Government Must Regulate Business
Thank Alan Greenspan for the mess we’re in.
January 10, 2019
Regulation is the biggest distinction between Democrats and Republicans. How much regulatory power does the government have? How much power should it have? Why do we need regulations at all?
Some economists claim that regulation stifles the free market. That’s true, just as speed limits stifle speeders, and seat belts save lives. It’s a good thing.
In 1911, The Triangle Shirtwaist Company employed 500 people in its New York City factory. On March 25, fire erupted on the eighth floor. When it was over, 146 people were dead. More than 90 of them jumped to their deaths on the sidewalk below.
The factory was packed full of machines, bolts of cloth, hazardous electrical wires, accumulated garbage, and human beings. The doors were chained shut to prevent workers from leaving the work floor. There were no fire drills, internal fire alarms, or sprinklers. The fire was so hot and moved so fast that they never had a chance. Many burned or suffocated to death. Some of the workers got to the fire escape, but it was faulty and collapsed, throwing them to their deaths below and trapping others inside. It was the deadliest workplace disaster in New York City until September 11, 2001.
There were no government regulations and no labor union to protect them.
In 1929, the American stock market collapsed 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 followed. Nearly every American suffered.
So Congress created the Securities and Exchange Commission in 1934. That regulatory trend continued until the Reagan administration in the 1980s. Meanwhile, the United States enjoyed a massive economic expansion.
Then Congress couldn’t move fast enough. They tripped over themselves to de-regulate business throughout the Ford, Carter, Reagan, first Bush, Clinton, and second Bush administrations.
Why? Because Alan Greenspan told them to. Since most 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.”
In 1977, I argued with an economics professor who insisted that public utilities should never be regulated, despite the fact that most consumers have no choice of which electric, gas, or other company supplies their needs. I said that, without regulation, people would have to choose between heat and food, and some would die. He claimed that customers are free to switch back and forth from electric to gas heat whenever they want, and that people would die anyway. He couldn’t – or wouldn’t – grasp the fact that working people can't afford to change their homes' infrastructure every time the wind blows.
In 2008, history repeated itself. Radical practices like sub-prime mortgages, securities bundling, outrageous credit fees and interest rates, and predatory lending collapsed our economy again. So then we pushed the pendulum back.
Congress created the Credit Card Bill of Rights and the Consumer Financial Protection Bureau to regulate unscrupulous bankers and business owners. The leaders of the G-20 Summit in Pittsburgh pledged, “To make sure our regulatory system for banks and other financial firms reins in the excesses that led to the crisis. Where reckless behavior and a lack of responsibility led to crisis, we will not allow a return to banking as usual.”
Then our economy enjoyed a long and strong rebound.
On January 30, 2017, President Donald Trump issued Executive Order 13771, requiring all federal government agencies to eliminate two prior business regulations for each new regulation adopted. This is a dangerous, irresponsible, and ludicrous stunt.
And here we are.
Gee, from the cheap seats it looks like Greenspan’s “flaw” was deliberate, rampant, contempt for working people. Greenspan doesn’t know what he’s talking about because he spent his entire adult life in government and academia. It’s all theoretical to him. He’s never managed or worked for a real business. 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. Greed is a powerful 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.
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?
I live in a small town bordering on Pittsburgh. I know a woman who says “All of the stop signs are stupid.” So she doesn’t “use” them. (No, it’s not me.) She hasn’t crashed yet, but it’s inevitable.
Republicans claim that government regulations kill businesses. No. From 2007 to 2011, the US Bureau of Labor Statistics asked failed companies why they went out of business.
In that five year period:
Businesses fail because of poor management or because the public doesn’t want what they’re selling.
I can’t give you more recent data or a link to that report because the government doesn’t ask that question any more, and the data has been scrubbed from the website. Go figure.
We should remove obsolete, absurd, and impractical rules. But we should make those decisions carefully and only if the removal will cause more good than harm. 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.
THE REGULATORY PROCESS
Corporations want to eliminate all government regulations, yet they don’t hesitate to use and exploit every benefit that our civilized society can offer them. Regulations don’t just happen. There is a process and you can influence it.
Most of the laws passed by Congress require the relevant government agencies to adopt regulations to implement the law. The agencies write proposed rules and publish them in the Federal Register, a daily record of all executive branch actions. The public is encouraged to submit comments on proposed rules. Anyone can support, oppose, or suggest changes to the rules. The Federal Register announcement includes a statement containing a deadline and address for submitting comments. The Register is published every weekday, except national holidays.
Yes, it works. I’ve submitted comments on proposed regulations many times. And yes, the comments do make a difference. The more comments an agency receives, the more likely they are to adopt the recommended changes.
The agency staffers read and analyze the comments. In true democratic fashion, there are meetings, memos, and reports. Eventually, the department managers decide on the final version of the regulations. That final version is published. The notice includes a report on the types and nature of comments, their rationale for accepting or rejecting changes, and the effective date of the new final rules.
That’s all there is to it.
How to Submit Comments
No one is expert enough to comment responsibly on proposed rules in every topic. But if you want to comment on an issue, go to Regulations.gov. This site links to proposed and final regulations for nearly 300 federal agencies. Each agency’s website also contains a section listing current proposed comments on its topic area. Go to usa.gov to locate specific government agencies.
The final version is published in the US Code of Federal Regulations, which is issued annually and contains all regulations for all government agencies and programs.
See. You really can influence your government if you want to.
All you have to do is show up.
Meanwhile, be sure to lobby Congress (and your state and local representatives) for the laws that you want.
Lobbying is not what the politicians and media tell you it is.
"Giving buckets of money to legislators" is not lobbying.
Lobbying is the act of trying to convince elected officials - local, state, and federal - to support or oppose legislation and policies that you care about.
Lobbying is the only thing that can restore our democracy.
Our schools are supposed to teach this stuff, but they don't want you to know that YOU have the power to influence your government.
Every legislative victory that occurs is the direct result of lobbying.
Nothing moves in government unless someone pushes it.
Legislators listen to corporate lobbyists because they're the only ones doing the talking.
If you want your representatives to listen to you, then start talking to them.
If the 99% would do more lobbying, the 1% would have less power.
Lobbying is more important than voting.
Everyone can do it.
And it doesn't cost a dime.
For More Information
What the Triangle Factory Fire Did for Us
The Common Culprit in America’s Multiple Massive Crises
Executive Order 13771
Code of Federal Regulations
Learn how to lobby
Read the Constitution
Patricia A. O'Malley
Social Policy & Programs Consulting ~ Community Matters
P.O. Box 97803 ~ Pittsburgh, PA 15227 ~ 412-310-4886 ~ firstname.lastname@example.org
Copyright Patricia A. O'Malley ~ All rights reserved
Social Policy & Programs Consulting
Training and Services for agencies working toward social and economic justice