When the Republican Party opposes laws that protect us from the life-ruining effects of corporate greed, they tend to argue that such laws create big government, which, they say, is evil. They advocate for small government instead, which allows the corporations to exploit workers, consumers and the environment. They employ several well-rehearsed arguments in an effort to convert voters to their way of thinking. Here are some of those arguments and why they are wrong. [The following is an excerpt from my book, “Rescuing Religion from Republican Reason”]
1) Government regulations always have negative unintended consequences.
Imagine you’re on a camping trip. Out of the corner of your eye, you see a black bear approaching from the opposite side of your tent. He doesn’t seem to know you’re there. You realize that if he gets too close, he could become startled and attack you. You’re in danger. You need a solution. One solution is to do nothing. The bear will then enter your campsite and likely harm you. Another solution is to run away. If you do, you’ll ensure your demise, because bears love to chase, catch and maul other animals, including you. Another possible solution is to bang pots and pans together before the bear gets too close. Since bears dislike loud noise, the bear will turn and walk away from you. Life saved! Of these three possible solutions – doing the right thing, doing the wrong thing, and doing nothing – only doing the right thing worked. Doing nothing was nearly as bad as doing the wrong thing.
Unfortunately, anti-government Republicans, especially of the libertarian variety, usually insist that we must do nothing to address the harmful effects of greed in the business world. They repeatedly claim that the government makes every problem it addresses worse, so the government should limit its actions to the defense of property rights. Yes, sometimes governing officials choose wrong solutions, making existing problems worse or creating new problems worse than the original problem. This is a part of what decision-making is all about – choosing between solutions that work and those that don’t. People in power make mistakes just as all humans do. It’s up to us to vote for the best decision-makers. But to vote for those who refuse to make decisions altogether is to let the devil have his way.
Thanks to the thousands of decisions our government has made over the years, it’s easy for anti-government types to sort through them and find some bad ones to use as examples of how government decisions always have negative unintended consequences.
However, countering their argument is even easier. All we have to do is identify laws and regulations that do far more good than harm. For example, most business regulations that protect workers and consumers from harmful chemicals in the workplace, in our food, or in the environment do a tremendous amount of good. Child labor laws are also good. The only negative consequence is that the business owners make less money when not exploiting children. Republicans warn that business owners will pass the extra expense on to consumers in the form of higher prices, making life worse for everyone. (They’ve made this claim in opposition to child labor abolishment, to the auto safety regulations of 60s, the Clean Air Acts of 1970 and 1991, and the Fair Labor Standards Act of 1938. And yet, economic doomsday failed to materialize every single time.) But this can only happen if consumers are willing pay more for that product or service. The truth is that most households have a limited amount of income to spend, so they must make choices where to spend it. If business owners raise prices, consumers will choose to buy less, which hurts the business’s sales and profits. So, in many cases, businesses simply must keep prices where they are, leaving the owners no choice but to earn fewer millions. This is what corporate powers fear. That’s why they promote the unintended consequences argument.
One industry in which the benefits of regulations have been far greater than the unintended consequences of them is banking. Before banking regulations were enacted in the 1930s, widespread banking industry collapses afflicted every generation throughout the previous century. Once the regulations were implemented, our banking industry was catastrophe-free for over 50 years. Then along came banking industry deregulation of the 1980s and 1990s, and following soon after were the Savings and Loan bailouts of the late 80s and the bank bailouts of the Great Recession in 2008-2009. Without regulations, our banking system proves to be a disaster that robs depositors and tax-payers of their money. So it’s not government regulations of greed-driven business practices that have negative unintended consequences; it’s what the government allows in the name of enriching the wealthy that has negative unintended consequences.
2) Regulations kill jobs.
Even after the deregulatory disaster we call the Great Recession, Republicans continued to oppose financial industry regulations designed to prevent another collapse and future bailouts. They, of course, called these “job-killing regulations.” They apply this term to most financial, environmental, workplace, and consumer product regulations. They claim these regulations will cost businesses extra money, and that they’ll have no choice but to cut jobs, since they’ll no longer be able to afford to pay their employees.
