Friday, May 28, 2010

Regulations, Responsibility, and Reality

We the people sit in a difficult place and time. Largely unable to come together in productive discussions on issues that define our nation, we have taken to fighting over the carcass of government; like two starving Lions ripping at the flesh of an animal from opposite sides. Republicans blindly fighting regulations and Democrats blindly trusting what are only words on the page have in fact worked together. They have conspired, in the manner of two drunks leaning on each other to walk down the street, to destroy large sections of the American Dream.

There is culpability, there is recrimination; then there are the millions without jobs because of our lack of national planning regarding finance. Further millions will lose their livelihood as oil encircles, encroaches on, and encrusts the fisheries and beaches of the Gulf Coast and beyond. What other tragedies must befall our country before we agree on a few simple truths? There are roles for markets and the democratically elected government, that each cannot well accomplish in lieu of the other. We have an implicit understanding, in business and education, in medicine and law enforcement, that humans need oversight. Redundancies are good and double-checking is better. Forever known as "The Crash" and "The Spill", the events of 2008 and 2010 should be a wake up call to our nation every bit as loud as the one we heard on 9/11.

This is our fault; Mr. and Mrs. John Q. Conservative, Mr. and Mrs. James Q. Liberal, and everyone in between own an equal share of both of these disasters. We all earned this dubious investment through our ignorance, our greed, and our abiding desire in taking the easy way out. Liberals embraced the deep linkage of Wall Street to the home mortgage market in the pursuit of their expansion of personal home ownership. They joined Conservatives in the spending of bubble wealth, and looked happily on the artificially low interest rates proffered by Greenspan and Bernanke. Liberals also slept soundly with the knowledge that there was a federal entity that looked after the safety of oil rigs.

Conservatives smiled broadly at their success in deregulating the financial markets of America. They spoke of permanent Conservative majorities fueled by happy voters flush with Wall Street cash. Conservatives looked on approvingly as ex-Texas oil man George W. Bush, and Haliburton chief and major shareholder Dick Cheney systematically gutted every federal entity responsible for environmental or safety regulations. The markets, Conservatives have preached for years, are far more capable than governments in taking care of these issues. These weren't the strategies of evil corporate warmongers intent on domination, they were time-honored theories of supply-side economics put into practise. Conservatives ran their full playbook in the first decade of the 21st Century, and Liberals (by and large), came along for the ride.

But a funny thing happened along the way to America's future; Conservatives, both in government and the corporate community, forgot about their mantra of personal responsibility. Liberals, for their part, ignored their creed that government be responsible to all of its constituents. The regulators trusted by the Liberals to keep a lid on things, got far too cozy with those they were watching. Tax dollars committed to the regulators at the SEC, Federal Reserve, Mine Safety and Health Administration, and Minerals Management Service seem to have been thoroughly wasted. We did put Martha Stewart in jail, and there were millions of dollars in fines levied against companies (mostly appealed and left unpaid), but to no avail.

The marketplace trusted by Conservatives to generate jobs, ensure wealth, and manage our natural resources has been an equally abject failure. Proving again what is common sense for most, business and industry will always do what is in their best short-term interest. How much money did Haliburton, B.P., and the partner firm managing the rig, save by short-cutting literally every procedure and decision point designed for rig safety? The failure of management rises, in my opinion, to the level of negligent homicide in the case of the dead oil workers. But this isn't a surprise unless you have been taken in by the notion that the market can self-regulate.

Whether through political necessity or blind hope, the President seems to have believed that B.P. would be immediately forthright. While the notion that this is "Obama's Katrina" is ridiculous" (Bush had warning, Obama and America weren't let in on the secret for almost a week), the President and his team were and remain complicit in the Liberal trust of bureaucracy to prevent, solve, and fix problems. Well-defined regulations with clear, meaningful, and immediate consequences are a boon to the market and society. The brand of sloppy, lobbyist-prepared garbage, complete with endless administrative recourse before enforcement and hand-slapping, are little more than the waste of taxpayer dollars Conservatives claim them to be.

Obama took responsibility for his Administration's response to the latest incident, and commented on the way forward. It is the way forward that must be made clear to politicians of both parties, by good people from all ideologies. No more fairly tales about market abilities, and no more bureaucracies with more employees than power. Our marketplace needs specific guidelines in those areas which industry tends to make profit-first decisions within. But more than the guidelines must be adjusted. The Spill and The Crash both happened, and can both happen again, because the market had limited liabilities. You guessed it friends, these industries are more than happy to allow government interference in their business if it means less risk.

Our nation puts an artificial cap on liabilities resulting from a spill...and $100 million doesn't go as far as it used to. The "too big to fail" concept that was not addressed in the recent reform legislation means that financial institutions know that they can take on enormous risk (and the profit that comes with it), and we the people will have to bail them out (again) if the risk goes bad. Lets end the hypocrisy of government involvement only when it suits the largest corporations, and focus our protections on the little guys. Lets stop assuming that a regulation by itself ensures safety, and start mandating that civil servants do their jobs in enforcing regulations (or lose them like the rest of us would).

Lets do something along these lines; anything really. The price of our national failure is growing higher every day, and it is a price we can no longer pay.

The Rational Middle is listening...

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