Accountability

When regulators do not believe in regulation – Updated

I began writing an article about tobacco companies convicted of multi-billion dollar fraud through smuggling schemes to escape punitive taxation of poisonous products sold to slow-witted youth and the addicted. I thought this was a perfect example of corporate morality, or lack of it, and demonstrated how wrong the BC Liberal government is to allow self-regulation in resource activities.

I was going to complain about BC Liberal’s mock transit experts spending $171 million to save $4.38 million annually in fare evasion while they slash the budget for protecting the environment, the regulation budget that declined as need for regulation increased. Does not this perfectly demonstrate Gordon Campbell’s attitudes? Tighten the screws on poor people riding transit while loosening the bonds on industrialists and resource exploiters.

I see a painful divide where the BC Government treats the weak badly and the most well off citizens, even non-residents, harvest an ever-greater share of provincial wealth. At my age, this is not a cry for changes to benefit me. It is a message to people that British Columbia is capable of so much more. The spirit of our people on the streets during the Olympics demonstrated a capacity to share and spread joy. We cannot let the greedy impose a hierarchical society that will ultimately result in destruction.

As written here previously, Nobel winning economist Paul Krugman warned about, “dangers created when regulators don’t believe in regulation.” Does that apply to Gordon Campbell’s troops? Well, yes and no. To rephrase WAC Bennett’s statement about socialism, BC Liberals believe in regulation when necessary but not necessarily regulation. Campbell and his clients in commerce and industry value regulation in certain circumstances. They despise it in others. We know that Liberals don’t operate according to principle or philosophical commitment, they are the party of special interests. In the land of greased palms, theirs are the most oily.

For example, government maintains many products sold to consumers at high prices through supply management schemes. Anyone wish to grow cranberries? Those sour little price-controlled berries are grown in BC only by multi-millionaires. Without sufficient wealth, you are limited to growing your own in a backyard garden. The high costs of quotas established by government preclude new commercial growers. The Environmental Law Centre at U Vic concluded:

. . . the supply management system in BC creates legal barriers for local food production and distribution because small-scale, local producers cannot afford or obtain quotas to produce their goods, particularly when competing with large, corporate producers.

Of course, that is one form of regulation favored by many in business. Professional trades provide other examples. Experienced consultants could incorporate a federal or provincial company inexpensively but, without being a lawyer, would soon be in trouble. Provincial laws protect other professions including physicians, engineers, accountants, teachers, notaries, etc.

We cannot buy a transmitter and start broadcasting television or radio or offer satellite internet access or movies. We cannot import French cheese or small-batch Kentucky bourbon to resell without satisfying restrictions. Actually, you can never import French cheese because quotas are in the hands of a few wealthy eastern importers who exercise unassailable franchises, kept exclusive and valuable by well-rewarded federal politicians.

If there are scientific tax credits, tax rebates, subsidized financing, property tax holidays, grants, research aid and other corporate welfare, business is happy with government activities. While big business enjoys regulations that limit competition and maintain high prices, the worms turn if regulations interfere with profits. The mantra has been, “Reduce cost, gain efficiency. Trust us. Allow self-regulation.”

We all understand the bitter fruit of financial deregulation. Whether in London, New York, Hong Kong, Singapore or Zurich, massive financial institutions trembled or crumbled while ordinary people funded government to provide backstops to ensure the rich stayed rich. The roots of disaster depended on a climate of deregulation. Businesses that said, “Trust us” proved unworthy of trust and pernicious conduct went unnoticed or ignored. Through undue influence in high places, most criminal and immoral acts remain unpunished.

Have these trillion dollar catastrophes taught anything? We should have learned that, when fortunes are at stake, few humans can be trusted to act appropriately without oversight. Business will not operate exclusively in the public interest without regulation yet Canada has the weakest anti-competition laws in the developed world. After the largest, wealthiest, most established international financial empires proved themselves without morality, we can never rely on industrialists to protect Canada’s environment without careful monitoring and public supervision.

Yet, Gordon Campbell and BC Liberals embarked on a program to allow unprecedented exploitation of provincial resources while inversely decreasing regulation, inspection and oversight. Evidence grows that open net fish farms destroy wild fisheries, sour gas poisons the air and hydraulic fracturing pollutes groundwater throughout gas fields, logging old growth forests devastates irreplaceable ecosystems and widespread power projects effectively privatize vast areas of BC wilderness.

A government trusted by few aims to remake the roles of public watchdogs. Instead of complying with existing law, the Liberals intend to change the laws. Before appointment as Premier, Campbell promised the most transparent and accountable government in provincial history. Instead, he lies repeatedly and follows courses opposite from those he pledged to follow.

Since Campbell will not depart voluntarily, his Liberal colleagues should remove him from office, not for the good of the Liberal Party, but for the good of British Columbia.

* * * * *

Further to the central thesis here that corporations cannot be trusted to operate in the public interest without close regulation, read the New York Times for information about the super-connected Wall Street firm – and major Canwest participant – Goldman Sachs.

Trust me, readers. These people knew what they were doing. So did John Paulson’s Hedge Fund, which made BILLIONS while suckers were going down.

We also have always worthwhile ProPublica weighing in on the major financial crisis fraud of 2007, before and after.

And, another of my favorites, Chicago’s This American Life gives us show #405: Inside Job. Don’t miss it.

ProPublica follows on with Other Major Banks Did Deal Similar to Goldman’s

I would appreciate being educated by any reader who studies the noted links and returns here to explain why citizens should maintain confidence in a deregulated economy and how the course being followed by BC Liberals is appropriate in today’s circumstances.

4 replies »

  1. Norman, if the VSun and Province had any guts they'd take your article and run on page 3…it's the most succinct analysis of everything wrong with the province and country I've seen in many months. Thank you for what you do, and your ability to speak for those who can't find the right words.

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  2. You are too kind Leah. Do not hold your breath waiting to hear ideas like this from pages of Canwest newspapers. Who is the editorial director anyway. Oh yeah, some ex Fraser Institute guy named Fazil Mihlar. This is not coincidental.

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  3. I heard a “highly respected” investment advisor tell a group of schmucks whose money he wanted that he could make more in a falling market than in a stable one so he loved chaos.

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  4. I hate what I see British Columbia becoming. The fox is guarding the henhouse in too many sectors now. As Leah said, thanks Norm for doing what you do. I am very disappointed in our MSM's repeated dropping of the ball on so many issues. Not in the public interest.
    Curly

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