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“When regulators don’t believe in regulation and don’t get what is going on at the companies they oversee, there can be no major white-collar crime prosecutions,” said Henry N. Pontell, professor of criminology, law and society in the School of Social Ecology at the University of California, Irvine. “If they don’t understand what we call collective embezzlement, where people are literally looting their own firms, then it’s impossible to bring cases.”
It reminds me again of a customer who wanted to learn more about Brooksley Born. I wonder what she is up to?
And if you're wondering about the title of this posting, I was reminded of Benjamin Franklin, who said (during the convening of the Continental Congress which resulted in the Declaration of Independence):
We must all hang together, or assuredly we shall all hang separately.
Granted, the context is different, but the concept is the same. Are we a civil society or are we a bunch of sharks in a vast ocean of scarce resources for which we must fight one another by teeth, by wits, by trickery, by collusion, by any means all fair none foul? In a civil society, we hang together and bring alongside us those less fortunate than ourselves, because they are who we are, not alien but different parts of one whole.
We all converge on what we believe is a civil society, how we count ourselves and identify ourselves, how we believe we behave and our fellow citizens will behave within this society we call ours. Yet, we do not look at it as a lesson in sociology, but in values, in politics, in economics. I share with you another item on Ayn Rand from Anne Heller, author of a newly published biography of Ayn Rand. The interview on NPR puzzles me and frustrates me further. Perhaps though my gripe is with Ayn Rand and not with any interpreter of her philosophy. She has written (and this jives with Michael Sandel's writing on libertarianism, which I have already quoted in this blog), that there are basically three (3) and only three proper functions of government:
defend against a foreign enemy (which means she believes there are discrete societies to which someone belongs which may be hostile to each other)
police the nation for crime (what is the definition of a crime, Ms Rand? and does not the definition of "police" include oversight, monitoring, and enforcing the laws of the society?)
enforce voluntary contacts between free parties (would involuntary contracts then be crimes or free-for-alls?)
Biographer Heller then goes on to say that Ayn Rand was totally against regulation, that "government regulations [are] responsible for everything that's wrong." Again, maybe we need the proper definition of "regulation." Was Ayn Rand against traffic lights? Did she think motorists would all very kindly stop for each other? Most of the time, I observe in Chicago that motorists don't follow the law voluntarily, like stop when there is a pedestrian waiting in a crosswalk. They say it's dangerous to stop when the car behind you won't. And, as Larry says to me when I doggedly walk across the street as oncoming cars appear to be gunning for me, "I'll tell them at the funeral that you were in the crosswalk." (By the way, we have the book for 20% off!)
I believe there is a little "libertarianism" in all of us Americans. We are the home of the free and land of the brave, the Wild West. We don't want shackles. We don't even want anyone putting a hand on our arms and saying, "Hold on, mate."
And, we certainly don't want any of our hard-earned money on anything for which we did not personally assent. Any funds spent on anything for which we do not see immediate benefit to ourselves is being wasted.
Yet, when something horrible happens to us personally, what is the first thing someone says? "There ought to be a law." "Who was supposed to be watching this? Why isn't anyone investigating why this happened?" "Who's to blame? They should be sued." "That intersection is so dangerous; 'they' should have put up a traffic light long ago." Let's close the barn door after the horses leave, shall we? Is that the role of government, to be reactive? And who's that "they?" Isn't it "we?" Aren't we collectively the government?
As Brooksley Born had pointed out, our government needs to know what's going on so that we can police crime and enforce voluntary contracts, not to rely on an honor system which by human nature is naturally imperfect and then, react to resulting chaos. There is the debate of 'a public good' to be discussed someday.
I pass along a PBS program that aired last week and was passed along to me. I had heard much of the Alan Greenspan, Rob Rubin, Larry Summers, et al cabal before, but not so much about Brooksley Born (Her father had expected a boy to name after his best friend Brooks, so didn't plan on a girl's name. Love the name, sir.) . What I felt very naive about was Ayn Rand's philosophy and how that influenced Alan Greenspan, or how people have said it did. I still feel like Forrest Gump or someone naive. I still reject the notion that libertarianism and objectivism are for no government intervention whatsoever; it cannot possibly be against crime prevention. I know it's on tape that Ayn Rand is against any regulation and that Greenspan took that to mean that the government is not responsible for stupid fools, but I cling with my fingertips to the cliffedge of sanity -- how can he possibly believe that government is not responsible for punishment of those who act against society? Michael Sandel in his new book wrote that libertarians believed in government's role in at least three areas:
enforce contracts
protects private property from theft
keeps peace
I think preventing fraud is covered under all of these:
enforce contracts with a civilized society
protects private property from theft including theft from the unscrupulous, the greedy and the violators of the Golden Rule
keeps peace including chaos due to economic meltdown and attacks on the lives of innocents
For one thing, although "bespoken derivatives" were so narrowly defined as to be one-of-a-kind and contracts are admittedly or should be between two consenting parties, when these CDOs, etc are being offered up to the general public through the vehicle of the stock market, bond market, insurance policyholders, etc and the public becomes a partner in these contracts (as shareholders or other stakeholders), the government should rightly be a representative of the public as a whole. Maybe it should be under a different name -- not regulation, but oversight, peacekeeping, contract enforcement or theft prevention.
