State-Owned Enterprises (SOEs) and Human Flourishing in the USA

© 2014 Robert Osburn

I attended a wonderful memorial service for a true man of God the other day.  While there, I ran into a Chinese friend whom I have known for decades, and eventually the conversation progressed to business, especially since he has long been employed by a large, well-established firm.  As a theologian and an international educator, I am very interested in business as one of God’s tools for human flourishing (and will teach about this when in Africa later this summer).

“Our big companies are becoming like branches of the US government, “ he said.  I echoed back with the state-of-the-art term for this phenomenon: “State-owned enterprises,” or SOEs.    SOEs are businesses owned partially or completely by governments (think of the former Soviet Union or today’s People’s Republic of China).  SOEs are loaded with all kinds of business problems and maladies that augur against human flourishing:  cronyism between government officials and business leaders, corruption and bribery, inefficiencies galore, shoddy workmanship, and chronically insufficient capital investments.  The result often is a lack of competitiveness, and the net result of noncompetitive behavior is that taxpayers often end up subsidizing these industries for the benefit of a favored few whose future is secure in the SOEs, however poorly they serve human needs. 

The problem my friend was getting at is that many big businesses in the US are increasingly adjusting their business practices to almost become extensions of government agencies, and thus becoming a type of SOEs.  As the US government imposes more regulations on businesses, the businesses not only try to satisfy the regulators but also begin to subtly adapt their business practices to an environment of heavy regulation.  The greater the amount of regulations, the greater the challenge for new businesses to arise as competitors to the big, old businesses that have been satisfying the regulators.  Eventually, big business welcomes regulation because it effectively keeps out competitors.  As long as there are few if any competitors in a particular industry or service, then big, old businesses are able to keep raising their prices and/or decreasing their quality while ensuring the return on investment (ROI) that they want to maintain.  To reiterate: The problem is that big business begins to welcome government regulation as a way to inhibit the growth of competition.

This is no screed against government regulation.  In a sinful, fallen world, government regulation is appropriate in order to ensure product and worker safety, as well as an open, competitive marketplace that exists to serve human needs through innovation, creativity, research, and a pricing environment that responds naturally to supply and demand.  The problem with the emerging SOE phenomenon in the US (and Western Europe, as well) is that more and more big businesses are effectively using government regulation to perverse ends, that is, to undercut the original purpose of government regulation in a fallen world.  They begin to welcome more and more regulation as a way to eliminate potential competitors that must raise ever-greater mountains of cash in order to satisfy the demands of regulators.  The net effect, as I have just written, is more expensive  and/or shoddier products ands services, and all of this is to the detriment of human flourishing.

This phenomenon demands a response from redemptive change agents (RCA) who intelligently, skillfully, courageously, and creatively apply a Christian worldview to challenges in their societies that inhibit human flourishing.   US-based RCAs must aggressively demand that government regulators cease-and-desist when their regulations result in a SOE-type environment.  Wise legislators will recognize the problem and will use their power to rein in government bureaucrats who believe their job is to evermore-skillfully and aggressively stamp out evil, but whose efforts have the perverse effect just described.  If these regulators are not reined in, America will continue to be the lagging, underperforming, weak job-creating society that we have seen since 2008. 

If my Chinese friend (who has long since become an American citizen) is right, then we have sound theoretical reasons to regain control of a government regulatory machine that’s not only out of control, but one that big business is starting to welcome and embrace.