Tuesday, April 20, 2010

Consumer protection as coal mine canary

Officials say it's too soon to pinpoint the exact cause of the tragic explosion at the Upper Big Branch mine in West Virginia that took the lives of 29 miners, but we certainly know enough to identify the root cause. It's the same cause that led to the 2007 Crandall Canyon mine disaster in Utah that killed six miners and three rescue workers. It's the same cause that led to the 2006 Sago mine disaster in West Virginia that killed 12 miners. And it's also the same cause that led to the Lehman Brothers disaster, the Citigroup disaster, the bursting of the housing bubble, and the implosion of our financial system: a badly broken regulatory system.

The loss of life at Upper Big Branch happened in one horrific instant. The economic collapse has not killed people, but it has gradually destroyed millions of lives. Both calamities occurred because elected officials who should have been creating a regulatory system that protects working families instead created a system that protects the corporations it was meant to watch over.


Regulations are "very difficult to comply with," and "so many of the laws" are "nonsensical." Those are the words of Don Blankenship, the CEO of Massey Energy, the company that owns the Upper Big Branch mine and has a grotesque history of safety violations.

In the case of the financial industry, the reason it can't be regulated adequately is because, as Alan Greenspan put it last week in testimony before the Financial Crisis Inquiry Commission, "the complexity is awesome," and regulators "are reaching far beyond [their] capacities."

That is, of course, exactly the way Wall Street designed it. To the financial world "awesome complexity" is a feature, not a bug.

Something else the mining and financial industries share: the revolving door between regulators and those they're supposed to be regulating.

Congressmen leave Congress to become lobbyists, they lobby their former associates in Congress to weaken the business oversight regulation which helps their corporate clients make more money. Meanwhile the little guy loses his home, loses his job, loses his retirement.  Oh yeah, people also lose their lives (not only in collapsed mines but also because they can't afford healthcare, either with or without insurance). But profits go up.  Bonuses go up. Stock prices go up.

I'm sure there will be new regulations written in response to this latest mining disaster. Just as we're about to get yet another grab-bag of financial regulations. But by the time these regulations make their way through the Congressional sausage grinder, the lobbyists will have added in the loopholes that ensure that the fix is in -- and that the American people get the short end of the stick. Again.

There is no sense of urgency in Washington about making sure these corporations play by the rules. In 2007, after the Utah mining disaster, we got angry, we held hearings, we supposedly fixed things, then we moved on. Three years later, 29 miners die. And the cycle starts again.

In the same way, in 2003, after the Enron and WorldCom disasters, we got angry, we held hearings, we supposedly fixed things, then we moved on. Five years later, we got AIG, Lehman Brothers, Citi, and an economic crisis that devastated -- and continues to devastate -- the lives of millions. Will we just sit back and let the cycle start again?

Disasters -- both mining and financial -- are going to keep happening until we re-evaluate our priorities, and force our elected officials -- and the regulators they pick -- to put the public interest above the special interests and their lobbyists in Washington.

Glenn Smith at Dog Canyon adds ... 

Capitalism has been the engine of our society and America has been its poster child in the world. The power of the market forces that drive capitalism has brought unprecedented wealth and success to our nation and much of its population. However like a growing fire that starts out useful and productive providing light and warmth and heat to cook by, unrestrained capitalism is quickly consuming all the available fuel and is shifting from being productive to becoming destructive. The root of this lies in raw capitalism’s core; its obligation to the bottom line. As a fire requires fuel, capitalism requires profit. When confined behind a glass shade and fed a slow supply of kerosene an oil lamp can light a room and make its inhabitants more productive, but if not controlled, that same flame can destroy the house and kill its inhabitants. Raw capitalism burns with the same power and we are quickly losing control.

Flames ripped through the mine shafts of the Upper Big Branch mine in a massive explosion. Those flames were fed by the explosive gases that were allowed to collect unventilated deep below the surface of the earth. The destructive force of that explosion bent steel rails, collapsed tunnels and shattered lives. Unregulated capitalism has bent our political system, collapsed our financial system and is shattering lives. It must be contained again within a robust and sturdy regulatory system. We need strong, well staffed agencies with the legal powers to manage the mining, the financial and food agencies among others. Additionally we need to douse the influence of lobbyists and industry insiders to ensure that our capitalism remains a source of light in our society and doesn’t consume us all in the name of greater profits.

And Arianna Huffington closes ...

The lives of hardworking Americans have to take precedence over the bottom line at Massey Energy and on Wall Street.

This isn't a matter of right vs. left. It's a matter of right vs. wrong.

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