It has not been a good spring for the proponents of economic deregulation. Consider the following:
Item: Goldman Sachs has been accused by the Securities and Exchange Commission of defrauding investors by creating a complicated bundle of toxic mortgage securities and then deliberately selling them to investors while secretly investing against the securities because they believed the bonds in the bundle would fail.
Item: A coal mine operated by Massey Energy experienced a catastrophic fire that claimed the lives of 29 miners. Massey had a history of safety violations before this disaster struck. Its CEO, Don Blankenship, had spent millions to get a judge elected, who then ruled against the plaintiffs in a suit claiming Massey had engaged in fraud.
Item: An oil drilling rig operated by BP (British Petroleum) exploded in the Gulf of Mexico causing a massive oil spill that threatens coastal marsh lands and wildlife across the entire Gulf region. The resulting leak allegedly could have been prevented had BP installed a safety device that is required in many other countries (but not the United States).
Notice a pattern here? If you are a tea-bagger, you probably notice that the government didn’t protect us. You would therefore claim that these incidents are another example of a broken system of our democracy and would then start looking for government agencies or elected politicians to blame. You’d focus in particular on the Democrats since they are the ones who got elected in 2008 (led by the guy whom you aren’t entirely convinced is even an American citizen).
You’d end up believing firmly that the only way to get things back the way they should be is to demand your right to be free of taxes, free of government interference, and free to carry your guns with you to political rallies and Starbucks.
On the other hand, if you are a thinking and concerned American citizen, you notice that each of these disasters occurred because of loose or non-existent government oversight and regulation of the industries that were the real culprits in the events. And you also are aware that the real issue turns on whether policy makers favor or oppose such a role for government.
The patterns of the picture may be perceived differently, but that fact doesn’t mean that both are accurate perceptions. In fact, the tea-bagger perception is based on ignorance and prejudice and is not deserving of serious discussion, notwithstanding that it gets a lot of what would otherwise appear to be serious discussion on Fox News and right-wing talk radio.
Part of the problem that confronts the country in this era of institutional distrust is the willingness of many Americans to pay the most attention to the message that has the most appealing ring to it. Ronald Reagan came to this realization early on in his political career, and he built his legacy on it.
Thus, he spoke of “morning in America,” as if he had discovered a long lost secret about the country. In reality, all he was doing with that, and other emotional, flag-waving sound-bites, was cloaking a radical policy prescription in feel-good language. And it didn’t hurt one bit that he was calling Americans out of the “malaise” that had developed after a decade marked by the Viet Nam War, the Watergate scandal, and the Iran-hostage crisis.
The country was longing for a sense of patriotic fervor, and Reagan deftly supplied it. And, to make his prescription even easier to take, he told everyone that the country would be better off with less taxation, thereby introducing the tax revolt that has become the mantra of the “re-born” Republican Party he spawned.
George W. Bush took Reagan’s approach to the next level. He used the flag and love of country in a way even Reagan hadn’t considered “doable.” He took the country to war under its banner. “Freedom” became the catchword of the decade, and it, too, was an easy sell, since everyone wants to be free (never mind how the word is defined) and since no one wants to live in fear of terrorism, which Bush conveniently and cleverly linked to an absence of freedom.
And so, he led us into a war that never should have been fought, while at the same time pushing the corporatist economic policies that have now come home to roost fully, as evidenced by this spring’s trifecta of disasters.
And it was all cloaked in “freedom”: freedom, as in “freedom from government intrusion” (never mind the illegal wiretapping that Bush inaugurated under the amended Patriot Act); and “freedom from government bureaucracies” (never mind the Katrina disaster in which government bureaucracies remained inert while thousands lost everything they had); and “freedom from government regulations” (never mind the financial crisis that resulted from unregulated lending institutions that bet ours farms on their portfolios).
