Titans of industry are imploring the government to re-institute regulation and government oversight! Yup, that is exactly what’s happening – and this week it happened twice. You haven’t jumped through the looking glass. The laissez-fair experiment is over, and those intended to benefit from it (airlines, for example, were one of the first deregulated industries) are crying uncle! Milton Friedman and Ayn Rand must be plotzing wherever they are.
The Hearing
Tuesday, at a hearing being conducted by Rep. Henry Waxman (D-CA), the CEOs of the companies contracted by FEMA to build mobile homes and trailers intended for the victims of Hurricane Katrina, insisted that the thousands of homes, uninhabitable for formaldehyde poisoning, were poorly manufactured due to lack of government regulation or inspection.
There were no rules, and the chairman of Gulf Stream testified that FEMA specifically directed them to not bother with further testing for formaldehyde. At the hearing, he further maintained that without rules and codes for their pre-fab homes, how could the company be held liable for using materials that leak toxins? Indeed.
The real revelation was that these (four) executives were, in fact, saying that business without government oversight will neglect ethics, quality, and responsibility. So, a concept long held on the left is now coming straight from the boardroom! They are, in essence, admitting the failure of unregulated, unbridled Capitalism. Capitalism, therefore, only works when society keeps it in check through government.
The Letter
You may have already received the letter, because, theoretically, it’s going to everyone who has an e-mail address registered with a frequent-flier program. In one of the most stunning calls to action ever seen in business, the CEOs of every major United States Airline (!!) have signed it, and its significance goes well beyond the astonishing words on the page. It calls for the end of a brutal era. Read on – more after The Letter:
An Open letter to All Airline Customers:
Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.
For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.
Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.
The nation needs to pull together to reform the oil markets and solve this growing problem.
We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com
Signed:
Robert Fornaro, Chairman, President and CEO; AirTran Airways
Bill Ayer, Chairman, President and CEO; Alaska Airlines, Inc.
Gerard J. Arpey, Chairman, President and CEO; American Airlines, Inc.
Lawrence W. Kellner, Chairman and CEO; Continental Airlines, Inc
Richard Anderson, CEO; Delta Air Lines, Inc.
Mark B. Dunkerley, President and CEO; Hawaiian Airlines, Inc.
Dave Barger, CEO; JetBlue Airways Corporation
Timothy E. Hoeksema, Chairman,Pres.and CEO; Midwest Airlines
Douglas M. Steenland, President and CEO; Northwest Airlines, Inc.
Gary Kelly, Chairman and CEO; Southwest Airlines Co.
Glenn F. Tilton, Chairman, Pres. and CEO; United Airlines, Inc.
Douglas Parker, Chairman and CEO; US Airways Group, Inc.
The deregulation to which they refer is the Commodity Futures Modernization Act of 2000, crafted by Sen. Phil Gramm (R-TX), after extensive (and lucrative) lobbying by Enron - who had already gotten unique concessions on oversight from his wife, Wendy Gramm, when she was head of the Commodities Futures Trading Commission (CFTC) under Presidents Reagan and Bush, Sr. The CFMA 2000 was signed by President Bill Clinton. Phil Gramm is now the lead economics advisor in the McCain campaign.
It looks like even big business has had enough of his kind of economic policy, and even they agree that it’s time for a big reversal of policy.
