At what point in time are the American people going to take a look at our nation's history and realize that deregulation and non-enforcement of regulation as a tool to stimulate the economy doesn't work? Not only does it NOT work, but it's a disaster and has the opposite desired economic effect? I am literally shocked every time I hear an educated adult making the argument that deregulation benefits consumers. I won't disagree that the smallest possible government is a good thing. I vehemently disagree, however, with how small is too small.
As Ronald Reagan said in 1982 when he signed the Garn-St. Germain Depository Insurance Act (this deregulated savings & loans and made ARM mortgages legal), "I think we hit the jackpot." I assume he meant "we", as Americans - at the time. But as the years drag on it's apparent that "we" should have been referring to "the wealthiest 1% of Americans." Reference the chart below, from the Institute for Policy Studies, that demonstrates the distribution of wealth in America as of 2007.
This was, of course, the same right before the Great Depression as well. When they also promoted an excessive laissez-faire approach to governing. See this chart that shows the percentage of pre-tax income that went to the top 1%. What happened after both of those peaks?
In the last thirty years, we have deregulated or let enforcement of regulation go on consumer protections, utilities, mine safety, oil drilling, environmental protection, and banking. Food safety, education, heavy metals testing - even import inspection at our ports is all but non-existent these days, with whatever regulatory agencies created to serve these functions losing funding each and every year, even as their work burden goes up.
Electric Deregulation: From USA Today - Rates are 30% higher in the states that deregulated electricity in 2006. That grew from 24% in 1990. Inflation was the same, but deregulated electricity rose 6% more than regulated electricity.
Banking: We all know what deregulation did to the mortgage, investment, and banking communities. If you'd like to read a good review of it, try here.
It's been rehashed a million times already, so I'll just refer you to go ask the unemployed how the various banking deregulation bills worked for job creation in this country. See Desperado's blog for information on the unemployed today.
Food Safety: All those recent food recalls and raids on rodent infested food plants? From CQ Politics: "The FDA is responsible for more than 150,000 food facilities, more than 1 million restaurants and other retail food establishments, and more than 2 million farms, as well as millions of tons of imports." In 1978, there were roughly 35,000 facility inspections - by 2009, there were roughly 10,000 per year. The annual budget of the FDA, which polices 25% of US GDP, was $2.04 billion - according to Newsweek, that's less than the operating budget of a single school district in suburban Washington. Enjoy that gas station sandwich.
Look at the millions of gallons of oil killing our coastal communities (and economies) right now and you've actually got people opposed to regulating drilling (or even enforcing existing regulation). Obama's proposal to stop drilling on 33 exploratory rigs until they can demonstrate they can clean up a spill if one occurs is being hailed as a disaster worse than the oil spill itself by conservative Governors of the very states being devastated by the effects of the spill! Why? Fishermen and tourists don't make campaign contributions or have paid lobbyists to hear the true costs of these reckless actions by corporations. It amazes me that people that believe planning for contingencies is behaving in a manner that over-burdens business want to run our country.
If at this point you still think blanket deregulation of everything is good for the economy, there is simply no hope for you. Logic and common sense and fact aren't within your realm of understanding and you will be more at home at the websites of Michael Savage, World Net Daily, and Glenn Beck.
No one advocates for too much regulation, either - but we've let the pendulum swing too far to the right. It's time to bring it back to center.
here ya go, kel - news today on exactly why it is harmful to let dollars stagnate at the top of the pyramid:
http://www.nytimes.com/2010/07/17/business/economy/17consumers.html
we have to remember that Brooke Astor (John Jacob Astor heir) and oil-man Sid Richardson (ancestor of Bass Bros.) both had variations on the theme:
" Money is like fertilizer - the higher it's piled the more it stinks; to do any good, it has to be spread around "
We must not forget that money is just an economic tool, a tool to be respected & put to use, not hoarded, because hoarding destroys both capitalism and democracy.
It is one of those things that in the abstract sounds good, but just not so in reality. The problem is that our conservatives are stuck in Smithonian economics from before the industrial revolution. Self-regulation only works when there is enough competition to force it. When you boil down 100 different competitors to a half-dozen you promote short-term thinking and make screwing over the consumer more advantageous.
