- Any time now we can expect another major American enterprise
to go down in flames as a result of executive greed and corruption. But
of course, we should not leave out greedy shareholder expectations. Many
journalists are saying that Enron and Worldcom, Harken, Halliburton, and
a growing list of other candidates are only the tip of an economic failure
iceberg the potential size of Antarctica. When the truth is known, that
may be the case for highly visible pieces of the American system, but
it will not be true for all of it, not even most of it. The reasons are
deeply imbedded in American practices, even though we often seem deeply
confused about what those practices are.
- For thirty years I served in the US Department of State
as an officer with broad responsibilities for explaining and carrying
out American economic and financial policies and protecting American business
interests abroad. In places such as Cairo, Calcutta, Colombo, Manila,
and Sao Paulo, and in the Department of State itself, I dealt with many
issues involving the actions and interactions of business and government.
In every respect, the American system was, and still is, the top of the
heap. But in dealing with foreign and American businesses abroad, as
well as in conducting relations with foreign governments, the biggest
single hurdle to navigation was not what Americans actually did, but what
they said and thought they did. Enormous confusion arose in foreign
media, government officials bridled, and foreign businessmen gloated over
the thought as we tried persistently and innocently to export "free
- The simple truth of the matter, as I tried to explain
when confronted, is that we never have had a system of free enterprise.
From the beginning our founding fathers created and we evolved a system
of private enterprise regulated by government. Putting aside actual wars,
including the Cold War, which had at root pretty fundamental economic differences
of view, our national tug of war between government and business always
has been between government regulation in the public interest versus unbridled
business self-interest. It still is today.
- Over the years one side or the other has waxed or waned.
Journalists today are fond of recalling the trust busting successes of
Teddy Roosevelt, because in that epoch the regulators achieved the upper
hand where sharp business practices were concerned. However, we have witnessed
several decades of the reverse. On one hand, we have seen a persistent
questioning, mostly by ideologues, of the need for and value of government
regulation, nay even of government itself, and on the other hand, we are
now witnessing a virtual collapse of business ethics under the onslaught
of greed and unseemly profit opportunities. Ironically, business has brought
itself to this lowly state by co-opting the regulators and cozening them
into the notion that regulation is unnecessary, business actually can
regulate itself. If you believe that today, wooden nickels have a great
- The costs of this cozy union are still growing. We
may or may not see strong legislation to regulate business and accounting
practices before this Congress adjourns for the Summer. If we get useful
legislation, hopefully it will grow out of recognition that proper regulation
of business activities is essential to the growth and stability of our
society. We can do without Enron style business malpractice, the systematic
robbery of small investors, unregulated electric power supplies, unregulated
and about to collapse civil airlines, road-busting coal trucker habits
in West Virginia, the rape of forests in the Northwest, and a number of
failing processes that we all know are the proper subjects of public oversight.
- In the end, however, we cannot do without the initiative
and the wit that make American enterprise a global leader. Thus, we need
a balance that serves to protect the public interest while giving enterprises
room to grow and prosper. To get this done, it is in our best interest
to act without illusions or ideological visions of what our system is.
We have a well-established system of private enterprise regulated by government.
That system works. Recent failures show what happens when we put that
system aside. Our challenge is how to achieve and sustain proper regulation.
The lessons of recent years and months make it plain that we cannot afford
unregulated, that is "free" enterprise.