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There was a time in America when men with lunch pails walked to the neighborhood factory, where they were able to proudly bring their families into the middle-class. Now educated Americans think that factories bring nothing but harmful pollution.

For its first 160 years, the federal government never consumed more than three percent of national income, except during wartime. The percentage started to increase in the 1930s with the New Deal. It now stands close to 20 percent.

Growing in lockstep with the growth in government and government-related jobs are professional associations that have a vested interest in the regulatory state.

Family-friendly policies and programs create work and jobs for HR people. It is not in their interest to give opposing views a fair hearing.

Employers have a right to know the agendas and philosophies of professional associations that are supported by them through reimbursements to employees.

Reimbursing employees for memberships in pro-regulation associations is akin to aiding and abetting the enemy.

Subversive Subsidies

by Craig J. Cantoni¹

In their December 22, 1998 Wall Street Journal article, "An Uncharitable Look at Corporate Philanthropy," Craig Cantoni and co-author Marianne Jennings discussed how companies shoot themselves in the foot by giving charitable contributions to external, pro-government groups that do not believe in free markets. In the article below, Craig discusses the growing cadre of occupations and associations that owe their existence to the regulatory state — and how business plays a role in their growth through subsidies to their own employees.

Cognitive Dissonance

Many Americans are concerned that society is bifurcating into "haves" and "have-nots." At the same time, the same people support public policies and government regulations that exacerbate the problem. Even more puzzling, companies subsidize people and organizations that support big government to the detriment of business interests and societal wealth creation. What is going on?

With respect to the general public, what is going on is cognitive dissonance. It is difficult for people to admit that they hold conflicting beliefs, even when presented with irrefutable evidence. They are incapable of seeing the connection between their belief in big government and their belief that the nation is bifurcating into two economic classes, for that would mean that one of their beliefs is wrong.

But that explanation is too kind. A more likely reason is self-interest. An ever-increasing number of workers, particularly professionals, are dependent on the growth of the regulatory state for their pay, power and prestige. As government grows, so do their careers and income. More and more of the best and brightest people in America are those who interpret and enforce laws and regulations, not those who produce tangible products. They have nothing to lose and everything to gain in their endless pursuit of pristine air, perfection in the work place and social utopia, even if the pursuit results in lower pay, more expensive products, frivolous lawsuits, and a loss of manufacturing jobs for the unskilled and uneducated.² Ironically, many of them profess to be compassionate poeople who are concerned about the disadvantaged.

According to the Bureau of Labor Statistics, the civilian work force grew 13% between 1988 and 1998. High wage manufacturing employment remained static during that period, meaning that manufacturing jobs decreased as a percentage of the work force. At the end of 1998, the average hourly wage of production workers was $13.60, excluding benefits, or 54 percent higher than the hourly wage of retail clerks, many of whom do not have the medical insurance and other benefits found in manufacturing.

Despite those dire statistics, a white-collar neighborhood not too far from the author's home fought the building of a high-wage computer chip plant, just as neighborhoods throughout the country fight any industry that is susceptible to environmental hysteria, no matter how environmentally benign the industry is.

There was a time in America when men with lunch pails walked to the neighborhood factory, where they were able to proudly bring their families into the middle-class. Now educated Americans think that factories bring nothing but harmful pollution. At the same time, they see nothing wrong with the proliferation of convenience stores, strip malls and casinos, choosing to ignore the social "pollution" caused by low-wage retail jobs and gambling addictions. The reason for this apparent contradiction is simple: The educated elites in society have other job opportunities.

Regulation = Growth Industry

BLS statistics show that at the end of 1998, there were about 622,000 lawyers, 113,000 paralegals, 163,000 inspectors and compliance officers, 544,000 human resources people, 1 million accountants, and 2.2 million accounting clerks and bookkeepers — to name some of the the occupations that earn at least part of their income from complying with laws and regulations. These numbers are only the tip of the iceberg, however, for there are scores of other private-sector occupations that are not identified in the BLS statistics but are dependent on government regulations for almost all of their income.

The occupations are too numerous to list here, but examples range from the obvious to the obscure, including pension experts who help companies comply with the Employee Retirement Income Security Act, laboratory specialists who determine the fat content of green beans for federal labeling requirements, and toilet designers who make sure that commodes do not contain more than the federally mandated amount of water. Then there are all of the businesses that provide training, services and products to people in regulatory-related jobs. Examples include the producers of employment law training videos, the makers of product warning labels, the publishers of compliance guides, the distributors of air monitoring equipment, and thousands of other businesses.

For its first 160 years, the federal government never consumed more than three percent of national income, except during wartime. The percentage started to increase in the 1930s with the New Deal. It now stands close to 20 percent. When the cost of regulations are added in, government consumes an astonishing 50 percent of national income. To keep the voracious beast alive, income taxes and payroll taxes have increased 400 percent since the 1950s, forcing both mothers and fathers into the labor market just to pay their tax bill, a bill that is higher than what families pay for food, clothing and shelter. America is just starting to realize the resultant social consequences of absentee parents and institutional child care.

