Deregulatory Pendulum Has Swung Too Far
At a time when our politicians resemble boxers bolting from their respective corners every time a bell rings, it's worth noting that at least one subject has garnered -genuine bipartisan support for decades.
From Richard Nixon to George W. Bush, "deregulation" (meaning relaxation of -government rules) was a popular -rallying cry for both Republicans and Democrats.
Starting with FDR in the 1930s and running through LBJ's "Great Society" in the 1960s, policymakers embraced an ever-expanding role for the federal government. But the economic stagnation that swept over the country in the 1970s convinced politicians in both parties that the pendulum had swung too far.
New notions bubbled to the surface challenging the need to solve social problems with government regulation. The distrust of the marketplace, so widespread in the Depression era and beyond, gave way to a new, nearly unbridled faith in the marketplace. Ronald Reagan's election in 1980 - trumpeting the message that "government was the problem" - merely sealed the deal.
The first major push focused on transportation, starting with Nixon but reaching fruition under Jimmy Carter - jettisoning the Civil Aeronautics Board in 1978, followed by deregulation of railroads and the trucking industry. Then came deregulation of the energy sector, notably the natural gas and oil industries under Reagan and electric utilities under George H.W. Bush and Bill Clinton.
Inexplicably, the latest, most significant bipartisan push came in the late 1990s with sweeping deregulation of the banking and financial services industries. Remarkably, this stripping of oversight - eliminating firewalls between commercial banking and investment banking, and between the banking, brokerage and insurance industries - occurred close on the heels of the savings and loan debacle, a cautionary tale if there ever was one.
The deregulatory movement was not misguided. The pendulum had, indeed, swung too far, and some -government regulation had become counterproductive, denying -consumers the best services and prices, while placing unnecessary burdens on some private sector -businesses. But a pendulum moving too far in one direction can, over time, swing back too far in the opposite direction.
That's where we stand today. Instead of being too rigorous or unduly burdensome, regulation of some business sectors has become too weak and ineffective, or it has become outdated, greatly outpaced by technology and the sophisticated business practices of industries being regulated. Think oil, mining, electric and banking, and then recall BP, Massey Energy, Enron and Bear Stearns.
So, what's to be done? Do we join the band of angry citizens and media agitators beating the drum for even more drastic cutbacks - believing that with big, bad government off our backs, we can return to a simpler world envisioned by the Founding Fathers? It's not so much that these people want "their" country back, it's that they want to turn the clock back - and, it would seem, entrust our fate more completely to industry giants like BP and Goldman Sachs.
I spent a professional lifetime working with Washington bureaucrats - in federal agencies, federal courts and the U.S. Congress. While critics love to castigate and demean the whole bunch - writing them off as ineffective, unnecessary or even corrupt - in truth most are knowledgeable, hard-working and just as dedicated as those in the private sector.
Take any slice of the working population - in business, in schools, in retail and certainly in lower levels of government - and you will find "slackers" and incompetents. They don't all reside in Washington, D.C.
There is , however, a problem increasingly unique to Washington - one that does impact performance, by corroding and potentially corrupting the underlying system. While inept regulation is usually attributed to poorly performing individuals, it can also be the product of an overriding political environment. If elected -leaders of government (in the executive and legislative branches) are possessed of a deep-seated ideology favoring the marketplace and mistrusting government, it's nearly impossible to create a highly vigilant workforce.
The deregulatory zeal washing over Washington in recent decades, eagerly adopted by political appointees in supervisory roles, inevitably instills skepticism and complacency down the line. Combine this with budget reductions for many agencies, a revolving door between government and industry, and the showering of elected officials with campaign money bundled by industry lobbyists, and the whole idea of vigilant oversight becomes a sham.
In the end, it comes down to governance - the kind of management or oversight we want. We don't need new agencies bloated with more employees, or overly protective rules. But we do need updated standards, more consistently and energetically enforced by a better motivated public workforce responding to appropriate incentives.
If we want protection from the worst excesses of the private sector, we need to acknowledge that free markets work for the public at large only if they are balanced by responsible, carefully targeted regulation.
Carl R. Ramey, a former Washington communications attorney, lives in Pinehurst. Contact him at firstname.lastname@example.org.
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