Government must re-regulate business

               Some economists like to say that any regulation stifles the “free market”. That’s true, just as speed limits stifle speeders, and seat belts save lives. And it’s a good thing. No one wants to be regulated, but we all want regulations for other people. Still, the free marketeers need to be controlled..

 

               In 1929, the American stock market collapsed primarily because there were only a pitiful few, unenforced, regulations to “stifle” the insatiable greed of the traders and financiers. Then the consumer banks began to fail, and the farms, construction, and other businesses that depended on credit, and the peripheral businesses on Main Street.

 

               So Congress established the Securities and Exchange Commission in 1934 and began to pursue serious regulation of Wall Street. That regulatory trend continued until the Reagan administration in the 1980s. Then, Congress couldn’t move fast enough. They tripped over themselves to de-regulate throughout the Ford, Carter, Reagan, first Bush, Clinton, and second Bush administrations.

 

               Why? Because Alan Greenspan told them to. Since most of our government officials don’t understand the technical aspects of economic policy, they took his word for it. Greenspan, who holds a Ph.D. in Economics from New York University, served as Chair of the President’s Council of Economic Advisers (1974 to 1977), a director of the Council on Foreign Relations (1982 to 1988) and as Chair of the Federal Reserve Board (1987 to 2006), as well as on the boards of directors of several major corporations.

 

               Greenspan insisted, for more than 30 years, that our economy would flourish if only we abolished all regulations. However, during Congressional testimony in October 2008, he said "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity — myself especially — are in a state of shocked disbelief. . . . I have found a flaw. I don’t know how significant or permanent it is.  But I have been very distressed by that fact.  .  .  . I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

 

               A flaw? Gee, from the cheap seats it looks more like deliberate, rampant, contempt for people who work for a living. Greenspan doesn’t know what he’s talking about because he spent his entire life in government and academia. It’s all theoretical to him. He has never lived in the real world. I don’t know whether Greenspan is evil or not, but I do think he’s dangerously out of touch with reality.  It’s a good thing that he no longer has an official position in our government. But where does that leave the rest of us?

 

               Certainly not all business people are greedy, selfish, and manipulative but there are far too many who fit that description, and there always will be. Greed is a powerful and prevalent force in human nature. I know people who were victims of predatory lenders and unscrupulous business owners. I’ve seen the damage it causes to real people and real families. We wouldn’t need regulations if we could trust them all to be honest and fair. But we all know that we can’t do that.

 

               And here we are. At this time last year, our economy began to collapse again under the weight of extreme practices like sub-prime mortgages, securities bundling, outrageous credit fees and interest rates, and predatory lending. History repeated itself. So now, the pendulum is beginning to swing back again. I don’t like pendula. They make me seasick.

 

 

               Can you imagine the National Football League permitting two teams, with 22 players and a football, to play a game with no referees or rules at all? Like it or not, nearly every aspect of our lives has rules. So why do capitalists think they should be exempt?

 

               The market should never be entirely free. We must find a good balance to restrict predatory and incompetent behavior, but encourage responsible and ethical entrepreneurs and visionaries. It’s a delicate balancing act and we can’t approach it lightly.  Once again, if you want peace, work for justice. 

 

               All federal regulations are first published in the Federal Register and are open to public comment for a time. Once the comments are reviewed and evaluated, the final version is published. The 138 volume US Code of Federal Regulations is published annually and contains all regulations for all government agencies and programs.  They’re all available online, at regulations.gov,  if you’re interested.