Upton Sinclair, an ardent anti-capitalist, wrote TheJungle to expose what he thought were the dangers of a freemarket economy.

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He intended to do this through his plot about a heartlessmeatpacking company that took advantage of the poor working classit employed.

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When Teddy Roosevelt read it, he saw only one thing--the awfultruth of how the sausage is made (literally).

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He immediately had the federal government inspect the meatpacking industry and confirmed what Sinclair had written about. Inno short time, Congress passed and Roosevelt signed into law thePure Food and Drug Act of 1906 and the Meat Inspection Act.

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In a low or slow information environment, it’s easy for abusiness to hide problems. In those cases, it’s nearly impossiblefor consumers to find those problems and react accordingly (i.e.,by not buying that product or service).

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In matters involving food or money, information flows morequickly (mainly because there’s an incentive). Buyers move at thespeed of sound, unlike regulation, which tends to ooze ever soslowly like molasses.

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We may be witnessing this first hand in our industry (see“Will Increased 401k Fee Scrutiny Trump DOL’s NewFiduciary Rule?FiduciaryNews.com, February 23,2016).

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It’s very possible all the media focus on 401k fee litigation has obviated theneed for the DOL’s proposed Conflict of Interest(aka “Fiduciary”) Rule--at least as that newrule pertains to 401k plans.

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Why? Because, through their own purchasing choices, plansponsors may already be enforcing what the rule was meant toenforce.

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Scott J. Stitt, Counsel at Tucker Ellis LLP in Columbus, Ohio,says “the Tibble v. Edison case from the US Supreme Court in May2015 added a lot of uncertainty over the application of the statuteof limitations in ERISA fee cases, and how far back a plaintiff canlook when asserting a breach of fiduciary duty claim. Thatuncertain liability window--plus the fiduciary rule and its newscommentary, plus some big recent fee case settlements (like in theNationwide case, and the Boeing case, to name just two)--have ledto increased discussions regarding fees. I think of all of thesethings as creating a ‘critical mass’ of fee news and commentarythat has caught everyone’s attention.”

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The free market, enhanced by the instant communicationsenvironment we currently live in, may be the most effective SROaround.

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It’s not 100 percent foolproof, but it can move at the speed oflight. We see this every day in the stock markets.

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Once word--even an unconfirmed whisper--gets out that a companyis tainted (either through poor earnings, a failed product, or ascandalous investigation), the price of that company’s stock fallsprecipitously.

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What applies to the stock market holds for all markets.

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Twenty years ago, most 401k plans held funds with 12b-1fees.

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Once plan sponsors, primarily through class action suits,discovered 12b-1 fees increase fiduciary liability, that productbecame tainted.

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Today, very few 401k plans offer mutual funds with 12b-1 fees.Indeed, so dirtied are 12b-1 fees, it’s remarkable any plans stillhold funds that contain 12b-1 fees.

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It wasn’t regulators that caused this.

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Not only are 12b-1 fees still legal, there are specificprovisions in the DOL’s regulatory framework that continue topermit their use.

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Furthermore, no one expects the new Conflict of Interest Rule tochange this exemption in any meaningful way. So, once again, themarketplace is acting in advance of the regulators.

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There are only two kinds of products and services that compel analmost immediate response from consumers--those of the stomach andthose of the wallet.

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Lessons derived from these markets show us the true value--andthe ultimate sustainability--of capitalism. The free market isself-regulating. In the most prominent examples of this,regulations are always a step behind, often coming in a little toolate to help and with unintended consequences that can stifle trueprogress.

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This is bad news for the forces intent on defeatingcapitalism.

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As Upton Sinclair once lamented about the reaction to his book,he said, “I aimed at the public’s heart and by accident hit itsstomach.”

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Christopher Carosa

Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).