Corporate Corruption in Political Congress
Let's play a simple game. What do Enron, Arthur Anderson, ImClone, WorldCom, and Vivendi all have in common, besides the obvious reduction to penury?
Each was decimated by corrupt business practices. +1 for getting that
Each is a rapacious capitalist corporation. -1 for that. Keep trying.
Each is a rapacious American corporation. -2 for that. You're hopeless.
Each operates in some of the most highly regulated business environments on the planet. Ding, ding, ding, we have a winner!
Why is it that far-reaching and rampant corruption seems to occur in those companies and industries that are most closely watched by various governments? After all, Enron is in the energy business, which is hyper-regulated. Arthur Anderson's accounting business is highly regulated, with the arcane rules and licensing practices mandated by the government. ImClone is a drug company, whose very existence was subject to the whim of the FDA. WorldCom is a telecom company, which are severely regulated, let me tell you. I'm a veteran of that business, and you can't fart without a government bureaucrat's say-so.
Then, we come to Vivendi. The latest greatest collapse. But what industry are they in that is highly regulated? For Vivendi it is not the industry, it is their origin. They are not a US company, they are a French company. They operate under one of the most stringent regulatory systems in the developed world.
So why is it that all of this government oversight failed to prevent this kind of thing? And why is it that companies in less regulated industries, such as Xerox, make accounting "errors", fix them, and go on about their business without collapsing?
The answer is easy. Corporate avarice corrupts government. Government avarice corrupts business. We need to stop trying to use the government to regulate, and instead use the market to moderate. How long would Arthur Anderson or Enron have gotten away with their shenanigans without a bevy of government regulators to prop them up? We need corporate transparency, simplified taxation, and strict enforcement of contract law. With those, the market would have been able to correct Enron or Arthur Anderson, without the financial disasters that we have now.
Regulation breeds corruption.