Back in the late 19th century, there was a national political movement called “Progressivism”. People were a bit upset with big business, so the politicians of the day sought to appease this displeasure by setting up regulation schemes as to reign in the abuses of cowboy capitalism. Federal and state agencies were set up with the power to tell critical industries such as banks, telecommunications, railroads, power companies, insurance companies, etc. what they could and could not do. There existed a variety of academic rationales for such regulation, but the chief political concern was – or should have been – protection of the little guy. (Arguably, some of the business moguls themselves liked the stability that government oversight bought; it toned down the competition while guaranteeing some profit).
The era of regulation seemed to correspond with a more level economic playing field. By the 1960s, there was a broad middle class in America. The super-rich were quite rare, and the “generally wealthy” (doctors, lawyers, corporate leaders) weren’t all that much wealthier than the local supermarket produce manager. There were still a lot of poor people, but the “War on Poverty” begun by the Johnson Administration and continued by Nixon actually did shrink the poverty rate significantly.
But things changed. After 1980, with Ronald Reagan’s election, business regulation became a dirty word. “Deregulation” became the mantra of the young and hip economists. Regulation was found to be wasteful and outdated. Along with labor unions, they were found to be slowing the growth rate of the economy. They admittedly had choked certain industries to the point of bankruptcy. They had to go. And go they did. Within a few years, the walls of federal and state regulatory bureaucracies came tumbling down. And once oil prices came down from their peaks in the early 80s, the economy really got into gear.
But now we see that there was – and still is – a big problem with unfettered capitalism. I.e., the “pie” of economic growth has been cut quite unevenly. The rich have gotten the lions share, the middle class have barely gotten a taste, and the poor have to be content with the crumbs.
So it was with great interest that I read a recent article in the NY Times entitled “The Free Market: A False Idol After All?” It turns out that a lot of thoughtful people are now having second thoughts as to whether America is better off without some government oversight of the capitalists. I doubt if we are going to see Bolshevik-style five-year plans anytime soon. But if the Democrats take the White House back later this year (which is still an extremely iffy proposition; McCain might just make a comeback, and then all bets are off), we may see a bit more government involvement. Will that slow the economy down? Yes, it will. Would anything good come of that? Perhaps we could avoid future Enrons and sub-prime mortgage crises and accounting scandals and HMO’s that refuse to pay legitimate medical bills.
Also, maybe we could share the economic pie more fairly. The challenge is to figure out how to minimize the drag on the economy and maximize the benefits of fairness and stability. America had almost 100 years of extensive regulation experience, and can hopefully learn from that what worked and what didn’t work. We can’t just bring back the FCC and ICC and FAA and FPC as they existed in all their dusty, bureaucratic grandeur back in the 1940s. There would have to be innovation, some way of keeping the regulators from becoming a hidebound institution (as many of those agencies had become).
Despite the heavy drag placed on the economy by the regulators and labor unions of old, the American economy still did quite well in the 1950s and 1960s. I think I know why. Back then, our government was making it easier and easier to go to college. In New York City, a citizen had the right to go to college for free (at CCNY). Millions of young guys returning from WW2 and Korea got generous loans and tuition payments from the GI Bill. And states built and expanded their college systems and charged tuition rates that weren’t much more than pocket change.
Well, guess what. All those college graduates kept IBM computing and Pan Am expanding and AT&T innovating, and got our space program into orbit and then onward to the Moon. Subsidized education fueled economic growth despite the bureaucratic drag, and regulation (along with labor unions) helped the middle class and working class to get their share of it. I was around in the last decade of it, and it really wasn’t so bad (although the regulators and labor unions really did milk it at the end and got what they deserved — Ronald Reagan). I hope that Hilary or Barack or John E. will consider taking us back in that direction, should they get the chance – but help us do it better this time. We won’t get fooled again. We hope.
Jim,
I confess I do not know the answer. But it does seem to me that the Reagan years and the GWB years particularly have ended up putting us in the hole financially.
I can only shake my head in dismay that eight years after Clinton, when we had a balanced budget and even a surplus (if I am correct on that last point), the country as a whole (in more ways than one) is now in terrible debt. To say nothing of some of the other things I find myself shaking my head in dismay about.
