Congress's attempt to steer manufacturers and retailers away from using conflict minerals from Central Africa is misguidedly punishing corporate America in the hope of advancing African peace, according to Bill Frezza.
Frezza, a partner at the venture capital firm Adams Capital Management, blasts proposed regulations requiring public companies to disclose whether the products they manufacture contain tin, tungsten, tantalum, or gold taxed or controlled by rebel groups in the Democratic Republic of Congo or neighboring countries.
Frezza fears that the rules, which the Securities and Exchange Commission is drafting and which currently don't carry a penalty for non-compliance, will prove excessively burdensome for businesses. Compliance, he explains "is sure to cost countless companies serious money. And once a vast reporting infrastructure is in place policed by an army of government inspectors that need to be paid, which do you think is more likely to follow--peace or fines?"
The difficulty in complying with the law's reporting requirements guarantees the initiative will be futile and only stoke chaos, he argues:
It would be one thing to ban American corporations from purchasing "conflict minerals" directly from rebels in central Africa. Perhaps it would do some good, with only a modest burden imposed on a few ore importers. But erecting a vast new regulatory bureaucracy covering thousands of globally sourced products requiring chain-of-custody documentation and auditing from raw materials through retail is insane. How do the costs imposed across our economy ever get weighed against the purported benefits delivered to some far off land? Congress's answer? Who cares, it's someone else's money!
The law, Frezza adds, epitomizes Congress's bloated power and the forces plaguing the economy in "treating American businesses as if they were cost-free instruments of public policy" and creating an environment in which businesses don't know "what crazy rule is going to pop out of Washington next." He concludes:
The fact that there was bipartisan support for this insidious economic intrusion, which will require hundreds of pages of SEC regulations just to define, belies Republican claims that they have a clue how to get businesses moving again. Perhaps they were afraid to speak out against this madness knowing that MoveOn.Org would label them racist enablers of rape and mass murder, such being the current state of partisan political discourse.