OK, it keeps coming up every election cycle and this one would be no exception so we thought we would tackle the issue with facts.
Deregulation, in plain election English, that’s getting the government out of the way to influence the free market.
The best way to get these facts is to look in history where deregulation has been applied in the past and see how they turned out. We will only site the ones we know you should be familiar with so you don’t think we are blowing smoke.
In 1978 the airlines were deregulated. The regulations insured against monopoly’s created between specific routes and insuring that routes were maintained. Insuring new carriers access.
Result: 70% fewer carriers exist and limited access to international routes. Did this increase jobs… no, in fact many have been lost over the years.
In the early 80’s, Ronald Reagan Deregulated the Savings and Loans of America. The result:
747 S&L’s failed, rescued by the taxpayer in the amount of $160 billion. They currently hardly exist. The regulations prevented risky behavior with depositors funds that were insured by the taxpayer through the FDIC. Did this increase jobs… no, in fact many have been lost. Taxpayers lost local funds financing local projects.
In 1999 congress passed the “Financial Services Modernization Act of 1999″ that should have been called the repeal of the Glass-Stegall Act of 1932. After all, that is what Phil Gramm called it as it was signed by President Clinton. These regulations were created after the great banking crash that created the great depression.
Senator Phil Gramm clandestinely slipped the 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party).
This same legislation contained a provision — lobbied for by Enron, a major campaign contributor to Gramm — that exempted energy trading from regulatory oversight.
Deregulation removed most oversight of the banks and allowed them to have no reserves of what they were lending and allowed them to self insure the risks they were taking with other peoples money that did not have to be validated. So, like the S&L deregulation, it only took a few years to find the reason they were made in the first place. Did this increase jobs… no, in fact millions were lost in less than a decade.
Deregulation of oversight of oil trading is not so hard to feel the effect of so who knows what dirty deeds are happening in the world of trading oil commodities that we all are paying for. No oversight.
Most of the “smart folks” who led us into deregulating anything, including Reagan appointed Anti-Trust Judge Richard Posner and Fed Chairman Allen Greenspan have changed their tune and now do not support it because they just never believed the markets could not take care of it themselves.
Here are some of their statements:
Rich Posner – Allen Greenspan –
Watch this or read a short version of the same on Airline deregulation.
Its a little late for these “smart folks” to save us from their blindness. But can we at least take some lessons from it to not make the same mistakes? Or are we doomed to not see what we can not feel today. Especially when folks are promising jobs for it that never come.
Deregulations are sought by companies to gain profit and control of markets and jobs are contradictory to profits so do you think they just feel bad for you and will give you a job if they can make more money?
Who will protect us from ourselves? The government is the trustee of the taxpayer to insure that the free market stay “free” and competitive. How do they do it without regulatory oversight?