The Rebirth of Regulation (Robert Reich)

[swag]

http://robertreich.org/post/569147888/the-rebirth-of-regulation

What do oil giant BP, the mining company Massey Energy, and Goldman Sachs have in common? They’re all big firms involved in massive plunder. BP’s oil spill is already one of the biggest and most damaging in American history. Massey’s mine disaster, claiming the lives of 29 miners, is one of the worst in recent history. Goldman’s alleged fraud is but a part of the largest financial meltdown in 75 years.

All three of these companies are also publicly-held, which means that much of the financial costs of these failures will be passed on to their shareholders, many of whom are already watching their stock prices plummet. Prominently among those shareholders are pension funds and mutual funds held by people like you and me.

That may seem fair. After all, shareholders benefitted when BP made big profits extracting oil without paying attention to a possible blowout, when Massey Energy got fat earnings from its careless coal mining operations, and when Goldman Sachs did wonderously well for its own stock holders by allegedly defrauding others. In fact, it was pressure from their shareholders seeking the highest possible returns — and their executives, whose pay is linked to the firms’ share performance — that led all three companies to cut whatever corners they could cut in pursuit of profits.

But profits aren’t everything, which is why we have regulations that are supposed to be enforced. So a key question in each of these instances is: Where were the regulators?

Why didn’t the Department of Interior’s Minerals Management Service make sure offshore oil rigs have backup systems to prevent blowouts? One clue: You may remember MMS’s wild drinking parties exposed during the Bush era.

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[DrDan]

1. it doesn't take a Professor of Public Policy to know we need more regulation

that is sooooooo obvious.

These corporations are not necessarily evil - just doing what their shareholders want - increasing stock prices. They will continue to push the boundaries of regulation with the aim of cutting costs and increasing profits. That is what we stockholders want. They are not intentionally spilling oil or creating mine disasters. Those are just the result. We used to be happy with simple returns on investment. Not now. We now want daily triple-point jumps in the DOW and are not satisfied with less.

[salguine]

3. I think you're being way too charitable. You say

"They are not intentionally spilling oil or creating mine disasters", but they fight tooth and nail to be free of regulations that probably would have prevented oil spills and mine disasters, and for no higher reason than money. This is the pursuit of money by any means necessary, no matter who gets hurt or killed or what gets destroyed. This is not benign thinking or behavior.

[DrDan]

4. that is exactly what I said - their sole purpose is to increase profits

that is what they are paid to do.

That is what the shareholders demand.

Evil? Not necessarily. They are doing so (pretty much), inside the law. The problem, of course, is that they are also establishing the law. As long as lobbyist maintain their incredible power, those laws will favor the corporations.

Money rules.

[salguine]

2. I wish we could swap out Obama for Robert Reich. I think Reich cares about

people more than corporations.

[DrDan]

5. agree