The reading level for this article is Novice
Why the Securities and Exchange Commission (SEC) should have stiff penalties for individuals using Western ideals as a façade of justification for personal gain at the expense of society.
Note: This is the text of a speech given before a class on September 25, 2002.
Greetings fellow SEC commissioners.
While news of corporate scandals was at the forefront just three months ago, perhaps now we are all a bit tired of hearing of yet another of our Ivy-league MBAs defrauding our country.
So instead of this predictable discourse with a call to end corporate crime and a reassurance of how bad it really is, I would like to give you a different perspective; a new perspective, a perspective through which you can see the true importance of our actions this day.
I am a firm believer in this country’s core ideals. Democracy, self-determinism, individualism and our competitive market economy, legal framework, secular government, and entrepreneurial culture have made our country what it is today. Of these values, I would like to focus today on that of the competitive market economy, also known as capitalism.
There are many in this world who see capitalism as an immoral concept. They see greed, they see self-interest, they see capitalists as those who exploit others for their personal gain. They see workers slaving away in China for four U.S. dollars per week. They see multi-national corporations destroying the environment in undeveloped nations. They see CEOs and CFOs making off-balance sheet partnerships and being paid a $14 million bonus in a year during which their company barely stayed business.
These white-collared criminals have hid behind our treasured ideals. An example? Well, in 1996, according to the National Institute on Money in State Politics, lobbyists sent by Enron spent US$1.9 million lobbying Congress to deregulate the electricity industry in California. 1 Hiding behind our ideal of freedom Enron exploited this volatility and made millions in profits by manipulating the available supply in the market. While yes, a truly competitive and deregulated market would likely be best in the end, either integrity among all participants or regulation to ensure fair play is needed. Many other examples can be given regarding the ways some corporations have ventured into undeveloped countries, hired workers for next to nothing, and ravaged the local environment. While this is surely ethically corrupt, often these companies try to hide behind the western value of freedom and free markets in justifying what they do.
Competitive and free markets are clearly are more efficient and provide greater freedom than state-controlled economies. And there is NOTHING wrong with being an entrepreneur, and dedicating your life to innovating, to finding better ways of doing things, raising the standard of living for all. However, without across the board integrity or intelligent regulation to ensure that integrity there will always be misallocations in those markets due to unethical, self-serving, and corrupt behavior. This is the exact behavior that is creating so much anti-American feelings across the world and teaching children to think of America as morally corrupt. They begin to associate capitalism with immorality and democracy with capitalism. Soon they associate democracy with immorality and develop a hatred for the free world. We cannot let this happen.
As such, I propose that we, as members of the SEC, the governing body of this crucial system and the developers of the framework that will either extend or collapse this system, be harsh with the current executives who have disparaged our so treasured ideals
We must make better rules, deal harshly with those who disobey them, and stay vigilant on our watch. If we do not, in the end Karl Marx may end up being right. Our society of democracy, freedom, and capitalism may collapse, perhaps not due to communism, but to the grown up version of those young minds who are today learning to associate democracy and capitalism with immorality.
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1. Secondary source – http://www.gp-us.org/articles/derosa_03_02_02.html; Primary data from – http://www.followthemoney.org/press/Enron.phtml