Better Regulation of Business Will Be Necessary as Population Explodes and Energy Prices Rise

Big corporations are like big sharks.  They’re not evil.  They’re just eating. I read this clever observation several years ago on CDBaby, and had the immediate realization that WE have to swim with those sharks, and our shark cage (government) just isn’t protecting us like it once did.  On this, the eve of release of Michael Moore’s new movie “Capitalism: A Love Story“, I just have to write about the impact of capitalism on our future, and how we might possibly avoid sliding into an almost feudal state where a tiny upper class of owners dominates a huge but painfully poor mass of wage slaves. 

An unregulated business environment is “dog eat dog”, and the individual has no chance against huge corporate “dogs”. The capitalistic assumption developed in the 19th century that corporations are on a par with individuals makes less and less sense in our era of global-sized corporations, when there are hundreds of corporations with more financial resources than all but a handful of the very largest countries.  Recent U.S. government bail-outs of giant banking and insurance firms brought the phrase “too big to fail” to prominence.  It is a failure of government to allow any privately held organization to become “too big to fail”, and the results have been disastrous for huge segments of the population.  In the future, our government representatives need to understand that, for the good of the global economy, “too big to fail” is the same as “too big to be privately held”, and regulations need to be crafted to prevent corporations from ever being able to assert this condition again.

The simple truth is that business entities are directed at only one goal: making money. In a capitalistic economy, where businesses are in direct competition with similar entities and short term thinking predominates, it is difficult if not impossible for them to consider long term social needs even though, in the end, those needs may define their long term survival.  In the highly competitive modern business environment, however, the need for short term profitability almost completely buries the need and resources for any long term planning, let alone actions.  Like an elected politician, businesses respond primarily to their stockholders/owners, and secondarily to members of their core markets and sometimes to members of market(s) targeted for expansion.  Those are the people responsible for company profits, and their continued business is critical to profitability.  As the population explodes, too, businesses may more successfully pursue the old fashioned model of extracting the most profit possible from each customer, without concern that they might not come back.   This is a short-term way of thinking that smarter businesses transcend, for as W. Edwards Deming taught us, repeat customers are the essence of lasting business success.

Naturally, business entities are narrowly focused on their own markets. Unfortunately, this sub-optimizes the benefit the business provides to society as a whole.    It is this sub-optimization of benefits, along with short term thinking, that creates the need for an over-arching body, a government, hopefully elected by the general public so its members have incentives to ensure the common good, which can regulate business in a way that mitigates the natural tendency to work in ways not benefiting society as a whole or harming it.  In my experience, every major economic upheaval has been preceded by lax regulation of at least one sector of the business economy, and economic interest has been detectable as a motivator of virtually every political upheaval (including wars) as well.  For this reason I see well-balanced, well-considered government regulation, applied by a democratic system, a prerequisite for a stable and sustainable economy, and a relatively stable and peaceful political situation in the future.

The core infrastructure of an economy must be regulated for the common good. The regulation of the energy and banking industries will be required to ensure anything approaching general prosperity and peace.  These economic infrastructures form the platform for the success of all other economic activities.  It is unfortunate that profit is the basic charter of corporations, and that only particularly savvy top management can impose additional strategy so that these organizations will behave with some social responsibility. Banks and other financial corporate entities can create huge crises in the unthinking pursuit of profits, and energy companies, destined for ever greater power unless and until steps are taken to favor more distributed “back yard” energy generation, will likely be more influential in our economic and political spheres over the next few decades.

Conflict of interest is the common factor that we all must be alert to, and work to eradicate. The conflicts of interest that come with the need for profit present problems that our governments will have to continue to address.  Ecological responsibility will increasingly become a theme of our lives, and corporations are not necessarily going to understand the value of social responsibility to their future profitability, so it must be pushed into laws and regulations, and that requires each of us take action.  Corporations, with their great financial and political power, will fight back, unfortunately, but each of us has a voice in a democratic system, and it is up to us to constantly use our voices, and to learn and work to more effectively be heard by government decision makers.  I urge everyone to use the internet to connect with those interests of greatest importance to you, and push for regulations that optimize the good of all instead of the profits of a few.

As always, I welcome your comments.


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