^Nevertheless, it is true that we need to regulate businesses. For too long, the conservative belief in the utter purity of the profit motive has held sway. The thinking has gone like this: regulations to protect consumers and a company's immediate environment cost businesses money. Businesses want to make money, so they won't do anything to hurt their profits. Therefore, businesses don't need regulations because they will do what is right anyway. And if some business does get too greedy and cuts corners, resulting in grievous harm to people and their environment, lawsuits will punish the business. So, again, no need to regulate businesses, no need to regulate the marketplace. It is rationally self-correcting on its own.
This, we have seen and need to acknowledge, is naive. Businesses are only as smart and ethical and far-thinking as the people who run them.
It is true that regulations cost businesses money in the short run. But often, as in BP's case, regulations save
businesses money in the long
term. And, beyond the interests of business, regulations save lives and grief from reckless pursuit of profits.
We need regulations. Even Alan Greenspan, a lifelong libertarian free-marketeer, a disciple of Ayn Rand, has acknowledged this:
Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.
``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.
Greenspan's contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets.
Greenspan's devotion to free markets was nurtured in part by his association with Ayn Rand, the libertarian novelist and philosopher who espoused laissez-faire capitalism. He met Rand in the 1950s, becoming part of her inner circle of followers meeting regularly in her Manhattan apartment.
``Greenspan in a very, very kind of unwise, left-brain way, imputed pure rationality to markets,'' James Grant, editor of Grant's Interest Rate Observer, said in an interview on ``Night Talk'' with Mike Schneider to be broadcast later today on Bloomberg Television. ``They are just as rational and just as efficient as the people that operated in them.''
So I think that a big lesson we need to draw from this oil spill is that we need to be skeptical when people argue that regulations are unnecessary or bad. Some are. But there are a lot of lazy ideologues out there who like to latch on to the simplest idea and avoid nuance. So they'll argue that regulations are always bad, always unnecessary. They're wrong. See the Gulf of Mexico.
But I agree with Saul that both parties are to blame. Regulations piss off corporate owners, who can sway elections with their money. With few exceptions, Democrats are just as afraid to impose and enforce regulations as are Republicans. There is a political cost for doing so.