There are always drum majors for the status quo. They are status quo beneficiaries who would lose by change. They fight technological innovation or invention that would benefit society handsomely. They epitomize William F. Buckley’s memorable definition of a conservative: “[S]omeone who stands athwart history, yelling ‘Stop.’ ” They are commonly known as Luddites, named after British workingmen who destroyed machinery to save the jobs. If Luddites had their way, the nation would resemble a petrified forest. We would travel in a coach and six instead of in automobiles.
Every regulatory change gives birth to new Luddites. The silliness of their arguments is no deterrent. Take the contemplated Securities and Exchange Commission (SEC) rule change to bring filing requirements into the Age of the Internet. For more than two years, the SEC has deliberated over proposed Rule 30e-3. It would relieve companies and mutual funds of a mandatory burden of filing and distributing required reports or disclosures to shareholders and the public in hard copy. Under the proposed rule, the recipients would be permitted to choose between electronic or paper receipt — a pro-choice rule.
Rule 30e-3 would also diminish environmental stress by reducing the demand for paper. At present, companies twice annually mail 440 million required SEC reports averaging 189 pages. The SEC’s electronic option would preserve approximately 2 million trees yearly, assuming 8,333 paper pages per tree. Companies and their shareholders would save $2 billion over 10 years, which would benefit the 43 percent of households that own mutual funds and the 55 percent who own stock.
But today’s Luddites are fuming over the SEC’s investor choice rule that could slash their profit margins. The American Forest and Paper Association and the Envelope Manufacturers Association jointly funded Consumers for Paper Options (CPO) to oppose it. The CPO is a front organization to conceal the ulterior financial motives of its paper company benefactors. It would be more accurately described as an enemy of both the environment and investor disclosure options.
The CPO is furiously lobbying members of Congress — especially in tree-mill states like Maine — to scuttle Rule 30e-3 with legislation. This attempt to hijack the legislative process for private advantage is what the U.S. Constitution’s architects deplored. James Madison elaborated in Federalist 44: “The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less informed part of the community.”
Congressional detractors of the SEC proposed Rule have taken hyperbole and insincerity to new levels. Rep. Bruce Poliquin (Maine Republican) may have wept on the House floor in remonstrating, “Millions of our fellow American will be left in the information desert.” Mr. Poliquin neglected that any investor harboring that contrived fear may ask for snail mail paper disclosures, like a recent 1,463-page annual report of AXA Equitable Life Insurance Co.
Sen. Susan Collins (Maine Republican) has similarly sounded the tocsin against the Rule because of “confusion and potential financial discord among Americans who receive these financial disclosures [electronically].” It speaks volumes, however, that the senior senator from Maine did not make that assertion under oath.
Have Rep. Poliquin and Sen. Collins sold their souls for a mess of pottage?