Last January I wrote a column entitled: Are Polar Bears Edible? I pointed out that during good times, people worry about whether polar bears will have ice in one-hundred years—but when times are tough we wonder whether the bears are tasty.
I suggested that in the event of a worldwide financial crisis, we would likely focus our collective attention on government spending, and whether the corporate directors legally responsible for doing so were protecting our investments. In short, Americans would not worry much about whether companies were being socially responsible; we would worry about whether they were being financially responsible.
Little did I know at the time that less than a year later Americans not only would be confronting bank failures, a credit crisis, and a wildly gyrating stock market, but also a federal government taking actions that would make even Karl Marx blush.
With a handful of exceptions in the Senate and House, the only people who appear to be genuinely concerned about what has been going on in Washington, D.C., are the people who reside outside of Washington, D.C. They seem to think that playing high-stakes poker with $700,000,000,000 in taxpayer cash and nationalizing a sizeable chunk of the private sector merits more than a few days of hemming and hawing. Those pesky taxpayers!
Meanwhile, Capitol Hill has been so chaotic that it is hard to tell who is in charge. Is it Karl Marx, or the Marx Brothers? By the time this column appears, the so-called “rescue” may have been enacted, and most of the 535 members of the U.S. Congress will have bailed out of D.C. to return home for the election. What will they say when a constituent asks, “Senator Groucho, how in the heck did this fiasco happen?” or “Representative Harpo, who is to blame for this world-class mugging?”
Truth be told, it all goes back to the screwball notion that the basic laws of economics can be successfully violated by clever politicians bent on redistributing the wealth and dictating how the rest of us live. In other words, this debacle did not start on Wall Street; it came out of both ends of Pennsylvania Avenue.
First, Jimmy Carter and his merry band of congressional miscreants enacted the 1977 Community Reinvestment Act. The purpose of the Act was to provide credit, including home ownership opportunities, to “under-served populations.” In those days that was the politically correct way of referring to poor folks.
Second, in 1992 Congress mandated that Fannie Mae and Freddie Mac increase their purchases of mortgages for low-income and medium-income borrowers. When Bill and the Clintonistas came to town in 1993, they decided to use all within their power to browbeat, cajole and otherwise pressure the lending industry to provide low-income people with home loans. They were wildly successful! If you want to learn more, I would suggest reading a May 31, 1999, Los Angeles Times article by Ronald Brownstein headlined, “Minorities’ Home Ownership Booms Under Clinton but Still Lags Whites.” Radio talk show host Mark Levin features the Brownstein article at his show’s website.
In my opinion, the third and final straw that broke the polar bear’s back was the advent of the so-called Corporate Social Responsibility (CSR) movement created by environmental and social activists who, largely, despise capitalism and all that free enterprise stands for. The CSR crowd set about convincing appeasement artists in the public relations industry that their corporate clients had a social responsibility to focus on the “triple bottom line”—people, planet, profit.
The corporate socialists have also been monumentally successful. As a result, rather than concentrating on protecting and growing the investments of their shareholders, many business executives have been spending time and resources on social and environmental agendas that do not pass the economics red face test. Does this sound at all familiar?
Providing low-income people with housing loans that did not make economic sense may have felt good during the good times, but how does it feel now?
How does it feel now that many of the corporations involved in this social experiment no longer have a single bottom line, much less a triple bottom line? How does it feel to those who owned stock in these failed firms?
What about those of us who pay our mortgages and taxes; how do we feel about being asked to put billions of our hard-earned dollars in a pot controlled by Washington bureaucrats?
If the mainstream media told the truth about who created this debacle, I suspect there would be some feedback on Election Day. However, as people are saying more and more, don’t bank on it.
In the meantime, may I suggest that if you hear that a company in which you have invested has a fantastic Corporate Social Responsibility program, call that firm’s investor relations department and suggest that the CEO and the General Counsel might want to review what it means to have a fiduciary responsibility to the shareholders? Then, just for kicks, ask the person on the other end if polar bears are edible?
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