Back in the late 19th century, there was a national political movement called \u201cProgressivism\u201d. 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 \u2013 or should have been \u2013 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). <\/p>\n
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 \u201cgenerally wealthy\u201d (doctors, lawyers, corporate leaders) weren\u2019t all that much wealthier than the local supermarket produce manager. There were still a lot of poor people, but the \u201cWar on Poverty\u201d begun by the Johnson Administration and continued by Nixon actually did shrink the poverty rate significantly. <\/p>\n
But things changed. After 1980, with Ronald Reagan\u2019s election, business regulation became a dirty word. \u201cDeregulation\u201d 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 Regulation was found to be wasteful and outdated.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. <\/p>\n
But now we see that there was \u2013 and still is \u2013 a big problem with unfettered capitalism. I.e., the \u201cpie\u201d 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. <\/p>\n