Growing in lockstep with the growth in government and government-related jobs are professional associations that have a vested interest in the regulatory state. According to our research, they number over one hundred. The American Bar Association is one of them.

The preliminary agenda for the ABA's 1999 midterm meeting reads like a platform for the left-wing of the Democratic Party. It includes this item: The Special Committee on Medical Professional Liability "supports enactment of federal legislation to amend the federal Employee Retirement Income Security Act (ERISA) to allow action to be brought in the state courts against employer-sponsored health care plans under state health care liability laws."

Obviously, that amendment is not in the best interest of employers or employees, yet companies give financial aid to the ABA. How? By reimbursing in-house attorneys for ABA dues and for attendance at ABA functions. One would hope that company lawyers appreciate the reimbursements enough to keep their employer informed of the ABA's agenda and to fight their comrades in the ABA on behalf of their employer's interests.

Birds Of A Feather

Other associations are not as blatantly pro-regulation as the ABA, but they have a vested interest in big government nonetheless. Two examples are the American Society of Safety Engineers and the American Institute of Certified Public Accountants, both of which grew 54 percent and 21 percent, respectively, over the last ten years. But it is hard to find an association that could top the growth of the Society for Human Resources Management, which increased membership by 110 percent since 1990, almost paralleling the 130 percent growth in sexual harassment claims for the same period (only 20 percent of those claims are valid).

Some of the associations claim that they aggressively fight new federal regulations and lobby Congress on behalf of business interests. If true, that would run counter to the human instinct for self-preservation, since the demise of the regulatory sate would be their demise. Would tax accountants really vote for simplifying the tax code? Would HR Managers vote for repealing discrimination laws, safety engineers for dismantling OSHA, environmental specialists for weakening the EPA, or pension specialists for reforming ERISA? Sure, and Al Gore is a friend of the fossil fuel industry.

As reported in the Wall Street Journal a number of years ago, 66 percent of human resources people had voted Democratic in a prior election. That explains why so many HR people (about two-thirds, in our experience) try to impose liberal beliefs on their organizations, even if those beliefs have questionable benefits for employers, employees or society.

Family Friendly?

Take family-friendly policies and programs, a motherhood-and-apple-pie issue if there ever was one. How could any reasonable, progressive person see anything sinister in them? After all, family-friendly initiatives not only make it easier to attract and retain working women (and a few men), they also help society — or so goes the conventional HR wisdom. And so goes the literature from the Society for Human Resource Management.

It is an indisputable fact that America's epidemic of illegitimacy and single-parent households (usually headed by women) is a major cause of poverty, crime, school dropouts and behavioral problems in children, especially boys. A convincing case could be made, therefore, that the more that schools, businesses, the media, the government and society as a whole make it socially acceptable to have kids out of wedlock and to raise kids without the benefit of fathers, the more illegitimacy and single-parent households there will be. Perhaps making life easier for single working moms and dads is hurting rather than helping society in the long run.

That view is certainly debatable, but for some reason the possible dark side of family-friendly initiatives is not debated by most HR people, or by their professional associations. Maybe the lack of debate is due to cognitive dissonance, by the inability to admit that their good intentions may be having a bad effect and may be hurting the people they are designed to help. A more plausible explanation is that family-friendly policies and programs create work and jobs for HR people. It is not in their interest to give opposing views a fair hearing. Maybe that is why so many HR people and their associations do not question the whole panapoly of liberal beliefs, including such articles of faith as diversity training and racial preferences.

Caveat Emptor

The political views of those HR professionals and other staffers who favor the federal government are none of the business of employers, as long as those views are not taken into the work place to the detriment of employers and employees. However, employers have a right to know the agendas and philosophies of professional associations that are supported by them through reimbursements to employees. Employers would be dismayed to see the leftist, pro-government nonsense that some associations publish in their newsletters and distribute at their conferences.

Reimbursing employees for memberships in pro-regulation associations is akin to aiding and abetting the enemy. Companies are not only paying for the enemy's ammunition but are also sending in their own troops to reinforce their opponents.

Endnotes

¹Some could accuse the author of hypocrisy, since in addition to managing line operations, he spent a considerable part of his business career heading up staff functions closely aligned with the regulatory state. To set the record straight, Craig walked away from a lucrative executive career and began his consulting business because he felt that he was becoming a de facto agent of the federal government, particularly in his role as a human resources executive. Instead of focusing on making the work place more productive and rewarding, he had found himself spending more and more time interpreting and enforcing government regulations that were hurting business and society. The fact is, his public policy positions result in lost business opportunities, since many gatekeepers in big companies dislike his pro-free-market, pro-entrepreneur, anti-bureaucrat message. He also admits to being a member of some associations that favor the regulatory state. He is a member for the same reason that the Central Intelligence Agency subscribed to Pravda, the Communist Party newspaper.

²Craig is the former president of a large environmental-action group in the New York metropolitan area. He is in favor of reasonable environmental regulations, but is opposed to environmental extremism and to environmental laws that do not take both costs and benefits into consideration. He knows firsthand how one-sided the media coverage is of pro-environmental groups.

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