Whatever Happened To Self Regulation?

Lately the term regulation has come in for much opprobrium.  As in "Federal regulators failed to . . ." well regulate.  Think BP and that oil spill, of which much later.  Or "the regulator has been captured by . . ."  Fill in the name of the industry.

Seldom are the regulated lambasted to the same degree.  Long ago pollution, no less destructive then, is excused as a common lawful practice back when most everything was just dumped.  Only the "slow" cleanup is condemned.  Egregious practices that cause regulators to make new rules ought to be the subject of shamefaced public apologies.  Instead, the new rules are deemed new burdens on business that raise prices and "distort" markets.

Must every business cut corners? Is the legal mantra, “my client admits no wrong doing,” while paying a laughably low fine, no cause for shame when the local Chamber of Commerce meets? Is your Better Business Bureau a toothless sham?. Is enticing customers to collude in a rip off of third parties, including the government of all of us, now an acceptable business practice?

Private for profit colleges seem to think so. Realtors and mortgage brokers, too. They are only the latest, and won’t be the last these days. The phrase, “business ethics,” is a pure oxymoron. Customary business behavior has become at best amoral. Honesty it seems doesn’t pay.

Remember the savings and loan industry of a few decades back? It convinced Congress that the mundane business of investing FDIC insured savings in affordable mortgages was much too dull. Riskier investments with other people’s money was the ticket to riches and were needed to compete with money market funds free to offer uninsured savings at higher interest. That was the modern beginning.

More recently securitized mortgages and so-called credit default swaps – really insurance policy pools without reserves – were misrepresented and oversold around the globe by Wall Street with consequences still running their course. Securities rating agencies, those yesteryear bastions of probity, were bribed into complicity. Where in this scruffy line up is one trustworthy actor?  Name one law designed to clean up these dodgy practices that isn't considered a "regretable curb" on somebody's free market.

Leaving the “Masters of the Universe” to their own devices, what about those revered gentlefolk in scrubs, the medical profession? Study after study shows that lucrative practices easily trump best practices. Doctors and hospitals infect and even kill us by the thousands by cutting such petty corners as hand washing. Your local medical association is a club that protects its own by officially ignoring malpractice -- informal insurance that members don’t have to pay expensive premiums to enjoy.

Meanwhile, down on the factory farm, those honest sons of toil, the agribusinesses, pump farm animals full of antibiotics so they can fatten better in hellish pens while spawning whole species of super bugs even our drug enhanced immune systems can’t kill. Their concentrated animal waste then seeps into ground water, then into rivers, to roll out to lakes and seas, spawning algae blooms that suck the oxygen out of the water and leave behind lifeless dead zones where an abundance of fish and shell fish once thrived.

Equally damning paragraphs could be written about the sharp practices of coal mines, utilities, nursing homes, most professional sports, law firms, insurance businesses, paper mills, drug companies, chemical plants (whatever happened to Superfund?), construction companies, fishing fleets and, last but not least, the energy giants.

Who can forget BP and its contractors? How much of the $20 billion the feds made them set aside has been paid out to the Gulf fishing and tourist businesses their greedy haste devastated? How many unpaid claims are outstanding? Is the media watching, or is it too busy with Casey Anthony and Tim Tebow or their instant news cycle successors?

Government regulators can hope to do their job only if ethical business practices are the norm, when cheaters are few and stand out because they are called out by their peers. I can think of only one business that is consistently ethical and also self regulating: professional golf.

Maybe if Arnold Palmer would leave retirement and run the U.S. Chamber of Commerce we might get somewhere. How about Jack Nicklaus for chairman of Standard and Poors? At least they are habitually honest.

Update: 27 April 2013

Golf, too, has shamed itself of late.  At least Tiger Woods didn't win The Masters this year at hallowed Agusta National.  Of course he should have disqualified himself for what he says was an inadvertant illegal drop.  But he played on and responsible officials let him.  You see without Tiger on TV viewers vanish and ratings and revenue drop.  So a clear rule was bent our of shape and the Tiger band played on.  Very sad.