Corporate self-regulation is failing

The tragic crashes of Boeing 737 MAX airplanes have, once again, reminded the public of the dangers of regulatory capture and industry “self-regulation.” While many were shocked to learn that the Federal Aviation Administration (FAA), our government’s primary airline safety regulator, essentially handed over its responsibility to certify that airplanes are safe to the manufacturers of those planes, the reality is that this model of industry self-regulation is the norm, not the exception.

The Boeing crashes are a symptom of a much broader problem plaguing our country’s regulatory agencies, which have been entrusted to protect our health and safety. These agencies have been under systemic assault by conservatives and industries that have opposed almost any new regulations for decades. They have pushed an ideology of deregulation and self-regulation that undermines our government’s ability to protect the public – all to boost private profits.

{mosads}Their mission statement was succinctly described by former advisor to President Donald Trump Steve Bannon: “the deconstruction of the administrative state.” The Boeing crashes are what happens when government agencies that are supposed to protect the public are “deconstructed.”

Under Trump, attacks on regulations that protect the public have reached a feverish pitch. While efforts to undo many of the most important protections agencies established under the Obama administration are still underway, regulators have issued virtually no significant new health, safety, environmental or consumer protections during the Trump administration. Making matters worse, agency enforcement numbers have plummeted dramatically, meaning that agencies are doing virtually nothing to protect the public from bad actors that violate existing rules.

Without new standards to protect the public, and this administration’s unwillingness to enforce the law against corporate lawbreakers, the public can only hope and pray that industry will be able to police itself. Yet, allowing industry to regulate itself has a long track record of failure and disaster.

Our country’s biggest ecological disaster, the BP oil spill in the Gulf of Mexico and our country’s biggest financial meltdown since the Great Depression, the 2008 Wall Street crash, both were direct results of deregulation and blind faith in industry’s ability to regulate itself.

The Trump administration is already hard at work undoing the protections put in place to avoid the next financial crash or massive offshore drilling disaster. The U.S. Department of Interior has allowed dangerous offshore oil and gas drilling to continue by granting an astonishing 1,700 waivers to offshore drillers so they don’t have to comply with the safety measures put in place to respond to the cause of the BP oil spill. Soon, the agency will roll back the safety standard itself.

Meanwhile, the Trump administration has quietly rolled back many of the strongest Wall Street reforms put in place after the crash. Unsurprisingly, the result has been big banks once again engaging in risky activities and loading up debt.

It is simply unacceptable for our government to allow corporations to decide whether products and services are safe for the public when those companies have an overwhelming incentive to make products and services merely appear safe, so they can reach the market. This fundamental conflict of interest is at the heart of why industry self-regulation doesn’t work and leads to tragedies like the Boeing crashes.

We need strong regulators who are independent and at arms-length from the big and powerful corporations they are regulating. Under Trump, we’re heading in the wrong direction. 

Narang is the regulatory policy advocate for Public Citizen’s Congress Watch division.