Deregulation

In theory, markets regulate themselves. Companies won’t serve poisoned food or manipulate their accounts because people won’t eat there or invest in them.

Related Conservative Failures

Corporate Wilding

Trace back a corporate scandal to its root, and you often find a conservative legislator denouncing a regulation constraining that corporation as "burdensome." read more »

Rotting Regulatory Standards

Here's how shredding reasonable regulations because they are too burdensome to business often works out in the real world. read more »

Failing Hurricane Katrina Victims

In a climate where conservatives make it harder for government to keep track of malfeasance in the private sector, is it any wonder that developers were able to rake in cash meant to help hurricane victims for condos for the rich? read more »

More conservative failures

In reality, it’s hard to tell which company distributed the food that made the kids sick. The incentive isn’t to serve clean food; it’s to serve food at the highest profit, even if that means cutting corners, as long as you can get away with the ensuing contamination.
With regulatory authorities understaffed, underfunded and cast aside, there’s an incentive to do as much as you think you can get away with.

Free Market Fundamentalism > Deregulation

The Enron scandal (and prosecution) sent shockwaves through corporate America. After the fall of Enron, companies across America started correcting their books. The United States Government Accountability Office found the number of public companies announcing financial restatements from 2002 through September 2005 rose from 3.7% to 6.8%.  The market capitalization of companies announcing restatements between the time periods decreased $63 billion. When the books were restated to reflect these companies' actual value, people who worked and invested in companies lost their savings.

Enron Corporation

Enron was named Fortune Magazine’s “America’s Most Innovative Company” for six consecutive years.  Its innovation was not in producing electricity, however. Its innovation was in removing government inspection of trading practices and speculating on the buying and selling of electricity contracts. This was a disaster on every front.

After deregulation in 2000, California experienced significant price spikes in electricity and 38 “Stage Three Emergencies” requiring rolling blackouts, up from exactly one in the previous year. Coincidentally, Enron’s wholesale service revenues quadrupled — from $12 billion to $48.4 billion – in the same year.

Post-mortem investigations by state and federal officials concluded that power generators and power marketers intentionally withheld electricity, creating artificial shortages in order to increase the cost of power.

Enron took advantage of lax oversight following deregulation and formed a complicated web of more than 2,800 subsidiaries — more than 30 percent (874) of which were located in officially designated offshore tax and bank havens.

In 2001, Enron restated their books and it was discovered their overall equity was exaggerated by over $2.1 billion from 1997 to 2000. The collapse of the company vaporized 5,600 jobs and $60 billion in company market value.

Arthur Anderson

Arthur Anderson was Enron’s financial auditor. Half of the $52 million a year Arthur Andersen collected from Enron was for its accounting services, and half was for its consulting business, regardless of the conflict of interest between being an auditor and advising about how to circumvent the tax system.  Arthur Anderson accounting firm was charged with obstruction of justice as they began a massive shred campaign of all Enron documents. They were also implicated in the WorldCom and Waste Management, Inc. scandals for false auditing and accounting practices. Anderson’s unethical accounting practice threatened the jobs of 85,000 Andersen employees worldwide.

Disdain for Government > Deregulation

With the deregulation of various industries, companies have become more likely to attempt unethical practices. And with cronies in command, they’re more likely to get away with it. It’s all part of the plan—weakening the government that protects all of us.

Adelphia Communications 

In the late 1990s, Adelphia Communications became the sixth largest U.S. cable company after it purchased Century Communications for $5.2 billion.  In 2002, Adelphia Communications collapsed into bankruptcy in 2002 after it disclosed a staggering $2.3 billion in off-balance sheet.  In addition, Adelphia’s founder John Rigas and his family stole over $100 million from Adelphia Communications.

Waste Management Inc.

Waste Management Inc. became the largest waste hauler corporation in the United States.  Its auditor, Arthur Anderson, discovered fraudulent income sheets, but helped extend the fraud by identifying 32 "must-do" steps to cover it up, the Securities and Exchange Commission said. Waste Management, Inc. auditing discovered a $1 billion inflated income sheet from 1992-1996 that cost shareholders millions.

WorldCom Inc.

WorldCom, Inc. was one of the world's largest telecommunications companies with 20 million customers, thousands of corporate clients and 80,000 employees.  WorldCom hid $3.8 billion in expenses, allowing it to post a net income of $1.38 billion in 2001, and drive up stock prices. A week after the financial scandal was revealed, WorldCom began to lay off 17,000 employees worldwide, about 21 percent of their workforce. The United States felt large employee cuts in Virginia, Maryland, Colorado, and Texas.  Mississippi employees were cut from 2,000 to 100.

Qwest

Qwest Communications was the nation’s third large phone carrier service.  Former CEO Joseph Nacchio is accused of insider trading by selling $100 million worth of Qwest stock in 2001, after being warned months earlier by company insiders that the telephone company could not meet its aggressive financial projections.  During his five-year tenure, federal prosecutors and regulators allege Nacchio presided over a $2 billion accounting scandal. Among the transactions in question were a series of deals from 1999-2001 with Enron's broadband division which may have helped Enron conceal losses.  The company ultimately restated $2.2 billion in revenue for 2000 and 2001 after the accounting irregularities came to light, triggering legal action against Qwest and its former executives.  Qwest's stock price plummeted from more than $60 a share in 2000 to just $2 a share in 2002, and its near-collapse left thousands of pensioners, including many employees, in financial trouble.

Miscast Morality > Deregulation

Democratic Senator Daniel Patrick Moynihan wrote a paper back in the 1960s about the alleged weaknesses of often female-headed African-American families. His portrait of a culture of self-indulgence and loose morals became a touchstone for conservative discussions of moral depravity. He returned to the subject in the early 1990s, theorizing that, "over the past generation...the amount of deviant behavior in American society has increased beyond the levels the community can afford to recognize," and that, accordingly, “we have been redefining deviancy so as to exempt much conduct previously stigmatized, and also quietly raising the 'normal' level in categories where behavior is now abnormal by any earlier standard."

Conservatives loved this argument, too. It let them call for greater regulation over the bodies and lives of the poor. When it comes to corporations, however, the more deviant they become, the more eager conservatives seem to loosen them from the bonds of any regulation at all. That's conservative morality for you.