Think about it this way. Think about any major product you want to buy. How many true competitors are there? If someone screws you over it is more likely you'll be compelled to come back to them. Consumers can help themselves some by remembering these bad experiences and linking point A to point B with companies that pollute, screw over their employees, or provide shoddy service. Unfortunately, most don't.
Said to say, the facts just don't matter. Deregulation is a variation on voodoo economics which Paul Krugman has recently referred to as yet another zombie lie -- proven false time and time again but it never stays buried. In addition, people tend to avoid situations where they might be confronted by uncomfortable facts which could challenge their cherished world view.
I will disagree with you. Deregulation does stimulate the economy. However it usually leads to bubbles caused by excess. The repeal of Glass-Steagall led to the massive use of leverage to "gamble" with. While the economy was strong it only made things better. Fortunes were made, people were getting rich "flipping" houses and times were good. Similar to the roaring twenties.
However, just like the roaring twenties it all had to end. Home prices can't keep going up forever and bubbles tend to burst. The rest is history.
Hopefully we are learning that not all regulation is a bad thing. I will take slow, steady and sustainable growth over a huge bubble any day.
Kelly, you may single-handedly put a bullet through the dumb blonde myth. As shortstuff said, spot on.
Spot on! I've said this (but not as well as you!) for years!
Add in deregulation of the airline industry. At the time, we were told that "increased routes, carriers would benefit the consumer with lower air fares, etc."
Does ANYONE believe that now? How does your latest flight feel comfort-wise compared to what air travel was like 30 years ago? And not only in comfort but in cost? Fees added here, fees added there......40 years ago I could fly across the country and have a free meal, snacks, drinks, pillow, blanket....and not have to worry about sitting on the tarmac for 6+ hours not allowed to return to the gate. Fares are higher, customer service is in the toilet. Along with consumer satisfaction.
Then we had college tuition deregulated. Tuition (at least in Texas) has skyrocketed over the last 10 years. Thank God both of my sons are grown.
Deregulation, in my opinion, is just a code word for: soak the poor, give to the wealthy.
Sadly, there are too many people still buying into the lies fed to them by Bleck and Lardbutt. Sad sad sad. Evidently their education was "deregulated" also.
yep, Kel, we got a problem-
corporations are designed (rightfully) to get cash and assets to the top as soon as possible for best management.
the same tools work for banks and bankers, unfortunately enabling capital to leave the country for investment in BRIC countries after the selling or liquidating of assets/companies in the U.S.
human nature being what it is, tax policy was originally devised in this country to counter-act this tendency of things to gravitate to the top of the economic pyramid, where they stagnate if not somehow sent back to the lower layers of the pyramid to be spent and percolate back up.
instead, as taxes have been repeatedly reduced on the top of the pyramid, actually funded tax increases on the bottom of the pyramid, and the result is a pyramid that is top-heavy and stagnant, which is killing capitalism's growth.
our economy requires re-distribution from the top of the pyramid for dollars to circulate and capitalism's life-blood - GROWTH - to occur.
it's not socialism, it's not any " ism ", just fact - the economy benefits more over-all and the multiplier factor comes into more play when 1 million people go to Wal-Mart or Target or Costco to spend $25 each than when 1 person spends the $25 million by her/himself - the money doesn't cross enough palms that way.
it's just economic fact, it's not class war-fare; the economy shrinks when too many dollars get vacuumed to the top of the economic pyramid - and get stuck ! the primary reason for estate taxes was to get stuck dollars un-stuck.
one of the things I like most about Houston is people have always understood this and we can see where Jesse Jones, Ima Hogg, the Cullens, the Blantons, the Hobbys, the Taubs, and myriad legions of so many others have tried to counter-act economic inefficiencies.
unfortunately, greed and fear being easy to appeal to, it has become very easy to promote ideas for the economy which are nothing more than greed wrapped in slogans, and whomever can raise the most cash usually gets elected. this infection of democratic processes by corporatism is about to eat us alive.