Deregulation explained

The third pillar of a corporate policy agenda

Image: cfib-fcei.ca

This series of posts has been about the three pillars of a corporate policy agenda. These are:

1. Privatisation of the public sector

2. Austerity/cuts to public services

3. Deregulation of the corporate sector

I’ve provided brief discussions of privatisation and austerity. This post will summarize the third policy pillar, deregulation.

What is it?

Deregulation refers to a policy program of rolling back regulations on businesses and corporations. There are many different types of regulations that corporations might want to get rid of because they impact their profits. Laws and requirements regarding ensuring a safe working environment, not employing children, providing workers fair pay and rights to organize to challenge unfair conditions, anti-trust laws (laws that prevent corporations from consolidating and building monopolies), laws that prevent unscrupulous or risky speculation, investment, or lending practices, laws that protect renters from exploitation by landlords, laws that protect the environment, taxes and restrictions on moving money to another country to avoid them, to name a few.

Why have regulations in the first place?

Often politicians who push for deregulation claim that the laws and regulations make it impossible for business to function as it should. They use terms like “cutting red tape” and “freeing the wealth creators” or “increasing efficiency and productivity”. These terms indicate a view of economics that believes that corporations should be free to generate as much profit as possible, because they will then invest the money into more infrastructure, development, and job creation. This view is also known as supply-side or trickle-down economics because the benefits of increased wealth (generally through tax cuts) in the corporate sector are thought to “trickle down” to everyone else in society.

Because corporations have as their ultimate goal the generation of profits, in practice, they have always been unscrupulous and immoral actors unless regulated by government. They have shown time and again that they will not put money into providing a safe working environment or paying decent wages or giving their workers protections. They have engaged in speculative and risky investment and immoral lending practices and formed monopolies. They have failed to invest in infrastructure or safety measures.

In short, the reason why governments have regulations on corporations is that they will not behave appropriately unless they are regulated. This can have harmful effects for individuals and communities. And because corporations are intimately involved and enmeshed in a nation’s economic matters, bad behavior can have devastating consequences on national and even global economies.¹

How does deregulation work?

Corporations lobby government officials and politicians to push for deregulation. When a favorable government takes power, this often looks like repealing a bunch of laws or modifying existing bills to eliminate regulations that corporations don’t like. In addition, corporations will push for new laws to entrench their power and ability to generate profits. This has been called “reregulation” because in practice, even politicians or political parties who claim a deregulation agenda are really working to codify in law corporate protections from any future government regulation or democratic interference. Corporations would love to be insulated from any threats to their profits, and they will push governments to provide the insulation, even if it is not in the best interest of the public.

How does it benefit corporations?

Less regulation equals more profits, simple as that.

Deregulation in Aotearoa today

The first year of the coalition government has largely been one of deregulation. They campaigned on repealing a lot of Labour’s bills, including a bunch of regulations. In their first year, they have kept their promise, rolling back many regulations, often using urgency to bypass the usual parliamentary process. A short list of their rollbacks and reregulation includes

• Repealing fair pay agreements, which were passed to enable more fair collective bargaining arrangements between employers and their workers

• No cause evictions, which allow landlords to evict tenants for any reason within 90 days

• 90 day trial periods for all employers, allowing employers to fire workers for no reason within 90 days, making it easier to hire short term workers without having to pay for any worker benefits

• Reforms to the Resource Management Act which has provided environmental protections, including scrapping farming, mining, and industrial regulations

• Repealing the Smokefree legislation, which provides more incentive and opportunity for tobacco companies to market and sell in Aotearoa (tobacco companies were also given a tax cut)

• Reversing the ban on offshore oil and gas exploration

• The passing of the Fast-Track Bill eases a whole raft of regulations and requirements for corporate projects

• Changing laws around how workers vs contractors are defined, allowing companies to exploit workers and pay them less

As we can see, the government’s first year has been marked by a raft of deregulation or reregulation. Even bills which on first pass seem to be about other things turn out to have a corporate agenda. For example the Treaty Principles Bill is about redefining principles of the treaty in an attempt to void protections that have formed a barrier to corporate exploitation in the past.

Finally, the recently introduced Regulatory Standards Bill is an attempt by ACT and David Seymour to put into law a libertarian standard which prioritises property rights and the rights of corporations over the public good. This bill if passed will greatly increase the ability of the government to roll back regulation and tie the hands of future governments to undue the harmful effects.

Know it when you see it

Hopefully now the three pillars of a corporate policy agenda are clear and we know what to look for so we can fight back in the next couple years. The government is poised to deregulate, continue its austerity agenda, and move to privatise. But there should be no illusions about this agenda anymore. We need to organise and fight it in any way we can.

1. See this article https://jacobin.com/2014/01/clarifying-the-crisis/ for a discussion of factors involved in economic crises that are recurrent aspects of capitalism