One of the current political battles deals with the concept of Regulation. At this point it's pretty much a shouting match, with most of the shouting coming from the GOP candidates, each convinced that the US would be a better place if there was less governmental regulation. House Speaker John Boehner has even gone so far as to say that the Job Creators are on strike because of Regulations, and now the Tea Party is circulating a letter to small businesses, asking them to Not Hire until the current President is out of office. In other words, make things worse so we can be elected.
However, the concept of regulation is largely a straw man, created from whole cloth and designed, much like the patter of a stage magician, to distract the audience from the sleight of hand going on else where.
For the most part, the demand for Regulatory Reform has been vague, with few specifics. Two areas that do seem to pop up more than others are the Environmental Protection Agency (EPA) and the Securities and Exchange Commission (SEC). So, let's look at what those people regulate, and why that's important. Believe it or not, they're actually related.
The EPA creates and enforces rules related to protecting the environment, so that means they have rules about the discharge of dangerous chemicals into the air and water, limitations on exposure to cancer-causing agents, and things like that. Due to a host of problems over the years, they have tightened up restrictions, usually in the form of limits on companies and manufacturing processes.
While not exclusively within the EPA. those rules include things like protecting coal miners from black lung, protecting children to exposure to lead and mercury, dealing with companies that dump chemicals into landfills, and other similar activities. If you're old enough to remember, they deal with things like Love Canal. If you're not old enough, in simple terms, a bunch of families started getting seriously sick and dying when it was discovered their houses were built upon an old chemical dump.
That minor little problem we had a couple years ago...the one where a little bit of oil leaked out of a hole in the gulf of Mexico and messed up almost the entire southern gulf coast...is an example of the kinds of things that the EPA regulates, and, obviously, we all know what happened when those regulations weren't followed. I would argue that it was pretty clearly demonstrated that we need exactly those kinds of regulations, although they can't prevent Stupid People and Big Business from trying to cut corners. Those un-needed regulations did, however, provide the basis to hold BP accountable for their little mishap.
Now, another example of Regulation would be Wall Street. The SEC says you can't do certain things. Of course, that never stopped anyone from trying, and Bernie Madoff might be the poster child for that idea. But, he's not alone.
A little over a year ago you might remember Lloyd Blankfein, the CEO of Goldman-Sachs testifying before Congress. It was actually rather funny, simply because he wouldn't actually answer the questions, but the short story is this:
Goldman-Sachs put together a bunch of mortgage backed securities, and then told their sales people to "go sell these." At the same time, Goldman-Sachs took a "short position" on the package, meaning (in simple terms) that they believed the package would fail. They were so sure of that that they bet money on it. One of their sales people looked at the package and wrote in an internal email "...this is a shitty deal." His words, not anyone else's.
The response to the email was "go sell it." And they did. And it failed. And Goldman-Sachs made money, first on the commissions for selling it, and then in the long run when it failed.
During the questioning, Blankfein was asked if he (Goldman-Sachs) didn't have a responsibility to tell potential customers that they were taking the short position. The response was incredibly evasive, but in short he finally said there was no regulation that said they had to do that. In short, he could act un-ethically as long as no law said he couldn't. In the meantime, his customers were getting screwed...by design.
But...remember, just as with that oil spill, we don't need regulations.
Now, how does this all tie together. It's simple.
Tonight, I watched an advertisement during the NBC Nightly News. It was from some organization that included the words Clean Energy in their name. In fact, it is simply a front for oil companies. In any case, the ad supported the idea that energy would be cheaper without regulations. I suspect that statement might be factually accurate, but it fails to consider the true cost. Without regulation, BP could simple say "you clean it up" when they created that mess. Is that what we really want?
However, there's more. In 2008, Goldman-Sachs bought 860 million barrels of oil. Why? They're a bank! They don't refine oil or make gasoline! They have nothing to do with oil! However, they do like to make money. So...they bought the oil with the idea that they could sell it for more than their purchase price...and make money. And...they did! So, the price of gasoline went up. You paid more at the pump so Goldman-Sachs could profit.
This year, Exxon Mobil chairman Rex Tillerson testified before Congress that "Wall Street is tapping a real gusher in 2011." He then added that he thought "...excessive speculation might have raised oil prices 40%." So...that barrel of oil that should have cost $60 went up to $100, and you and I got to pay for that at the pump. Who profited? Well, to a degree Exxon Mobil and the other oil companies certainly did, but the real winners were...yup...on Wall Street.
Although the Occupy Wall Street movement might not list this as one of their basic concerns, it certainly should be. See, there's no regulation that says they aren't allowed to drive the price of gasoline artificially higher, and there's certainly no regulation that says they have to act ethically. Personally, I think there probably should be.
Still think we need less regulation?
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