How's that Deregulation Working Out for You?
I've been thinking recently about deregulation, the great "free-market" panacea that has been so strongly touted in recent decades. You do remember how deregulation is always always said first and foremost to benefit the American public–more competition, more choice, cheaper prices, something along those lines is always uttered as hands wave about dismissively. Frankly, I still don't know why people pay any attention to economists; honestly, you give a Nobel prize in some discipline and everyone takes that to mean that the discipline is a science.
The interesting thing about deregulation has been the outcome: economic failure and business ruin for the corporations involved. Let's think back on, say, airline deregulation, telecomm deregulation, energy deregulation, and now financial deregulation. I can't say that I recall ever hearing about the business strength and economic stability of any of these markets after they were deregulated. Nor, by the way, has their service or cost for the average American improved.
Why do they keep doing it? I think the big corporations suffer from the same delusion that Republican voters suffer, that goes like this: "They're all suckers and someone's going to profit–it might as well be me." For one data point I return to my favorite statistic (the citation buried someplace in this blog) that, when asked whether they were in the top 1% of earners, 6% of people responded yes. They're winners! No whiney-liberal defeatism for them!
I suspect that every business in every market that buys a few congress-people to see some deregulation imagines that it is a winner and all their competitors are suckers. They're hoping that some deregulation will confer some business advantage that they can leverage. Be honest: if you were a major CEO would you urge congress to deregulate your industry if you really thought it would bring more competition and make profits harder for you to earn, especially when it affects your personal bottom line: your stock options?
But still it all has to be packaged up for consumption by the consumers, and so we get lots of lip-service about "market forces" and "supply and demand" and "free markets" and "competition" and "shakeouts" and etc. It bears repeating: none of these are "facts" from the "science" of economics, they're all different names for pyramid schemes created by big business and their Republican marionettes.
What's interesting is that the party of big business isn't all that good for business in the end, although it might be good for a few businesses (the winners!). And, despite the marketing aimed at the intellectually impaired of the electorate–not to mention the fear mongering to create the "conservative" moniker, but that's a different story–the "fiscal and financial conservatism" of Republicans aren't good for business or for the economy, and certainly they don't benefit the average American. Here's a comparison showing how the economy never does better when Republicans are in control.
There have been other, related thoughts. I've been wondering whether there was a realignment going on with political parties, so that Democrat-Liberal vs. Republican-Conservative might not be the operable dichotomy, but now I think maybe not. Instead, I think that the two parties still tend to divide the territory into Democrat-Populist vs Republican-Corporate areas. My hypothesis is that what has been changing is that the Republican story that they really are populist, just socially and fiscally conservative and the party of small government, is finally unraveling and revealing itself as mere a propaganda tool used to convince people to vote in the interests of big business and wealthy business owners. If Republicans were honest about which politicians they buy to serve the purposes of sucking wealth out of the public coffers and into the hands of the corporate elite and wealthy capitalists, it might be hard to get the votes.
We liberals are still inclined to think that the malfeasance and government-gutting of the current administration is somehow an aberration, or an accident, or a few bad apples. "How could they not notice how badly their policies are working?" the cry goes up. I keep saying the answer is simple: for Republican goals the current policies are working just fine, it's the goals that need to be seen to understand this.
Republicans, at least as they are currently constituted, are not working for the commonwealth so much as what we might call the commonwealthy, that group of the super-wealthy who control the bulk of the capital and the bulk of the Republicans in this country. Their economic and power situations have improved remarkably during this administration so, for them right now, the "fundamentals of the economy" are indeed strong. Couldn't be better! More money is flowing into their accounts, less is flowing out; it's unfortunate that a few businesses have to fail, but at least they got their share out before the meltdown.
I don't have a catchy summary or stirring conclusion. Too many deluded people still want to vote Republican even in the midst of financial crisis and wars of vanity. Is it an improvement that so many of the Republican voters seem more motivated this election by racism than by their naive belief in the "fiscal responsibility" of their Republican party?
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I welcome comments -- even dissent -- but I will delete without notice irrelevant, rude, psychotic, or incomprehensible comments, particularly those that I deem homophobic, unless they are amusing. The same goes for commercial comments and trackbacks. Sorry, but it's my blog and my decisions are final.
on Saturday, 20 September 2008 at 19.57
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Incidentally, you got taken in by that "Nobel prize" in economics. It's a complete fake, recently invented to parasitize the prestige of the real Nobel prizes. Alfred Nobel never imagined it.
on Sunday, 21 September 2008 at 04.20
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Excellent post. Most people don't realize it, but many among the very rich added to their wealth in the depths of the Great Depression. They had the wherewithal to buy valuable property, devastated but worthwhile companies and other assets for cheap. They held on to them until times were better, then cashed in.
