nationwide peanut recall. Peanut Co. knew as far back as April 2008 that one of its factories was churning out contaminated, dirty peanut products. But it wasn’t until over 500 people wound up with salmonella poisoning and 8 people died that it mattered. All those peanut products it would have to destroy would hurt the bottom-line, so it did what it could to keep the outward conveyor belt in motion.
Sure, in a totally unregulated market, people keeling over would eventually do the brand irreparable harm, but how many people would have to get sick or die and how many distributors of their products would lose business in the interim?
The almighty dollar has blinded much of industry with anything but the appearance of financial success. The focus on the immediate short term windfalls created case studies out of the Lehman Brothers, Bank of America, Citigroup and friends.
Government regulation and limitations on risky behavior help curb the greedy. Even wearing a leash, executives still find there’s plenty of money to be made. The alternative is to let the hounds loose and let the economy free fall.
this evening. The book is absolutely depressing; it looks at how Friedman economics has been used for private company gain, while devestating economies in South America and Eastern Europe.
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