Indeed, they are correct in saying that regulations cost more. For example, if a power plant’s owners allow poisons and neurotoxins to run into a river, that costs them next to nothing. However, if government regulations require that toxins be stored in special containers and shipped to government-approved toxic waste dumps that keep toxins out of the general environment, this costs them a lot more. They must buy the containers, pay a company to haul them away, and pay for maintenance of the dump. If the power plant is in poor financial shape, this could force the owners to cut some jobs. Although, if it’s in good shape, the jobs will remain, since the plant needs all of its employees to service its customers. Here’s what the Republicans fail to tell us: Either way, the money the plant pays in obedience to the regulations goes to other U.S. companies; it does not leave the economy. This money creates jobs that build and maintain the dump, manufacture the containers, and haul the containers away. Thus, the regulations create jobs; they don’t destroy them. Some businesses may be worse off thanks to regulations, but remember that they were enriching themselves at the expense of others, anyway. So they don’t deserve that money. Also, without the regulations, many of these businesses would simply pay the money saved to their owners who are likely to sock it away in commodities or investment gambling rather than create jobs with it.
3) For every regulation we add, we must take one away.
“The impact of any proposed new regulation must be offset by removing another regulation of equivalent cost.” This is a quote from Mitt Romney while on the campaign trail in April of 2012. Out of concern that government regulations cost the corporations he represented too much money, he and other Republicans have proposed that we simply refuse to add any more laws that protect us from the harmful effects of greed; if we do, we must remove existing laws of equal cost.
Since regulations are simply laws that pertain to businesses, it makes sense to imagine how such an approach would work if we applied it to laws for individuals. For example, in recent years, Americans tend to disapprove of texting while driving, because it causes deadly accidents; therefore, many states have made it illegal. So if we apply the “if you add a law, you must take one away” principle, then we would have to simultaneously make drunk driving legal in order to keep the number of personal laws from increasing. This, of course, is absurd. The reason the new texting law has to be added is because a new technology came along that enabled people to endanger one another in a new way. Offsetting this new law by legalizing drunk driving simply increases the number of road deaths. This defeats the purpose of having laws, which is to protect people from the harm caused by those who throw caution to the wind. The only way to keep road deaths low is to add the new law without repealing the old ones. The number of laws is not important here; the well-being of people is.
In the business world, not only must we protect ourselves from a financial industry that never stops scheming to get people’s money, but in North America, over 1,200 new chemicals are developed each year. Manufacturers continually add new, potentially dangerous chemicals to cleaning agents, pesticides, beds, cosmetics, and, of course, food. In addition to that, businesses continue to invent new technologies, which, like weapons, can be used for good or for harm. Imagine if our government had adopted the “for every new regulation, take one away” mantra before the computer age, or the television age, or the automobile age. We would have no speed limits, drivers’ tests, minimum driving age, drunken driving laws, standards for vehicle safety, or requirements to stop at red traffic lights and stop signs, because adding these regulations would have supposedly added to the size of government and limited our freedom.
4) Regulations take away our freedoms.
This is a statement designed to appeal to the lazy mind. If you don’t think about it, it makes sense that the more rules we have, the less freedom we have, since rules take away our freedom to do whatever we want. What conservatives fail to realize is that regulations, which are nothing more than rules for businesses, actually increase our freedoms, as well as the freedoms of businesses to prosper.
Let’s go back to the life insurance example I used in the Pure Capitalism chapter. Imagine buying a Whole Life policy at the age of 25 that will pay $200,000 to your family when you die. And let’s imagine that you pay all of the premiums over the course of 20 years, and then the insurance company goes bankrupt before you die, so that your family will never receive any benefits for all of the premiums you’ve already paid. You will have thrown away thousands of dollars and gotten nothing in return. If this were the norm in society, you (and most other people) wouldn’t buy life insurance, since doing so would be a risky gamble, because the insurance companies would have to stay in business your whole life in order for you not to lose all of your money invested in premiums. Without government intervention, the life insurance industry would barely exist, because no one would trust it.
Fortunately, government regulations have come to the rescue. First, as I previously stated, all states have guarantee funds that pay your claims if your insurance company becomes insolvent. But that alone would not be enough to save the industry. It would be easy for companies that behave irresponsibly to exploit the guarantee fund for the sake of excessive short term profits. For example, a company could specialize in charging high premiums to high risk customers (those with health conditions that make them likely to die within the next few years), pay out enormous profits to themselves in the short term, and then declare bankruptcy when the claims come due. They would then walk away with millions, while the insurance companies who’ve behaved responsibly would pay the irresponsible company’s claims through their mandatory contributions to the guarantee fund. This scenario would have the effect of driving up the cost of insurance for everyone, and it would encourage companies to behave badly in order to come out on the winning side of the guarantee fund. In fact, companies who behave responsibly would probably leave the industry out of frustration over the fact that they have to fund the claims of those who behave irresponsibly.
