Whether this view of capitalism comes from ignorance or conviction, it’s naive and misguided.
Let’s first agree that free markets and capitalism were never designed to improve society as a whole. After all, capitalism is built on individual self-interest; society was never part of the equation.
Milton Friedman, a conservative economist and a Nobel Prize winner, wrote a now classic article for the New York Times Magazine titled, "The Social Responsibility of Business is to Increase its Profits." Friedman made it very clear that the sole job of corporate leaders is to make money for the stockholders. Spending money on areas deemed socially good, but not required by law, is nothing less than defrauding the owners.
So, even when a business decision is socially harmful — hiring only part-time workers, reducing medical benefits, moving production to China, or paying less than a living wage — if it improves the bottom line and it’s legal, it should be done.
Of course, not all business owners feel like Friedman, but it’s useful to know that many do. And it is also important to understand that, besides being uninterested in contributing to society’s well-being, many companies have shifted costs to society — that’s you and me.
Before regulation, for example, our local tannery dumped waste chemicals in the river. Their ledgers showed no cost for disposal; however, communities near the tannery were left with a poisoned river, increased illness and health care costs, and perhaps lower life expectancy. Eagle Ottawa effectively transferred the cost of proper waste disposal to surrounding communities.
When the steel mills in Gary, Ind., made the air semi-opaque, their ledger showed no cost for the treatment of allergies, asthma, infections, emphysema and other diseases suffered by Gary residents. Before mining regulations, coal miners were disabled or killed by black lung disease and cave-ins because losing a miner was cheaper than investing in mine safety.
Did bottlers worry about their empty aluminum and plastic containers that littered our roadside and landfills? Nope. Someone else paid that cost.
Many Superfund sites represent businesses that walked away from an environmental disaster of their own making, leaving it to the rest of us to pay the clean-up tab.
Older adults will probably remember examples of regulations that were imposed because industrial accidents cost workers their limbs and their lives; because mills were bringing young children into industrial environments to save labor costs; because food and drug providers were less than scrupulous about animal cruelty, sanitation, labeling and benefit claims; because some companies became monopolies and set prices that a competitive company could never demand. This is all old news and should come as no surprise to anyone, so why are some people now presenting unregulated capitalism as sacred and a symbol for American values?
One of the most flagrant cases of selfish capitalism that disregarded the well-being of the entire country, even the world, occurred on Wall Street just a few years ago. While traders made billions selling subprime mortgages and their companies were shored up later by government funds, the country and the world fell into the worst financial decline since the Great Depression. As these companies profited from creating unworthy investments, pension funds and families lost their savings.
Few, if any, traders involved with subprime mortgages have come forward to express regret, and Wall Street firms have done little to avoid another disaster if the right conditions occur. Expecting brokers and investment firms to voluntarily protect society would be to ignore history.
Unfortunately, one outcome of pure capitalism is that those who act irresponsibly are rewarded with lower costs and greater profits, putting those who act in the community’s interests at a disadvantage. Whenever there is a payout for doing the wrong thing, something is amiss. Enacting regulations fixes this problem by creating conditions that ensure all competitors operate and deliver products and services within a minimum standard.
As a capitalist myself, I can imagine there are useless, redundant, outdated and costly regulations; but cries for deregulation are rarely specific enough to identify them. Hence, tea party organizations treat all government regulations as a reason to “take our country back!”
I suspect that those pushing the hardest for deregulation and labeling others as socialists and communists are just capitalists doing what they do best: looking after their own interests. If the tea party actually gets the world they seek, it wouldn’t be long before they want to “take their regulations back!”
Does anyone want to bet that, if regulations were removed, all capitalists would behave nicely? No, I didn’t think so.
— By Richard Kamischke, Tribune community columnist