The Folly of ‘Self-Regulation’

The recent loss of human life in Bangladesh sweatshops and the 2008 Wall Street meltdown that devastated the world’s economy should demonstrate that relying on corporate executives to “self-regulate” is a deadly and dangerous way to protect the broader society, as Michael Winship explains.

By Michael Winship

A few days ago, I was listening to a radio talk show discussion of the bill passed on May 7 by the New York City Council, requiring some businesses to provide paid sick leave to employees.

The first caller was indignant. “This bill is anti-consumer!” he bellowed because, he insisted, it would raise prices. I thought, no, this bill is pro-citizen, helping out people, many of them in extremis — and just when did we stop being citizens and become merely consumers?

JP Morgan Chief Executive Officer Jamie Dimon. (Photo credit: Steve Jurvetson)

When did access to material goods and low prices become a right more important than public health and welfare, when did our celebration of profit take precedence over fundamental fairness and justice?

I thought of this again the other night while attending the ceremony for the Hillman Prizes in Journalism, named after the late union leader Sidney Hillman, once the influential president of the Amalgamated Clothing Workers of America. One of the awards went to ABC News for its coverage of a deadly fire at a garment factory in Bangladesh where Tommy Hilfiger clothing was being manufactured. Deliberately locked in and unable to escape, 29 died.

Confronted with the evidence, Hilfiger and his parent company finally pledged over $2 million to improve fire safety at dozens of other facilities in Bangladesh, but six months later another fire took more than 100 lives.
According to the Sidney Hillman Foundation, an ABC News producer “obtained evidence that showed clearly that Wal-Mart, Sears, Disney and other retailers’ labels of clothes were being made there at the time of the fire and written warnings from Wal-Mart’s own inspectors that the factory was not safe.” All in the name of cheap clothing made by workers in a country that has the lowest minimum wage in the world, $37 a month, while exporting $18 billion worth of apparel yearly, second only to China.

The Hillman Prize came just weeks after the April 24 collapse of the Rana Plaza factory in Bangladesh that killed 1,127 workers, and indeed another award was given by the Hillman Foundation in the name of the workers and in honor of labor activists fighting for safer factories in that country, many of whom have been intimidated, beaten and even murdered.

And yet, unlike nearly three dozen European companies, almost all American businesses refuse to sign onto a formal plan for Western retailers to fund safety upgrades at these Bangladesh factories where their clothes are manufactured. The American firms cite fears of legal liability.

But as Paul Lister, director of legal services at Associated British Foods, one of whose subsidiaries has signed the agreement, told The New York Times,It’s not a perfect document. We’ll deal with the imperfections in the document, and we have to deal urgently with the underlying issue — the moral and ethical issues of fire safety and building integrity in Bangladesh.”

Nonetheless, Matthew Shay, president of America’s National Retail Federation, claims the plan “seeks to advance a narrow agenda driven by special interests.” He means, of course, labor. Where profit is concerned, any excuse to foot drag will do and as Michigan Congressman Sander Levin pointed out to the Times, “It’s been left up to the retailers, suppliers and government all these years, and that hasn’t worked.”

That hasn’t worked because unless citizens shame them — in the wake of tragedy or crisis — the collusion between government and industry will continue to place the needs of corporate America first. And even a calamity will not necessarily slow it down – just look at the 2008 banking crisis and the increased size and power of the very financial institutions that got us into the mess.

Witness the JPMorgan Chase shareholders meeting in Tampa, Florida, last week. Its chairman and CEO Jamie Dimon has unparalleled authority – rivals call him “the sun god” – and yet Bloomberg Businessweek reports, “The litigation section of the bank’s quarterly filings now runs to almost 9,000 words, or 18 single-spaced pages.”

The magazine listed the institution’s “year of federal investigations into whether it manipulated energy markets, inadequately guarded against money laundering, abused homeowners in foreclosure, facilitated Bernard Madoff’s Ponzi scheme, and misled the public about the ‘London Whale’ fiasco, the worst trading loss in JPMorgan’s history.”

What’s more, the Office of the Comptroller of the Currency and California’s attorney general are each looking into how JPMorgan Chase has gone after credit card debt.

Despite this impressive litany of potential transgression, Dimon handily beat back an attempt by some stockholders to split his job in two, which theoretically would have added some much-needed adult supervision, regulation and corporate oversight. He did so with a concerted campaign of pressure and public relations; support from such pals as Mike Bloomberg, Rupert Murdoch and former White House chief of staff Bill Daley; threats to resign and with this one simple statistic: record earnings of $21.3 billion last year.

Dimon delivers value and that’s all that counts – over the last year, shares have risen more than 50 percent. As New York magazine columnist Kevin Roose wrote, “No matter what happens, it seems that as long as Jamie Dimon is making money for JPMorgan, he can get away with basically anything.”

Profit will out, whether in Wall Street boardrooms or in the ashes of a south Asian sweatshop. All of which makes for ever wealthier plutocrats, consumers kept content with cheap goods, and if we do nothing about it, lousy citizens.

Michael Winship, senior writing fellow at the public policy and analysis group Demos, is senior writer of the weekly public television series, Moyers & Company. To comment or for more information, go to www.BillMoyers.com.