On top of that, those who were creditors and able to collect even a modest portion of what they were owed did well for themselves. That was because they had loaned out relatively cheap, pre-deflation dollars and were paid back in money with much greater buying power.
On deregulation, you are so right. It has been a plague everywhere it's been applied. I had the good fortune to fly on Eastern Airlines, Northeast Airlines, Delta and American in the 1960s and 1970s. The flying experience was ever so much better then than it is nowadays.
on Tuesday, 23 September 2008 at 03.25
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>>>>Frankly, I still don't know why people pay any attention to economists…
Oh, you're just being mean. You want us to go back to reading sheep entrails?
>>>>Let's think back on, say, airline deregulation, telecomm deregulation, energy deregulation, and now financial deregulation.
Airline and telecom dereg has given us more for less. Energy and financial less so. What we call "deregulation" mostly means a different kind of regulation, or slightly less in an otherwise heavily regulated market. It's not like we put these things on par with illegal drugs.
>>>>They're hoping that some deregulation will confer some business advantage that they can leverage.
It usually goes the other way, where established business likes regulation because they can capture the regulators.
>>>>they're all different names for pyramid schemes created by big business and their Republican marionettes.
Dude! You've been drinking the kool-aid. I'm sending a black helicopter to straighten you out.
>>>>Here's a comparison showing how the economy never does better when Republicans are in control.
Ahh, the good old days of Carter.
I'll raise:
1) a technical objection, where the policies of a preceding administration affect the following, thus skewing the years where policy affect GDP growth.
2) a political objection, where most Republican Presidents have been fiscal liberals.
3) a philosophical one, where I wonder if Presidents really have that much power over economic growth. It seems to me that the flowering of the automobile in the 50s gave us robust growth in the 60s. The computer revolution gave us big growth in the 90s, etc. Presidents maybe just jump out in front of the parade.
>>>>Too many deluded people still want to vote Republican…
You know we just do it to piss you off.
I think liberal Democrats would do better if they had more to offer than just a vague notion that things will be better if they could just get in there and write some better regulations.
on Tuesday, 23 September 2008 at 16.34
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Yes, Fred, I know you vote Republican just to piss off liberals like me. That I can respect! It's the people who vote Republican because they actually believe that party adheres to certain principles are the ones I don't have the time for.
To summarize your technical & political reasons: the Republican presidents had a positive effect on the economy for which they didn't get the credit, but they weren't really Republicans anyway. (Your honor, my client did not kill this economy; and if he did he didn't mean to.)
I don't see why we'd want the Democratic candidates to have more than vague notions about what to do since, in your analysis: 1) they have no effect on the economy; and 2) prosperity arrives when dumb, ineffective Democrats are elected following Republican administrations, i.e., the success of Democratic administrations is all due to the economic policies of the preceding Republican administrations that are headed by presidents who have no influence on economic matters.
Besides, vague notions that things will be better seem more than enough to keep Wall Street markets happy.
As I think I've said before, I'm happy to hear that you don't think the president actually has any influence and it doesn't matter who's elected. I can count on your voting Democratic this fall?
Hurry and say yes–I'm thirsty for kool-aid and I think I hear a helicopter approaching. (How much money could we save by getting rid of the Republican black helicopters?)
on Wednesday, 24 September 2008 at 00.52
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I stand ready to vote Democrat. What is the difference, anyway, between Barack and John? Both are promising that government will fluff up my pillow and make me feel better.
I'd like to see an experiment where we put Barack in power four years, then dial back to the same starting point and put John in for four years. Then we could do some real shouting.
on Wednesday, 24 September 2008 at 12.01
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Now that's the kind of experiment I'd like to do, Fred! It brings out my scientist's desire for reproducibility in experimentation. Alas, we don't have the opportunity unless 1) the many-worlds interpretation of quantum mechanics turns out to be true; and 2) the branching universes learn to communicate. Then we'd know!
Even if the candidates were the same, they are seen as different by some people, sometimes many people, who project their own hopes and desires onto the candidates. Depending on who wins some of those hopes and desires get worked on, some get implemented. I'd prefer to go with the aspirations of the Obama-projectors.