It’s a question that might have seemed outlandish just a couple of years ago, when the country was flush with the irrational exuberance of a constantly rising Dow index and a seemingly endless parade of instant dot-com millionaires.
But recent months have been a different story, as unemployment has skyrocketed, economic growth has ground to a standstill and the stock market has fallen to 1997 levels. Much of the so-called “prosperity” of the ’90s has turned out to be the product of the outright larceny of corporate executives and their accountants, who devised various shell games to hide losses, overestimate profits and bilk investors out of millions. Hardly a day passes without the revelation of a new scandal of the kind that ruined Enron, Arthur Andersen and WorldCom.
The result has been profound loss of confidence in the economy and a dawning realization that our system is seriously flawed. At no time since the Great Depression has it been clearer that capitalism just doesn’t work without stringent government regulation.
In a sense, it all comes down to capitalism’s most basic flaw: Ours is a system in which greed is the fundamental motivation and organizing principle. It is a system that practically requires our most powerful citizens to act contrary to the public interest. Corporate CEOs must produce short-term profits, so they ignore the long-term health of the companies and the public welfare as they exploit investors, natural resources and employees. Politicians, who ought to be curbing these abuses, must turn to these same corporate executives for the funds they need to stay in office, so they write the legislation corporations want to see. This has produced a decades-long slide toward the de-regulation of vital industries, and the results speak for themselves.
Fortunately, there is a solution: re-regulate, and do it now!
For the first time in decades, public sentiment is clearly in favor of increasing the power of government to rein in big business. Anyone who doubts this should take note of the speed with which George W. Bush, an avowed opponent of government regulation, signed into law a set of reforms that would increase penalties for corporate crimes, create a review board to police the accounting industry and hold top executives responsible for their companies’ fiscal statements. That’s all to the good, but it’s only a start.
We need to re-regulate the utility industry and re-examine the media conglomerates, the telecommunications giants and just about every other industry that was deregulated over the past two decades. We need campaign finance reform, so that corporate giants can’t simply re-write these reforms. And we need is to do it now, with the memory of Enron, WorldCom and all the rest still fresh in the public mind.