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7 comments on “The Folly of ‘Self-Regulation’

  1. EthanAllen1 on said:

    I like Michael Winship’s writing and am a regular viewer of Moyers & Company, but this piece barely scratches the surface of the costs in lives and treasure that can easily be attributed to “The Folly of Self-Regulation” being granted to corporate plutocrats. Jamie Dimon did not make $21.3 billion for J.P. Morgan-Chase last year selling cheap clothing made in Bangladesh; he made it orchestrating high octane money laundering schemes, custom designed for his corporate clients, and overseeing the creation of various investment schemes designed to be undrwritten by the U.S. government. Let us not forget, it was J.P. Morgan-Chase that concieved of, designed, and marketed the the original credit default swap derivitives and their synthetic progeny.
    Our people will continue to behave as dysfunctional citizens as long as those whom they rely on for thorough and definitve information continue to fail to provide it.

  2. Ellin Callvis on said:

    Good points Ethan – that “financial industry” is a plague upon us all, and produces nothing of benefit to people.

    I would point out that of all the “sheeple” out there, it is the CEOs and corporate defenders who have swallowed the rhetoric and propaganda with the most zeal.

    Listen to their brainwashed talking points repeated obediently, such as “what is good for corporations is good for average people, it is what keeps us alive, it is what has lifted half the world out of poverty”

    - it almost sounds good, doesn’t it? But no, and Lo! be thy not of those number who are fooled by such self-serving tripe!! Corporations created the poverty in the first place and have kept the world impoverished. The World Bank and IMF have corrupted many nation’s leaders, and democracy has been crushed everywhere by American abuse of power.

    Socialist China decades ago, not corporations, lifted the most people from poverty… to bad China has been corrupted now too…

  3. Tom Blanton on said:

    Americans need to supply the innocent and wonderfully progressive politicians who dare to regulate away all evil with magic talismans to prevent them from falling victim to the black magic of corporate evil-doers who present their tainted money to these innocent politicians who then allow the evil-doers to draft regulations and bail out the corporate failures with tax money.

    Don’t listen to those anti-government types that try to persuade you that more regulations serve to consolidate and cartelize big business, prevent small businesses from competing with huge corporations, and motivate big business to send more armies of lobbyists with briefcases filled with money to DC. Put your fingers in your ears and say Nah Nah Nah loudly.

    Don’t be fooled by those crazy people who tell you that consumers can regulate business through the direct democracy of voting with their dollars. It can’t be done. The Walmart police will come to your house, take you to Walmart and force you to buy their evil products made in sweatshops and sold by sales people too stupid to realize they are being exploited by their employer.

    The only solution is to rely on our benevolent politicians that have done so well at protecting us from evil. We just need to step up to the plate and protect our wonderful politicians with magic talismans to prevent the corporate Svengalis from controlling their minds, forcing them to do evil things using black magic and bucket loads of cash.

    There is nothing like a wise and generous government with an efficient militarized police force, plenty of prisons and state of the art surveillance methods to lift all people up.

  4. Morton Kurzweil on said:

    Self regulation is an oxymoron. If you mean no regulation of bullies that might help in discussing the purpose of government regulation in a democracy.
    We have had too many examples of self regulation by religious and political bullies. It is time to face the fact that self regulation means anarchy, the ethics of terrorists. the unrelenting demands of pathologic autism. The symptoms as lack of empathy or any concern for others except as objects used for personal satisfaction.
    The liberal or social oriented human is at risk when he applies his own sense of empathy to try to explain the actions of an autistic personality.

    • Tom Blanton on said:

      Anarchists have the ethics of terrorists. You said it Mort!

      That’s exactly why we can only rely on caring and empathetic politicians to protect us from all manner of evil-doers. Only politicians, who all have the purist of motives, can keep us safe from the evil capitalists that force us all to give them our money. Anything else would be madness. I’m sure and I would both be robbing, raping and killing people all over the place if it weren’t for regulations prohibiting these things. That proves that self-regulation and self-rule (which is anarchy) are myths.

  5. AnneC on said:

    Regulations benefit ethical companies. When two companies bid for a contract the company with lower expenses can profitably make a lower bid. Without regulations this can be the company that exploits employees, uses shady accounting practices and pours toxic waste down storm drains. If managers are only supposed to make money for themselves and the owners of the company poisoning community drinking water could be appropriate. Most people in our society believe that poisoning other people, especially children, is not the ethical thing to do. Locking employees in firetraps does not sound properly ethical either.
    Employers also need to be supported when they treat workers like fellow human beings. Small businesses that want to give sick leave need to be able to compete with more callous employers. Sick leave prevents the spread of illnesses like the flu so all of us benefit when people with communicable diseases recover at home. We need to create a level playing field for ethical companies by making a level playing field for them.

  6. Charles Bin Dahmer on said:

    Part of the problem is the public complacency. Incentive for the big companies relies upon their reputation which they spend billions of their stolen money from. The problme lies in the fact that most people would not buy clothes from serial killers and their ilk. But they do. If the consumer mindset would change, the corporate overlords would be held accountable. Only the lack of censuriousness among the average consumer means the keeping of unchecked corporate evils.