Money; The Root of Regulation

"Regulation is strangling businesses of all sizes in California, and we've got to streamline regulation so it's easy, not hard, to do business."
Meg Whitman 

"That role for government is breaking up the monopolies, insisting on public disclosure, insisting on public audits, insisting on restitution whenever someone has been cheated."
Dennis Kucinich

"Let me say that I don't like money.  I work and I earn it because it's fundamental to survival. I spend it on necessities and frivolities and I donate it (thought not as much as I should) to causes more worthy than those that get my money for the necessities and frivolities. Let me repeat; I don't like money. It is evil and it inspires the evil in people."
Paul Anderson (Me)

 

This all started with yogurt; Greek yogurt.  Greek yogurt and phony Greek yogurt to be precise.  Then it went to foreclosure and bank regulation and from there it went to a legislator ranting about laissez faire and now it’s grown into an argument about the morality of making money. 

Let’s begin with Greek yogurt.  I can’t remember exactly when I first had it but once I tried it I was hooked.  And so I was more than a little interested when I heard a story on NPR about, yes, Greek yogurt; Chobani Greek yogurt which I buy 5 of every Sunday to get me through the workweek.  Greek yogurt has a unique texture which it apparently gets through an extra straining process.  Hamdi Ulukaya founded Chobani and he says that his yogurt goes through the extra straining process just like his mother used to do; well, that’s if mom had expensive, hard to get machinery and turned out a million pounds a day.  The point is that Ulukaya made a hefty investment for equipment that according to him takes over a year to get delivered and then up and running.  In business, a year is an eternity and a lot of lost sales particularly when Greek yogurt accounts for nearly 25 percent of the yogurt market. 

Sensing that they were missing out and not wanting Ulukaya to have all the fun, other companies jumped on the Greek bandwagon but instead of doing it the way mom did they’re doing it the way, well, a chemist would do it.  They essentially deconstructed the stuff and figured out that they can get a similar texture by employing additives.  Where or where would the American food industry be without additives?  In this case the additives are starches from corn or tapioca. 

Now I’m not a purist and I don’t know if Greek yogurt is any healthier than regular yogurt.  But what I do know is that if I buy Greek yogurt, and compared to the regular stuff it’s a bit expensive, I would like that it be made the way it’s supposed to be made and not formulated into an ersatz copy by using extraneous stuff.  And so Mr. Ulukaya and consumers like me find ourselves in a yogurt no man’s land because there is no legal definition of Greek yogurt or as Ulukaya puts it, “You could make a bowl of macaroni, call it Greek yogurt, and nobody could do anything to you.”  Mama mia, does that mean that there’s no legal definition of macaroni either? 

Yogurt-gate (if a scandal doesn’t have “gate” at the end of its name it’s not a scandal worth its salt) reminded me of the California Legislature’s passage of the Homeowner’s Bill of Rights this summer.  The law protects homeowners from unfair foreclosure practices by banks and other lenders; practices that lawmakers claim led to the foreclosure crisis.

Passage of the Homeowner’s Bill of Rights infuriated business and lending organizations (no stunner there) and Republican Assemblyman Tim Donnelly.  “There is something far greater at risk here than whether or not people are going to lose their homes.  What is far greater is whether or not we’re going to lose our liberties, whether or not we’re going to lose the concept of laissez faire which is the government keep your hands off my business.”

 Merriam-Webster defines Laissez Faire as: a doctrine opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights.

Tim Donnelly and the laissez brigade have been getting great mileage with that old notion that the big, bad, evil government keeps interfering with business.  I suppose that they have this belief that business at its very core really wants to do the right thing, and would if left alone. Really; what’s a little corn starch and a few robo-signatures among friends.

Donnelly warns that we are in danger of losing our liberties.  This begs the question; who exactly is the we?  I don’t think I’m part of Donnelly’s we but I do think that business and those who believe that corporations are akin to people make up Mr. Donnelly’s we.  The trouble is that business has a checkered past when it comes to what it does when it is given liberties.  Business has trouble shaking the nasty habit of taking liberties.  Because with business it is usually all about the money; how to make it and how to avoid spending it (When was the last time YOU got a raise?).  It isn’t very hard to find examples of business focusing on money, profits and potentially unhappy shareholders while taking an eye off of what might be the right thing to do.

