PrintAugust 27, 2010
How to Regulate America Out of Business
Vladimir Lenin had a much simpler time of it. Following the October Revolution, he swiftly nationalized nearly all industry, commerce, and agriculture in the Soviet Union. Those who opposed the takeovers, such as those millions of small landowners known as the kulaks, were executed or sent to die in Siberia.
American leftists are far more civilized. Rather than send landowners and stockowners to Siberia, they simply raise federal and state taxes to combined marginal rates of 60% and subject the rest to estate taxes after the owner dies. If the owner fails to pay up, he is marched off to prison. Meanwhile, corporations are subject to another form of control: the tyranny of activists on government agencies that view the private sector as the means of social change.
The August 25 vote by the Security and Exchange Commission to allow large shareholders access to proxy nominations for board members is a perfect example. In effect, the new regulation encourages environmentalist and human rights groups, as well as institutional investors, labor unions, and hedge funds, to nominate their own representatives for corporate boards. If elected, many of these board members would promote activist agendas that conflict with the interests of the stockholders. Instead of voting to maximize profits, such representatives would support narrow ideological goals. How would it be possible for a representative of a coalition of Greenpeace and other environmentalist groups to serve on the board of Chevron or Massey Energy? Such a representative would probably not be aligned with shareholder interests.
Perhaps this is the intention of the SEC in passing the proxy ruling. After all, liberal Democrats have been trying for decades to seize the profits of the more successful American corporations. The Carter "windfall profits tax" was just one such attempt. The long-running Clinton-era lawsuit against Microsoft was another. In 2007, Hillary Clinton famously screeched that she'd "like to seize the profits of Exxon Mobil" and redistribute them to alternative energy companies. Now not even Google is safe.
Proxy reform is just one among scores of anti-business initiatives being carried out by unelected bureaucrats within government agencies. Thousands of other changes are buried in the fine print of the recently passed health care and financial regulation acts. By design, none of these policy changes have received an adequate public airing.
One example is an obscure rule appended to the financial regulation bill passed in July. With no discussion or public comment, Democrats slipped in a requirement that energy and mining companies disclose payments to foreign countries for oil or mineral rights. This requirement puts American companies at a disadvantage to others because it hampers their ability to bid competitively on foreign leases.
Most of the world's large, undeveloped oil fields are controlled by the governments of developing countries in Africa, Latin America, and the Middle East. There is fierce competition between American oil companies and those of China, as well as those of Europe, India, and Latin America, for these prized lease rights. Why would Congress pass a law that puts our companies at a disadvantage when they negotiate for drilling rights? There is only one answer: the Democratic Congress does not really care about the success of American corporations. Or if it does care, it cares only about bringing them to heel.
It is not just energy companies that are the target of Washington's activists. Earlier this year, the Federal Trade Commission won a consent decree forcing Intel to pay a billion dollars in fines and potentially hampering that company's competitiveness in the global technology market. Like Exxon and Massey Energy, Intel is one of America's most successful corporations. That may well be the reason it was targeted by the left.
The irony is that even as the Obama administration has unleashed activist regulators on American corporations, that same administration is grumbling that corporations are not doing enough to spur economic growth. It's like cutting someone's throat and complaining when they don't speak up.
The truth is that the current administration is not really interested in creating jobs, nor is it interested in promoting economic growth or the corporate profits upon which growth depends. The Obama administration is dominated by leftist ideologues whose obsession is regulation of the private sector. The ideologues who now manage the EPA, FTC, FCC, and SEC are guided by a single purpose: to establish state control of the entire U.S. economy, and to do so at whatever cost to the American people. In order to achieve this goal, they are willing to accept a 17% real unemployment rate as the "new normal." They are willing to see foreign competitors, China in particular, overtake American leadership in the technology, health care, and energy sectors. They are not just willing to accept the decline of American power, but they are intent on bringing it about.
For those who fantasize about "one world" living in "harmony with nature," the crippling of American business may seem like a good plan. In place of spacious suburban homes, they advocate densely packed urban dwellings. In place of cars and SUVs, they promote biking or walking. Instead of treating diseases with new drugs and surgical procedures, they endorse second-generation generics or just letting patients die. Instead of defending ourselves with modern weapons, they speak of negotiating with our enemies, as if North Korea or Iran has shown a genuine interest in negotiation. This, in essence, is the left's vision of America in the 21st century.
The left cannot understand why the American people do not share their vision of national decline. Those who resist ObamaCare are labeled "obstructionists." Those who resist Islamification are called "racists." Those who question global warming are called "deniers," as if opposition to the fiction of man-made global warming were somehow akin to denial of the historical fact of the Holocaust. The left believes that its own agenda -- the eradication of private property and the destruction of America as a global superpower -- is a moral crusade of overwhelming importance. This is why individuals such as Nancy Pelosi become practically apoplectic ("Are you serious?" she responded, when asked about the constitutionality of ObamaCare) when their behavior is questioned.
For conservatives, there is only one rational response to the current assault on American liberty. That is to remove all leftists from office and to guard against their return. Every American needs to understand that the left is not simply attempting to "reform" our institutions: it is swiftly transforming America from a capitalist democracy into a Marxist totalitarian state. Only a complete repudiation at the polls will stop them.
Dr. Jeffrey Folks taught for thirty years in universities in Europe, America, and Japan. He has published many books and articles on American culture and politics.