This is why states have heavily regulated the insurance industry. Their regulations keep the insurance companies solvent by requiring that they follow ethical practices. These regulations, combined with the guarantee fund, strengthen consumers’ trust in the industry and its products, so that the industry has the freedom to thrive, while the consumers have the freedom to buy the insurance they feel best fits their needs.
Ask any Republican politician about a scenario like the one I just described, and they will likely reply that they don’t oppose regulations like these. And they are correct. This is why Republicans don’t abolish these regulations when they have control of federal, state, and local governments. The Republicans, whether they admit it or not, understand that many regulations are good for business. What Republicans oppose is not all regulations, but regulations that might limit the profitability of the handful of industries that control their party – namely the oil, coal, and gas industries, the banks, the pharmaceutical industry, the defense contractors, and a few others. When Republican politicians and pundits say that regulations take away our freedoms, what they really mean is that regulations take away the freedoms of big industries to hurt consumers, employees, the environment, and sometimes even smaller competitors for the sake of even greater profits.
5) Government must not increase regulations or taxes unless waste and fraud are eliminated.
Would you refuse to heat your home if you found that three percent of the heat escapes through windows and the opening of doors?
If so, stop heating your home! Almost all homes allow more than 3% of indoor heat to escape. For some, the number is probably closer to 30%. So why do you still choose to heat your home? It’s because staying warm is of far greater importance to you than eliminating all waste and inefficiency. You know that some waste is inevitable, so you do the best you can to minimize that waste. But you pay for heat despite the waste, because your body needs warmth to live.
In 2013, we learned that the Pentagon wasted $1 billion of taxpayer money on a logistics support system that never materialized. This waste reminds some of us of the $600 toilet seats and $400 hammers the Pentagon purchased in the 1980s, during Ronald Reagan’s presidency. So do we cease to have a national defense because of government waste and inefficiency? Of course, not. That would be suicidal! We need a national defense!
Likewise, our nation needs to tax its people to pay its bills. It needs agencies to regulate and inspect businesses for the sake of our protection. The Republican argument that we must eliminate or reduce these, because of bureaucratic waste, is downright absurd. Waste will always exist. There will always be inefficiencies. We must do the best we can to minimize these. I think both parties agree on that. Unfortunately, the cost of completely eliminating waste is often more costly than the waste itself, because it often requires micro-management, which means hiring more government workers to oversee the government. Nonetheless, government agencies must continue to do their jobs, regardless of waste, because the well-being of people is of greater importance than the elimination of waste and incompetence.
It’s on this last point where the parties differ. Republicans desire to eliminate many necessary institutions in the name of waste reduction.
Generally speaking, Democrats care about needs; Republicans care about nuisances. Democrats care about people suffering from lack of food, shelter, and medicine. They care about children getting an education and having a fair chance to live a life fitting for someone created in the image of God. They care about protecting workers, consumers, and the environment from disease-causing toxins, physical dangers, and thieving scams. Republicans care little about these things. Instead, they care about the nuisance of having to pay taxes or the nuisance of having to do paperwork required by regulations. They care about the fact that government is sometimes inefficient, corrupt, or incompetent. Yet when Republicans totally control government, as they did for 6 years under George W. Bush, these nuisances fail to disappear. If anything, Republicans have made government more corrupt. History has proven them to be guilty of this past century’s worst scandals: Teapot Dome (Harding), Watergate (Nixon), Iran-Contra (Reagan) and the Iraq War (Bush). So how can they insist that those who oppose corruption vote for them?
Republicans have also made government more incompetent by underfunding agencies and underpaying government workers. Then when their budget-slashing causes problems, they effectively say, “See! We told you government is incompetent! Vote for us! Because we hate government!” If you vote Republican because you hate government waste, fraud, and incompetence, you may want to ask yourself if they’ve ever made much progress in eliminating them when given the chance.
6) Free enterprise is more efficient than government.
This may be true (although I’ve worked for some incredibly inefficient corporations). But it’s beside the point. It’s just another distracting argument. Few Democrats argue for socialism in which the government owns businesses. Most of what the government does, free enterprise cannot do. Free enterprise cannot run our law enforcement and judicial system. If it did, corruption would abound, and the wealthy would rule far more than they already do. If free enterprise ran agencies like the EPA, OSHA, the FDA, and the SEC, they would be useless, because the business community would effectively oversee itself.