And, of course, it was that last “freedom” that led to the economic meltdown that has the country struggling with the worst unemployment in almost 30 years, for which tea-bagger types are all too ready to blame Obama and the Democrats.
And while they’re at it, they are happily trying to label the oil spill in the Gulf as Obama’s Katrina. This kind of simplistic reasoning, if it can be called reasoning at all, typifies the tea-bagger mentality. Katrina was a natural disaster that the federal government exacerbated by ignoring its role. The oil spill is a disaster caused by corporate greed and a lack of government regulation. Anyone who finds meaningful similarities in the two probably thinks the mine disaster in West Virginia last month was caused by the Obama administration, too.
The truth can be hard to discern if you aren’t paying attention, but it isn’t all that hard to see if you are.
And the truth is that within the last month, the three disasters that have occurred (or come to light in the case of Goldman Sachs) are the payback for policies that may sound in “freedom” but are in fact born of a far less noble sentiment: it’s called pure, unadulterated (and unregulated) greed.
Ed, Ed, Ed!
The last tea baggers I saw were handcuffed to the White House fence a few weeks ago.
Government regulation is not anathema to the “tea baggers”, only when it is designed to national ize ior internationalize the hard work and dedication of others. We all need to be kept honest – even Barney Frank.
Like you said, no way to get into a cogent discussion at this high plane of intellectual name calling.
Truth? Well, finance deregulation happened in the 90’s, voted for by many Democrats and signed into law by Bill Clinton. But you blame Bush? Classic.
Deregulation had nothing to do with Moody’s providing irrational AAA ratings to the packaged securities that people and governments all over world bought because of the rating.
Deregulation had nothing to do with people taking out foolish loans for homes they couldn’t afford, sometimes second loans, and often falsifying the documents on all of them.
Banks acting recklessly for greed have nothing to do whatsoever with George W. Bush. Remember that the Savings and Loan industry did exactly the same thing in the 70’s and 80’s when George W. Bush was cheerleading at Yale.
The ‘truth’ is that everybody is to blame for the meltdown, including Robert Rubin, Larry Summers, Timothy Geithner, and Peter Orszag, least of all, George W. Bush.
Let me correct an error of yous as well, the Democrats gained a majority in the House, and the Senate, and in Governorships in 2006, sworn in January 2007. They ratified George W. Bush’s budget in 2007 and 2008. They’ve been in charge now for 3+ years, and in the last 18 months they’ve had a super majority and a President in the White House. When are you lefties going to stop blaming George W. Bush for everything?
Back to deregulation, you cite that the mine had multiple violations. Multiple violations of what? Answer: Regulations. If you want to talk about oversight and enforcement, fine, but the regulations were already there and there is no evidence that more are needed.
If Goldman Sachs violated the law, they’ll be convicted by a law that is already in place. If they simply managed risk by taking insurance positions to protect their downside, that is normal, done every day by private citizens as well.
No one knows anything about the BP spill yet. Nobody knows the cause or the cure. U.S. offshore oil drilling is one of the most heavily regulated industries in the world. If there is something that could have prevented it, I’m quite sure it would be overwhelmingly supported as a new requirement. You can’t speak for Tea Partiers.
What are you pushing for anyway? Do you believe you can legislate away all accidents? Do you believe that people will stop circumventing laws and regulations for financial gain if you write more laws and regulations? Do you think that any government could create a system that contemplates every eventuality, creates no new exploitable environments, and prevents people from taking advantage wherever they can?
Consider this, a new crisis is building right now, something we don’t won’t even know about until it breaks someday. An accident is currently in the making with a flaw somewhere that will result in tragedy. According to you, the Democrats in charge better know about it, thinking of everything and preventing it, whatever it is. No worries though, you can always blame George W. Bush.
Ed,
I guess that Tommi James doesn’t remember who was at the helm of the S&L scandal in the mid 1980’s. Not George W., but his Daddy and Brother Neal. It is very sad that a person can make such a poor attempt to change the facts. Maybe a furture Faux News commentator (satirist). I could go on but what is the point.
