Posted on 07/22/2002 2:48:46 PM PDT by TLBSHOW
The solution to corporate malfeasance is more capitalism
Democrats, who have appeared to be bored since September 11th, have finally found a war to inspire them -- a war on capitalism. Believing that they have stumbled across an issue on which to capture the House of Representatives, Leftists are screaming about "corporate greed" and blaming President Bush, Vice President Cheney, tax cuts, and Pope Pius XII for the recent stock market slide. The solution? Why, Marxism of course. House Minority Leader Dick Gephardt offered these words:
"The opportunity for bipartisan reform is being met by opposition from special interests, Republicans in Congress, and an administration that offers tough talk without meaningful legislative action. Now is the right time [for] corporate reform and [to] go beyond the rhetoric to actually pass strong legislation to protect Americans and improve corporate responsibility and accountability."
Democratic National Committee Chairman Terry McAuliffe, Senate Majority Leader Tom Daschle, Democratic strategist Bob Shrum, and Wall Street Journal columnist Al Hunt have echoed similar sentiments, demanding radical regulation of private industry.
Leftists always believe that expanding government is necessary to protect American investors. Why? In the recent cases of accounting scandals, there is some evidence that existing laws have been broken. If current laws are being broken, why would the passage of new laws help the situation? And since when do Democrats care about the rule of law anyway?
Liberals do not believe in the principle of personal responsibility -- the notion that when a crime is committed, the criminal is the responsible party and she ought to be punished harshly and publicly so as to deter future criminal acts. Rather, they believe that the "system" is corrupt and seek to place blame elsewhere -- usually in traditional American institutions.
When a racial minority commits a crime, for instance, Leftists blame a "racist society" for the crime and, rather than punish the guilty thug, mandate diversity workshops. When public policy is crafted so as to satisfy groups of voters (known as "special interests" to conspiracy theorists), liberals blame a "corrupt political system" rather than legislators and enact campaign finance reform to restrict free speech. Hence, it should not be too much of a surprise, then, that when a CEO commits a crime, Leftists blame the "capitalist system" rather than the CEO. Leftists are more committed to advancing their anti-liberty agenda than punishing criminals.
All of this maneuvering by liberals is annoying, but predictable. What is infuriating to watch are Republicans -- from President Bush to Senate Minority Leader Trent Lott to Federal Reserve Chairman Alan Greenspan -- lecturing American business on the evils of "corporate greed."
The pursuit of profit is not evil; rather it is noble. Businessmen who are willing to take risks to create wealth ought to be rewarded and celebrated, not demonized by public servants. Maximizing profits is called "greedy" by socialist sympathizers either out of ignorance or political expedience.
The vast majority of Chief Executive Officers are not guilty of fraud. And the few that are can be pursued in the courts under existing laws. Socialists and political opportunists want to get pass legislation that would constrain businessmen's ability to earn profits. Dr. Onkar Ghate, of the Ayn Rand Institute, makes the point quite succinctly:
"The unjust premise at work here is a secularized version of Original Sin: as a selfish profit-seeker, a businessman is branded as guilty before he even acts. So the government must step in and, despite having no specific evidence of wrongdoing against a businessman, force him to be 'good.' But the truth is the opposite…We should get out of the way of the real producers by repealing the regulations which stifle them. Then the true wealth creators will once again enjoy the freedom that has made America the world's most prosperous country."
"Come on, Sabia!" you're thinking, "Capitalism doesn't work if CEOs are cooking the books and consumers are getting bad information."
Wrong. The beauty of a free market is that it responds to consumer demand for goods and services, which includes the dissemination of reliable information. Currently, the stock market is in decline for two major reasons -- (i) firms are scared to death that the federal government will enact regulations that strangle their ability to earn profits, and (ii) investors are unsure whether firms' accounting is accurate. The Big Government crowd -- which now includes many Republicans -- believes that only the government can provide accurate information to citizens.
But why would any sane person believe this? Politicians have been lying to citizens for years (consider the social security fraud, the Medicare scandal, and the national debt scam, all of which make Enron look like a Quaker Church), pitting citizen against citizen, generation against generation, and so forth.
Corporations, on the other hand, are directly responsible to their investors. If corporations do not satisfy consumer and investor needs, then consumers have the option to stop spending their money on the good or service provided by the firm and investors have the option of investing their money elsewhere. If contracts are breached, then the courts are available for redress. (Enforcing contracts is one of the few legitimate government roles.)
Compare those options with those you have in dealing the federal government. Try to stop "investing" in the federal government on April 15th. You'll end up in jail or dead. The federal government is kind of like the mafia, except without the cool hats.
The point is that consumers' jitters about the reliability of corporate accounting will lead to firms finding ways to credibly signal their solvency to investors. What will those signaling mechanisms be? I am not a Wall Street junkie, so I have no idea…and that is the beauty of capitalism -- a central planner (like me) does not have to know.
What I do know is that the market will produce information for consumers if there is a demand for it and a profitable way to provide it. But one thing is for sure -- the federal government is not necessary to save citizens from ourselves. Rather, we need saving from the federal government.
It is easy to defend free markets during times of economic prosperity. The real test of capitalists is how we react when crises intervene and the political winds begin shifting toward Naderite-style totalitarianism. Shame on the Republicans for abandoning free markets for political opportunism, especially when there is likely to be no political benefit for such tactics. As Kate O'Beirne recently said on the The Capital Gang:
"I'll tell you the mistake that the Republicans are making. They are trying to look, as I said, as anti-business as Democrats. They will never look as anti-business as Democrats, as the Democrats run the risk of looking too much so themselves. It's just not a plausible sales job for voters. What Republicans should do is look pro-investor. And to be pro-investor is to make sure Washington doesn't over-regulate."
O'Beirne gets it half right. Republicans need to go further than to just stifle liberal attempts to pass new federal regulations. Conservatives should call for massive cuts in the capital gains tax and the corporate income tax to spur investor confidence and unleash the creative talents of the corporate sector. Republicans should proudly declare themselves pro-business, pro-capitalist, and pro-wealth creation.
Unfortunately, knowing the bumbling Republicans, they will continue to march down the anti-business road, denouncing capitalist "greed" and profit all the way. As usual, liberty will be the big loser.
...the notion that when a crime is committed, the criminal is the responsible party and she ought to be punished harshly and publicly...
I'm still waiting.
Seems "the market" is speaking for a return to previous rules and regulations, even many CEO's. People are catching on. However, the republicrats are stuck with the ceo cult of personality and the windfall campaign contributions it brings. Goofball types running ideological cover.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.