(A Populist Capitalist Blog)
What is the proper amount of government oversight for business?
Too much = red tape and loss of prosperity, discouragement of entrepreneurship, innovation, and resourcefulness as well as the destruction of economic value and a reduction in America’s ability to compete in the global marketplace.
Too little oversight, well, the toxic loans that underlie much of the current economic malaise are an excellent example of the potential outcome when the Congress, the Executive Branch, the SEC, and other government agencies abdicate their fiduciary responsibilities.
Think of business as a race horse and government oversight as a jockey. To win the race, to stay on track, to achieve the prize, you need not only a good horse but a smart, knowledgeable, experienced jockey who knows the horse, its capabilities, its weaknesses, AND who has a good understanding of overall race strategy. That’s asking a lot. You most certainly do not want a fat jockey or a stupid jockey or an inexperienced jockey. When a horse is feeling its oats or senses that its rider lacks a firm hand or is not knowledgeable, there is a tendency to buck and try to throw the jockey off. While that may create some short-term satisfaction for the horse, it is usually disastrous in terms of winning the race. And in our analogy, the goal is to harness human effort, energy, and emotions so as to create as much prosperity as possible for as many as possible for as long as possible.
Any analogy breaks down at some point, but I find this “Jockey-Race Horse” story a great way to understand the proper balance between the institutions of commerce and government.
“A corporation’s primary goal is to make money. Government’s primary role is to take a big chunk of that money and give it to others.”
— Larry Ellison, Co-founder and CEO, Oracle Corporation
“To speak practically and as a citizen, unlike those who call themselves no-government men, I ask for, not at once no government, but at once a better government. Let every man make known what kind of government would command his respect, and that will be one step toward obtaining it.”
— Henry David Thoreau
“No government can love a child, and no policy can substitute for a family’s care. But at the same time, government can either support or undermine families as they cope with moral, social and economic stresses of caring for children.”
— Hillary Rodham Clinton