Free Enterprise or Socialism? How about neither.

A big debate these days is Socialism versus Free Enterprise.  I say neither.  I say we need a new direction - Fair Enterprise.

I'd say the failures of socialism are self evident.  You can look at the extremes like the experience of the Union of Soviet Socialist Republics (USSR), the various "republics" of Eastern Europe that were satellites of the USSR, or Venezuela, where socialism was accompanied by brutal totalitarian regimes.  Or you can look at the European socialism of France, Italy, and Greece, where the people would sooner bankrupt the country, paralyze the government, or commit acts of violence than give up the giveaways to which they have become accustomed.

With a history like that to point to how can anyone advocate socialism in front of an audience and not leave the stage covered with fresh vegetables thrown at them from the seats?  The answer is that unfortunately big businesses in the US have corrupted free enterprise.  Large companies have skewed the direction of government.  They are either unregulated or under-regulated or they influence the government to pass regulations that entrench incumbent companies and retard new competition.

Consider the government's reaction to the collapse of the mortgage bond market that led to the "Great Recession" from which we are only now emerging or the actions of a large institution like Wells Fargo ripping off military veterans and others in financially less favorable positions.  In the former instance, Government tossed large buckets of money to most of the very financial institutions that caused the calamity while in the latter the Government merely imposed fines.  

What was missing from all that?  Arrests!  Holding individuals accountable for their actions.  Taking down companies who were truly riddled with greed and corruption.

In 2007 and 2008, financial calamity occurs because of a widespread unspoken collusion between mortgage companies, rating organizations, and financial advisors allowing people to think a mortgage bond fund with a thin layer of good mortgages over a cesspool of bad mortgages is a low risk AAA rated fund.  People were lying - bond rating agencies lied when they rated funds AAA.  Lawyers and others lied when they certified the mortgage funds.  Financial advisors defrauded their customers by taking money to provide financial advice and then not doing the simple action of looking at what's in the investments they are recommending to their clients.  Not a single arrest occurs.  (To learn more about the events leading up to that economic disaster, read "The Big Short" or see the movie.)

On the other hand in 2008, Congress passes funding used to bail out large financial institutions while average people are losing their homes and going into bankruptcy in record numbers.  Then Congress passes the Dodd Frank legislation that supposedly regulates big banks but actually cripples smaller competitors by imposing on them the same regulations (and cost of dealing with those regulations) imposed on multi-billion dollar international companies.

And then there is Wells Fargo.  They collect $36 billion of the aforementioned aid from the federal government while implementing a series of scams to rip off veterans, homeowners, car owners, native Americans and any one they could get away with scamming.  (See this website to get a complete list: https://www.cheatsheet.com/money-career/wells-fargo-ripping-off-people.html/)

Heinous behavior and did anyone go to jail?  No.

As long as companies can get away with behavior like that advocates of socialism will get a hearing from the public.  That's why we don't need free enterprise, we need fair enterprise.  Simple laws that anyone can understand and focus on ensuring people do the right thing.  Laws that put the average American in the drivers seat not the major corporations.

We need laws that make it clear that if you do wrong, if you lie, cheat and steal you will be arrested.  We need regulators who get out from behind their desks and go out and investigate to find people who lie, cheat and steal.  

Financial penalties from companies should start with making injured people 100% whole before the government gets a dime in penalties, that will curtail prosecutors ignoring arrests in favor of headlines about how much they nailed a company in fines.  Also, laws need to say to companies if we find you ripping people off and your corporate bylaws don't include clawing back every stock option and bonus dollar paid out starting with employees involved in the scam and going up to the CEO and including the Legal and Compliance Departments for not finding it themselves, and also going after former and retired employees who benefited and then left the company, then we'll quintuple the penalties you'll have to pay.  Companies need to know that this is not a game where a company can determine the likely fines will be a small pittance compared to what they can make.

In return, Government repeals many of the onerous laws that impose lots of paperwork and regulatory hoops none of which prevented the economic calamity of 2002, or 2007, or the Wells Fargo scams or many of the other wrongs that have occurred in recent years.  

If we're going to stamp out the proponents of socialism we need fair enterprise - where companies compete not just freely but fairly.  Where companies succeed because they provide better products and services, not because they are better at ripping off the public or skewing regulations to choke off competitors.  Until that happens the proponents of socialism will have an interested audience.