Even infrastructure, which has historically been built by government, has sometimes been turned over to private ownership with disastrous consequences. Such was the case with the Ambassador Bridge that connects Detroit to Canada. The government had allowed the bridge to be privately owned, operated, and maintained after it was built. In 2012, Detroiters got to vote on a proposal to let Canada build and pay for a second bridge that would shorten commutes for citizens living on either side. However, this would mean decreased tolls and profits for the owner of the Ambassador Bridge. So he launched a fear-driven add campaign to get the people to vote against the second bridge. Fortunately, the majority of people did not fall for it. Nonetheless, this proves that private ownership of infrastructure can work against the common good, because private interests can stifle competition by manipulating the government.
7) Our government is power hungry.
Imagine yourself as a major shareholder or executive of a company that’s profiting at the expense of the well-being of others. And imagine that U.S. citizens want to elect leaders willing to pass legislation to stop you. Will you stand idly by as you’re in danger of losing millions of dollars for the sake of humanity? Your greed simply won’t let you do that. You, and all other corporate predators facing similar challenges, will use your wealth, power and influence to place politicians in government who look out for your interests. This may include encouraging those who represent your interests to run for office, donating to their campaigns, and backing a propaganda machine that distracts the public from your power grab by accusing the government of being power hungry. Such a campaign may claim that Democratic politicians are power hungry control freaks who want to take away our freedoms like Hitler would.
But does such a claim have any basis?
How much power does a congressman really have?
In order for a congressman to exert his power through legislation, he must get 217 House representatives and 51 senators and a president to agree with him. That’s not much power at all. The checks and balances of our system limit individual power among government officials.
One might argue that congressmen enrich themselves with bribes and kickbacks. Indeed, this happens from time to time. However, as we learned in the Rob Blagojevich scandal (in which he tried to sell a vacant Senate seat), the penalties for such crimes are significant. He was sentenced to 14 years in prison. Most politicians are unwilling to risk so much just for extra cash.
Only through working together as a political party can politicians have a lot of power. But even then, it’s not really the politicians who have the power; it’s those who control their party. In the case of the Republicans, that appears to be big industry. The corporate wealthy can appoint their representatives who vote for their interests. Of course, who knows their interests better than politicians who come from the corporate world? Not only will they vote for the interests of their peers, but they can campaign as “job creators,” and thus, distract the populace from their true agenda.
In the 2012 election, coal industry executive and multi-millionaire Bob Smith (R) ran against incumbent Bob Casey Jr. (D) for a Senate seat in Pennsylvania. Bob Smith was a Tea Party “job creator” who railed against big government. In some of his campaign ads, he said he favored changing the law so that if Congress could not agree on a budget, congressmen wouldn’t get paid. They would forgo their salaries.
At first listen, this sounds good to the average voter: it’s the job of Congress to pass a budget, so if they don’t do their job, they don’t get paid. But upon further examination, Smith’s idea was really a plot to give the upper hand in budget negotiations to wealthy congressmen from the corporate world. Congressmen who come from a public service background, or who have little wealth, need their congressional salaries to support their families. Wealthy corporate executives and investors who become congressman need no salaries, since they are already wealthy. This gives the wealthy Republicans power over middle class Democrats in budget negotiations. If the Democrats want to eat, they have to give in to the Republicans.
Politicians from the corporate world have numerous ways of paying themselves. They often use the government to enrich themselves and the big business owners who fund their campaigns. First, they vote for massive tax cuts that can add millions of dollars per year to their wealth, so their enormous tax savings dwarf their congressional salaries that only pay them thousands of dollars. Someone like Bob Smith might vote to remove safety and environmental regulations from the coal industry at the expense of the environment and the safety of workers – all in the name of greater profits for himself. And, of course, politicians can vote for the government to give money, in the form of subsidies or contracts, to businesses they own and invest in or that fund their campaigns.
Corporations excel at one thing: manipulating their environment to maximize their riches. Therefore, corporate executives elected to government excel at one thing: manipulating their environment to maximize their riches. That environment is our government. “We the people” have a choice: We can elect officials who represent our interests, or we can elect officials who manipulate the government to benefit the wealthy. When we elect these anti-government types from the corporate world to run the government, it’s like electing a mobster to run a police department. A mobster will weaken and corrupt the police department so it’s unable to protect the city from the mob. If the mobster police commissioner is particularly sly, he may even manage to turn the city’s population against the police, giving the mob even more power to do evil and freeing it from the only force that can protect its victims.
8) Big government increases corruption.