                A company that I was recently employed with, a plastic injection molder, made fins for Hobie Cat.  They were supposed to come out a certain shade of white and on one occasion a production run produced something other than the desired shade.  To make it right would require hanging the mold again and doing another run thereby pushing out an entire production schedule and incurring extra expense in time and materials.  And so someone in the executive chain of command decided that it would be much easier and more economical to send someone to the local Ace Hardware store for some white spray paint.  Voila, problem solved; up until the customer took delivery and essentially posed the question; “Why did you spray paint my parts?” 

                And then there’s Progressive Insurance, which in stark contrast to the definition of its own name took great pains to avoid paying a claim to the family of a client.  Kaitlynn Fisher was killed in a car accident and her policy covered the actions of underinsured drivers causing injury or death up to 100,000 dollars.  A witness saw the driver of the other car, Ronald Hope, run a red light.  Hope’s own insurance company concurred and paid 25000 dollars.  When the case went to court “Progressive's attorney coordinated with the defense and put on witnesses who tried to undermine Kaitlynn Fisher's case,” in an attempt to avoid paying the balance of 75000 dollars to Fisher’s family. I wonder what Flo, the Progressive shill thinks about that?

                This past April, Smart Money published the story, 8 Food Frauds on Your Shopping List, which explains how the food industry finds ways to hornswoggle the consumer.  Fish being sold as scallops, industrial lubricant marketed as olive oil, adulterated milk, honey that contains no pollen and fraudulent baby formula.  These aren’t cases of “Gee I don’t know how that antifreeze got in our vodka.”  These are all deliberate hanky-panky, some of it posing extreme health risks to consumers. 

And so in keeping with the old adage, “Find a need and fill it,” consumer advocacy found its niche.  Public interest groups decided that fraud shouldn’t be part of business plans, petitioned their legislators and government regulation was born.  Okay that’s the simplified version. 

Demonizing the American Government has become great sport and a growing segment of the public is buying into the notion of The United States Government as the great Satan. Would I be over analyzing if I said it’s some perverted, incestuous marriage of the 18^th century revolutionary spirit and the swallowing hook, line and sinker, of Frederick Jackson Turner’s notion of the frontier, individualism and American culture?   

The, less is more when it comes to government crowd loves to quote Jefferson, Madison et al when making their point. In this respect the founding fathers are something like The Bible (and to many, just as sacred); for every quotation you find to support your point I can find one to counter it and so I’m not going to get into that exchange here.   But I will offer that telling a candy company that you can’t have excessive amounts of lead in your licorice (Just how in the hell does lead get into licorice?) is not analogous to The British Quartering Acts.  

I imagine, sadly, that most Americans wouldn't know Frederick Jackson Turner from Lana Turner but he’s the fellow who wrote a treatise that hailed the frontier as the catalyst for the spirit of individualism.  Pro-business folk are big on that individualist stuff.  You know, that entrepreneurial spirit that made America great that big government is trying to stifle?  Americans seem to firmly believe in that whole connection between the pioneers, the individualist, the entrepreneur, and good old ingenuity and whether it's myth or not their steadfast faith makes them ripe for the plucking when it comes to be believing government regulation is choking progress.

It’s ironic that almost in the same breath Americans can praise their form of government as a model for the world and then turn and condemn it.  Why do so many Americans rail against a beautifully conceived unique system that’s miraculously managed to adapt to an ever changing world?  In a well written Independence Day blog Robert Reich wrote, “…these days some Americans loathe the government, and are doing everything they can to paralyze it, starve it, and make the public so cynical about it that it’s no longer capable of doing much of anything.”

In my professional capacity I've run up against the bureaucracy of government red tape. It's a pain in the ass and there are times when I curse it.  I've also seen the benefits that come from regulation.  You see I buy product that is imported from China, product that Americans use every day.  The Chinese factories that we contract with are bound to manufacture to specifications that adhere to American regulation.  Reader, you would be horrified if I were allowed to bring in the unregulated stuff.  You, who feels compelled to have the guy making your sandwich at the deli wear plastic gloves; you, who uses wipes before touching a grocery cart, would howl if, in the interest of fluffing up the bottom line I didn't fool with those pesky rules and brought in the profitable stuff.  You see I know what the problems are with the unregulated stuff (In the interest of keeping my job I'm being circumspect).

It all comes down to money.  Take away the regulation and business will get you a cheaper product that costs you less, unless of course they give you a cheaper product that costs you more.  Americans mindlessly join the indignant anti-government harrumphing politician lodged comfortably in a corporate pocket right up until they find out that the scallops that they just paid 20 bucks a pound for are really discs of cheap white fish.  Then they harrumph that there ought to be a law and the government ought to do something about that.