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By Dom Serafini
I wonder if, when the big corporate bosses decide to get rid of certain rules and regulations, they think about what the CIA calls “blowback.”
We commoners know that for every action — be it political, social or industrial — there will be a reaction, which, despite any best intensions, is always unpredictable. The question is: Do the corporate elite and their surrogate politicians know about “blowback”?
The term “blowback” comes from the poisonous gas that the wind pushed back to those who used it during World War I.
Even though the unpredictability of any consequences dates back to the political economist Adam Smith in the 1770s, only in 1936 did the American sociologist Robert K. Merton publish a study called “The Unanticipated Consequences of Purposive Social Action.” The book gave light to all kinds of analysis, like unintended or unforeseen consequences that were the basis for the “rational choice theory” movement, which was popularized in the 1970s by the politically conservative economist Gary S. Becker, who graduated from and was a professor at the (in)famous Chicago School of Economics.
In politics there are many cases of blowback, like in 1953 when the U.S. imposed the Shah’s rule in Iran to avoid the nationalization of oil, it laid the foundation for fundamentalist Islam that took power 26 years later.
But, the major cases of blowback occur in finance, industry and the service sectors. In our industry, for example, when U.S. broadcasters celebrated in the Hamptons the elimination of the fin syn rule, little did they know that Hollywood was plotting their demise.
When the oil industry pushed for the weakening of regulations, the BP disaster occurred. According to several reports, the principle cause of the U.S. Gulf Coast oil spill (the biggest environmental disaster in American history) points blame at lax oversight by MMS, the now defunct government agency in charge of regulating offshore drilling.
When Wall Street brass opened champagne bottles to celebrate the elimination of a SEC regulation, the removal of a banking rule or the demise of an antagonist like former New York prosecutor Eliot Spitzer, little did they care that any one of those missing rules would eventually cause the world’s major financial meltdown, like the one in 2008, and the U.S.’s worst financial crisis since the Great Depression of the 1930s.
When the toy industry spent millions to have Consumer Product Safety (CPS) rules removed, the sector suffered a massive toy recall of lead-tainted products in 2008. The damage was so great that, subsequently, the toy industry pushed for more regulations and blamed regulators for not being vigilant. The CPS defended itself by blaming president George W. Bush’s administration for cutting funds, which, before 2008, reduced the agency to just 15 inspectors and only one employee to conduct safety tests on toys.
And, do you think politicians learned anything from those mistakes? No way! So, U.S. president Obama’s administration is now proposing to cut FAA funding, thus reducing airline’s safety inspectors and delaying modernization of the U.S. air traffic system. This to satisfy the airline industry that wants fewer rules regarding pilots’ fatigue, aircraft maintenance and shipment of dangerous goods.
But, do I blame corporate brass for all those disasters? Not completely. Their job is to take market shares from competitors, to generate more revenues and to make more profits by cutting costs and regulations cost money in the short run. Should these bosses avoid blowback? In a certain respect, yes in order to keep consumers’ trust, because losing consumers’ confidence is not good for business. But their main job is to satisfy quarterly reports, not a Politburo’s five-year plans! Are the chemical and food industries main concerns with public health? No, their concern is making money, that’s why, according to the Washington Post, they want potentially unsafe chemicals in products like baby bottles and food can liners. And this is why, according to Politico, ExxonMobil wants to block restrictions on an allegedly toxic plastic softener used in toys.
In my view, the responsibility for man-made disasters lies exclusively with politicians who let special interests finance their campaigns or are outright corrupted by a political system that is no longer representative of the people, but of special interests.
Therefore, when a disaster occurs, politicians who voted to remove rules and regulations should pay the damages.