This argument implies that small government prevents corruption. History shows this not to be the case. One of the most corrupt politicians of all time was William Magear “Boss” Tweed. He was the head of New York’s Tammany Hall political machine in the 1860s and 1870s, the supposed good old days of small government. Yet it was the small government environment of that time period that enabled Boss Tweed to have so much power. On multiple occasions, Tweed used his power to legislate advantages for railroad magnate, Jay Gould, who, in turn, gave Tweed a major share in his companies. Tweed served as director of numerous businesses and manipulated government to serve them. In 1877, Tweed was convicted of stealing between $25 million and $45 million tax payer dollars through his schemes. This is over a billion dollars’ worth of money today.
Tweed was not the only corporate manipulator who changed laws to place competitors at a disadvantage. In 1890, the Republican-dominated Congress, led by Senate Finance Committee Chair, Senator Nelson W. Aldrich, passed the McKinley Tariff, which eliminated the Sugar Tariff on imported sugar. They did this, because the Sugar Trust in the Deep South wanted to weaken their San Francisco-based competitor, Claus Spreckels, who sold cheaper sugar that he imported from Hawaii, which was exempt from the old tariff. The Sugar Trust imported their sugar from Cuba, which was not exempt from the tariff. Since shipping sugar from Cuba was cheaper than shipping from Hawaii, the Sugar Trust was back on top once the tariff on raw sugar was eliminated. That however, cost the government about 50 million dollars per year in tariff revenues. Add to that the permanent subsidies the government had committed to pay the Sugar Trust as part of the deal, and the U.S. government went from having a budget surplus to having more than a 100 million dollar per year budget deficit (note: the Sherman Silver Purchase Act of 1890, which committed the government to buy 50 million dollars’ worth of silver per year from American mining companies also played a major role in the deficit).
Notice, again, how politicians with close ties to the corporate world are the most corrupt. When government fails to police corporations, corporations control our government. When we vote for politicians who have close ties with the corporations, like Boss Tweed, Mitt Romney, or Tom Smith, we vote in favor of corruption. Corruption existed in the past; it exists today; and it will exist in the future. While it’s difficult to quantify how much corruption existed in any given period, it seems to me that it was worst in the past when government was small.
Contrary to what small government conservatives tell us, corruption often finds state and local governments to be the path of least resistance. Today, more than ever, voters pay little attention to local and state politics, because their eyes are fixed on the national media. Local newspapers are practically gone, leaving voters less aware than they used to be. But even before the demise of local print media, local government corruption managed to fly under the radar.
Take, for example, the sewer scandal of Washington Township, Berks County, PA, where I grew up. In the early 1990s, when I was away at college, homeowners throughout the township received notice that they would all have to pay about $8000 each to install a sewer system in a mostly rural township in which everyone already owned septic systems for which they had already paid. How did this happen? The township leaders, working closely with the contractors who would profit from the mandatory sewer system installations, voted it through without notifying the township’s residents. Why didn’t residents object at the meetings? Because they didn’t attend the meetings. I once attended one as required by my 10th grade social studies class, and what I observed was a boring, tedious gathering of a few old men in flannel shirts. Few people want to repeatedly endure such boredom. That, along with the fact that most people are busy raising their families, keeps people from getting involved with local government. Conservatives may argue that we should get more involved. But the reality is that people don’t, and often, those who do are business people looking to manipulate local government for personal profit.
The state level of government, while more in the public eye, is still more susceptible to corporate influence than the federal government is (although, the federal government is certainly not immune). Take, for example, the asbestos dump in Valley Forge National Park. How did a toxic dump wind up in the middle of this national treasure? According the National Park Service website, “PA [Pennsylvania] permitted Ehret [the asbestos dumper] to dispose of manufacturing waste routinely by pumping it through a slurry pipeline into the former limestone quarries in the State Park.” Valley Forge was a Pennsylvania state park, and the state allowed this asbestos dumping from the 1890s to the 1970s. In 1976, the federal government made Valley Forge a national park. The National Park Service then prohibited further dumping, roped off the site, and has since been in the process of cleaning it up.
Of course, this clean-up has been at the expense of tax payers. Ehret can’t pay for it, because they are no longer in business. Even if they were, they would not be liable, since the state made it legal for them to dump there. To sum it up, Ehret got rich, while the taxpayers cleaned up their mess. And all of this was because state governments are even more easily corrupted by corporate power than the federal government is. Both left and right wing national media organizations, especially those that millions of us watch on TV, fix all eyes on the federal government in an attempt to dig up dirt on the politicians they want to defeat in the next national election. If the U.S. Congress tries to sneak corruption past us, there’s a good chance we’ll find out about it. But few people are watching the state and local governments; and that’s the way corporate corruption likes it.