Once again a well written and factual piece. Thank you for your sanity.
Dear oldbutstillthekidd, cc: Ed
Rules were changed for the S&L’s in the 70’s, and further in 1980 allowing S&L’s to invest in land. The 18% interest rates and runaway inflation ’77 through ’82 triggered the failures. If you want to blame whoever is in the White House for anything that happens, (I don’t), well that would be Jimmy Carter. By the time George Sr. took office, he implemented the clean up.
It’s clear to me that lefties have a story line and will stick to it regardless of facts or truth.
The Democrats have been in control of Government since January 20, 2007, 3 years and 3 + months. That means, according to your standards, that they are solely responsible for the economic crisis since it occurred in 2008.
Now after a super majority and Obama in the White House, there are no excuses whatsoever, and no one to credibly blame for whatever happens. I hope they are anticipating everything, and are not making any mistakes, or failing to regulate something, or allowing any accidents to happen. God knows if we have Trillion dollar plus deficits 3 years from now that would be catastrophic. I’m sure they’re working on it.
Instances of failure, accidents, and unscrupulous people are no more an argument for regulation that a snow storm in the Northeast is an example that global warming doesn’t exist.
Jennifer – A snow storm in the Northeast has nothing to do with global warming, but the incidents I described in my column are all examples of what unregulated corporate power can and do lead to.
Sophistry is not an acceptable form of argument on this blog. Please address points made directly. If you think the oil spill, the coal mine disaster and the charges against Goldman-Sachs are due to something other than unregulated corporate power, please provide your explanations and enlighten us.
-Ed
Unregulated? Do exaggeration and hyperbole have a place on this blog? They are all in completely different industries, and are all regulated heavily.
I believe my point was clear. I called them failures, accidents, and unscrupulous people doing bad things. Justifying a vague notion of ‘more regulation’ based on these events is as shallow as someone saying there is no global warming because we had a snow storm. Let’s test for casuistry on your part before sophistry on mine.
Jennifer –
I don’t get your point. I’m arguing for tight controls on all corporate actions that have the potential to damage the public welfare. Corporations are nothing more than business entities whose existence is entirely due to government action. They exist because governments (representing the people) allow them to exist. They have no rights other than those accorded by the governments that allow their existence.
The three examples before us are all the kind of activity that should be regulated far more than it has been. The oil spill in the Gulf clearly could have been prevented with more government controls over the drilling operation there. The coal mine disaster in West Virginia could have been prevented with tighter safety regulations (or with more aggressive policing of those on the books). The fraud perpetrated by Goldman Sachs could have been avoided had our regulatory agencies been working aggressively instead of looking the other way, as they obviously were.
If “failures, accidents and unscrupulous people doing bad things” aren’t appropriate events to justify tight government regulation, what would be? Or are you just saying that regulation is never appropriate? Are you opposed to all government oversight of corporate activity? If so, why? Do you trust corporations to do the right thing? Why should they? They exist to make money and for no other reason. Why should they care about the adverse consequences of their actions, except for the oversight that government regulation provides?
I really don’t know what your point is, and maybe sophistry isn’t the right word for the kind of argument you appear to be making, but if you still think your snow storm “analogy” is relevant, you need a course in rhetoric.
-Ed
You should examine your own fallacious rhetoric. If Goldman committed fraud, that means they broke a law. An existing law. The ‘regulation’, therefore, is already in place.
If the mine had several ‘violations’, that means they violated existing regulations. They violated a regulation that is already in place.
If an oil rig, operating under literally thousands of regulations had an accident, then yes, we should put a new regulation in place to keep that accident from happening in the future.
Someday there will be another accident, and we will examine whether a new regulation is needed for that. You cannot regulate away all possible accidents, and you can not stop people from violating laws or regulations that are in place, you can only police them.