One particular legacy of Reagan seems to be the continuing crisis with air traffic controllers–not enough of them, it seems. So that there are waaaaay too many near misses among planes that barely miss each other in the sky. My thought is that this serious problem goes back to Reagan and his handling of the air traffic controllers.
It does seem to me that any time the education needed for a particular job or work is denigrated in some way (read: “Anybody can do this job” as is so often said of teachers and was said of air traffic controllers), a few years down the line society pays for such lack of respect in the form of shoddy work that is sometimes not even recognized as shoddy. And the word “work” is used here in the most general sense.
At this point I wonder just how all the problems we are presently faced with can be “fixed.” I also find myself wondering why in the world anyone would actually want the job of president.
Obama almost glibly speaks of “change.” I remember some 40 years ago when the “young ones” were so sure of themselves. In fact I was one of those so sure. Yet, I find myself noting that each answer to problems results in its own set of problems that need to be addressed.
I have also thought that the seeming nostalgia on the part of young people for the “old days” (I find myself wondering how the young can long for the “old days” which they themselves did not experience), the staunch conservatism on the part of so many young people–I wonder if all this tendency to conservatism is a last ditch effort of a society that is on the verge of major change; that in the end, like it or not, big change will come to the USA.
But what exactly this “big change” will be is yet to be determined. Frankly, I say give Clinton or Obama a chance to see what he or she might do. However, I think that Obama who so easily speaks of “change” may find himself stonewalled by lobbiests, Congress, and other powers that be; he may have good ideas, but he may find that he will not be able to implement them. Clinton may already “know the ropes” in the government, but will she be able to get this country back to some kind of normalcy? Whatever “normalcy” may be.
Once again, I address your thoughts with my own tangential approach.
MCS
Comment by Anonymous — January 9, 2008 @ 3:55 pm
Jim,
I confess I do not know the answer. But it does seem to me that the Reagan years and the GWB years particularly have ended up putting us in the hole financially.
I can only shake my head in dismay that eight years after Clinton, when we had a balanced budget and even a surplus (if I am correct on that last point), the country as a whole (in more ways than one) is now in terrible debt. To say nothing of some of the other things I find myself shaking my head in dismay about.
One particular legacy of Reagan seems to be the continuing crisis with air traffic controllers–not enough of them, it seems. So that there are waaaaay too many near misses among planes that barely miss each other in the sky. My thought is that this serious problem goes back to Reagan and his handling of the air traffic controllers.
It does seem to me that any time the education needed for a particular job or work is denigrated in some way (read: “Anybody can do this job” as is so often said of teachers and was said of air traffic controllers), a few years down the line society pays for such lack of respect in the form of shoddy work that is sometimes not even recognized as shoddy. And the word “work” is used here in the most general sense.
At this point I wonder just how all the problems we are presently faced with can be “fixed.” I also find myself wondering why in the world anyone would actually want the job of president.
Obama almost glibly speaks of “change.” I remember some 40 years ago when the “young ones” were so sure of themselves. In fact I was one of those so sure. Yet, I find myself noting that each answer to problems results in its own set of problems that need to be addressed.
I have also thought that the seeming nostalgia on the part of young people for the “old days” (I find myself wondering how the young can long for the “old days” which they themselves did not experience), the staunch conservatism on the part of so many young people–I wonder if all this tendency to conservatism is a last ditch effort of a society that is on the verge of major change; that in the end, like it or not, big change will come to the USA.
But what exactly this “big change” will be is yet to be determined. Frankly, I say give Clinton or Obama a chance to see what he or she might do. However, I think that Obama who so easily speaks of “change” may find himself stonewalled by lobbiests, Congress, and other powers that be; he may have good ideas, but he may find that he will not be able to implement them. Clinton may already “know the ropes” in the government, but will she be able to get this country back to some kind of normalcy? Whatever “normalcy” may be.
Once again, I address your thoughts with my own tangential approach.
MCS
Comment by Anonymous — January 9, 2008 @ 3:55 pm