Bring the Sheriff Back to Town

A whole lot of us thought deregulation was the way to go when our hero Ronald Reagan made it a pillar of his campaign in 1980. After all, wasn’t free enterprise the American way, something to be taken literally? And with less government interference, business people would just naturally be freer to lead us to prosperity, and wouldn’t that be wonderful?

So we ran roughshod over what we saw as a misguided regulator crowd. Laws were changed. Officials were admonished to be kinder and gentler to the very guys they were supposed to be watching, because, after all, American business leaders could be trusted. And, of course, private enterprise does everything better than government. It can even regulate itself, we were told.

Well, American business leaders can be trusted. Their job is to operate efficiently and maximize profits for their shareholders. They can be trusted to work hard to make their operations successful. There is nothing wrong with that. Without guidelines about what is permissible, though, financiers and business people face too much pressure to produce large short-term profits, and do it quarter after quarter. That was part of the problem when we went overboard with deregulation. Caution became a dirty word. Many individuals crossed the line and committed fraud. Others had no ethics to begin with, and gleefully took advantage of the new deregulated situation.

Somewhere along the line, we forgot the lessons of the not-so-distant past. Government programs that did work in combating effects of the Great Depression included considerable regulation of our financial institutions. That inspired confidence, which along with wartime spending, lifted us out of economic disaster. In the late 1980s we should have learned the lesson again when relaxed regulation of Savings and Loans created an expensive bailout crisis. We quickly forgot about that and went on our merry deregulation way.

We ignored two very fundamental things about human nature. First, like it or not, greed is a major motivator of Homo sapiens. Second, many of us like to think we are considerably smarter than we really are.

Let’s face it; most of us simply do not understand the complexities of high finance. We haven’t a clue about what’s going on with derivatives, hedge funds, credit-default swaps, and exotic mortgage-backed securities. Hedge fund managers don’t even reveal how they are investing the money entrusted to them! Investors are supposed to just have faith.

Ignorance about high-level money matters is not confined to the middle and lower classes. The wealthy often don’t understand sophisticated financial deals, either. They, however, can hire accountants, lawyers, and other expensive advisors to protect their interests and make big profits for them. We common folks simply are unable to do that. We have neither the money nor the contacts.

We are the minnows in the financial pond. It should come as no surprise that the big fish just ate a whole lot of us little fish. They almost always do. This time, we suffered the additional indignity of being forced to pay the costs of the meal.

We must empower our government to closely monitor and regulate our financial institutions simply because we cannot protect ourselves from greedy executives and the predators who are ever-ready to pick our pockets to benefit themselves or their clients.

We need to get the sheriff and a whole lot of deputies back into our financial community right now. We need to back them up by restoring many old regulations and creating some stiff new ones, and we need to cheer them on as they round up the wrongdoers and hang them high. We need enterprise that is both free and fair.

Bring in the Clowns

There it was, right on the front page of my morning paper, a direct quote from one of our brilliant Utah politicians commenting on a proposed bailout of national financial institutions:

"I don't believe this crisis has been caused by an unregulated market. In fact, the free market probably hasn't been given enough of a chance to perform."--Congressman Rob Bishop

No wonder we so often are the laughingstock of the Nation.

A Crisis, For Sure

A whole lot of disagreement has been swirling around regarding the state of the U.S. economy. It's been a little hard to really know who's doing what to whom. For some time our president was claiming that the fundamentals of our economy were sound, but even he lately agreed we have some big problems.

Just yesterday, I encountered indisputable evidence that we are in an economic crisis of the most desperate kind.

During my 26 years in the U.S. Forest Service, we often referred to the outfit as the "Forest Service family." That was not a corporate invention of some public relations practitioner. There really was a family spirit throughout the organization.

Employees at all levels did what they could to help each other out. It was almost a requirement to invite visitors from other locations home for a meal with one's "real" family. Supervisors often hosted their subordinates at group dinners or parties as a kind of "thank you" for good work, especially around the holidays. Groups of employees frequently socialized after hours at restaurants or taverns. For some, the organization was the hub of their social as well as working lives.

Part of the mutual help was sharing knowledge of where to get the best bargains on just about anything. If you wanted to find the most inexpensive place to get decent restaurant food in almost any city, you could tap into the Forest Service underground network and the favored spot was described for you very quickly. We were known widely as tightwads. I will admit to that, although I like "careful spender" better.

Some years ago as a combined birthday and Christmas present, I took Sandy along when I had to make a week-long business trip to San Francisco. While I was in meetings, she had a great time taking the various tours available in that wonderful city. One was with a prominent chef who took a small group to lunch at favorite restaurants over several days. Sandy then took me to the best places for evening meals.

The first time we did that, she extolled the virtues of one Chinese restaurant that her host chef had proclaimed the best value in a city famous for that type of food. When we got there for dinner, there was a line waiting to get in that stretched about halfway around a city block. We had to pass all the waiting diners to take our place at the end of the line. Every single Forest Service man and women who had been in my meeting that afternoon was in that line. All had tapped into the value network.

What does that have to do with confirming that our economy is in the toilet? Yesterday, I had coffee with a group of Forest Service retirees in North Ogden. They have been meeting for years on Wednesday mornings in McDonalds, because the purveyors of Big Macs and other health food would sell a cup of coffee to a mature adult for 27 cents. Unlimited free refills were available. These guys knew a good deal when they saw one.

We were horrified to learn that next week McDonalds is increasing the price of a senior coffee to 40 cents. We old Forest Service family members were in total agreement that failed financial institutions and rising gas prices were indicators of problems, but a 60 percent increase in the price of our McDonalds coffee was conclusive evidence of an economic calamity.