June 10, 2005

Oversight is Orwellian

Fox News asks the question on its website "Are Rules Strangling the Market?" and then provides the answers from two different perspectives: Jonathan Hoenig, managing member of a hedge fund, and Jonas Max Ferris, co-founder of a mutual fund advice website.

In Hoenig's answer to the question, he paints corporate corruption as a "small minority of fraudsters", and claims that "regulation punishes innocent businesses." But the clincher is his characterization of "oversight" as "Orwellian." It's always interesting when a defender of the corporatocracy uses the words of the left in describing any attempt to limit unfettered corporate control and exploitation.

Hoenig goes on, saying: "It (regulation) holds them to completely arbitrary standards, set not by the marketplace but by an unelected pseudo-lawmaker who is often totally ignorant to industry practice. And because regulators’ whims can shift like a weathervane, corporations become fearful of long-range planning and investment. Rightly so, they’re unsure if their acquisition plans or business model will be the next target of the “public servants” who are so apt at making up the rules as they go along."

Where does Hoenig draw the line on regulation? Would he oppose child labor laws? the minimum wage? the 40-hour work week? the right to strike? equal employment laws? securities regulations? unemployment compensation? workplace safety regulations? disability laws? Not surprisingly, he never mentions them.

He actually says: "Onerous government regulation, however, has lessened the need for companies to establish a sound reputation among investors and analysts. " He never points out, as Ferris does, that in an atmosphere of total non-regulation it was this kind of corporate behavior that brought us the Great Depression.

How does he explain his claim that, on the one hand, the vast majority of companies are clean, upstanding self-regulators with the best of intentions, and yet, on the other, that in the face of regulation, they lose their way, and become emboldened to cheat and lie in the face of too much regulation? Now that is Orwellian thinking.



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