Commentary—

The Bottom Line Is Regulation

By Kelle Louaillier

It is no secret that today’s politics are driven, by and large, by crisis.

There are those like the “Social Security crisis” that were manufactured to support the case for privatizing Social Security and making the Bush tax cuts permanent.

There are also those like water scarcity, natural disasters, and hunger that legitimately demand our immediate attention and a deep commitment of resources. Unfortunately, all too often these commitments take a back seat to the crises of political invention.

In the midst of today’s financial crisis (which, bailout or no, is affecting us all) it is instructive to look at the relationship between these brands of crises, how one often begets the other, and how this relationship must be undone if we are to make real, systemic progress.

The energy crisis is but one example.

During the 1980s and early 1990s, energy corporations warned of a looming crisis of availability. They blamed government waste and the inefficiency of public utilities.

In fact, there were no indications at the time that public energy utilities were unfit to provide for the nation’s need.

In time, energy utilities were privatized, and the laissez-faire ethos that facilitated the handover also facilitated the rewriting of laws to limit oversight and accountability.

The result, as we all remember, was another invented crisis — an energy shortage — which led to rolling blackouts, rate hikes, and speculation that eventually cost Enron shareholders millions of dollars and thousands of employees their jobs.

The banking industry of the 1980s was no different, predicting a recession if the markets were not unshackled from the burdens of regulation.

And though the reasons for the ultimate savings and loan scandal are complex and disputed, most scholars agree that rapid deregulation and lax oversight paved the way for the greatest banking disaster since the Great Depression.

Now we are in a far greater, foundational crisis, a trapping of this same cycle.

This election year, the crisis rightly had candidates of all ideologies calling for accountability and reform.

But we must be careful that the action we take now does not spark our next crisis.

In the rush for answers, corporate interests are rushing to capitalize. The insurance industry, for one, has already launched an aggressive campaign to limit its accountability to consumers.

And in a political culture where a central function of government is to facilitate market opportunity, competition, and innovation, the crisis has already caused an unprecedented consolidation of banking capital.

Wealth concentration in this country has always pushed more and more people to the margins, and this debacle promises the same.

To break the cycle of crisis, our newly elected leaders will need to take the accountability they speak of and demand it across all industries. But most of all, they will need to stop demeaning the value and place of government in society. Tough, effective regulation of big business is the means by which the greater prosperity of the country is protected against the narrow economic interests of a handful of transnational corporations.

Whether our new leaders are initially up to the task or not, we’ll have our work cut out for us in the months ahead. They will only manifest our will if we demand it.

(Kelly Louaillier is executive director of Corporate Accountability International.)