The ostensible objectives of deregulation and other so-called pro-business policies articulated by free market-loving politicians are ones most of us can get behind.
What consumer, after all, doesn't want a vibrantly competitive marketplace loaded with diverse companies that provide a dizzying array of choices while, in their collective thirst for the consumer's dollar, driving down prices as low as they can healthfully go?
Whether it's the proposed deregulation of an entire industry—banking, insurance, health care, telecommunications—or a proposal to reduce the "red tape" bureaucracy that all businesses allegedly find onerous, the sales pitch is the same: free business from the suffocating yoke of government regulation and everybody wins.
Problem is, the sales pitch is a lie. Deregulation does not result in a healthier marketplace, nor one comprising more businesses offering consumers more choices at lower prices. Freedom from government oversight is not good for everyone. Fact is, there are far more losers than winners, if history is any measure.
The current economic crisis is the result of more than three decades of anti-regulatory policy—policy proposed, promulgated and enacted at every governmental level, by politicians of every stripe. As today's free-market disciples of Ronald Reagan link the collapse of the financial markets to the specific failure of the sub-prime market—the theory that the banks failed because they made bad loans to people who couldn't afford (read: probably didn't deserve) to own a home—they ignore the broader conditions that triggered the collapse. The deregulation of the banking industry led not only to the exact problems the Glass-Steagall Act of 1933 sought to prevent by prohibiting lending institutions from getting into the investment business, but promoted a mega-merger trend that resulted in business that were, in the parlance de rigueur, "too big to fail."
At the same time that Wall Street was being undone by its own excesses, shutting off the flow of credit, consumers were struggling to keep up with rising costs in, for example, health care—an industry that has been continually deregulated and privatized ostensibly to achieve lower prices and improved quality. Meanwhile, the price of energy, particularly of gasoline, soared as petroleum companies posted record profits. Without a thought given to regulating prices at the pumps, let alone nationalizing the oil industry, elected officials in Washington accepted that the runaway price of gasoline was strictly, and properly, the result of unregulated speculation in the commodities market.
It is easy to blame the anti-regulatory trends on Republicans, but the fact is that both parties have supported major deregulation policies in recent decades. Bill Clinton signed the 1999 bipartisan repeal of the Glass-Steagall Act and championed the 1993 deregulation of the telecommunications industry, which increased the rate of media consolidation. Massachusetts Gov. Deval Patrick hired a former law partner as a "regulation czar," seeking to reduce regulation that might slow the pace of commercial development. In this regard, Patrick apparently was on the same page as Republican predecessors Mitt Romney and Bill Weld.
Even now, in the face of the dismal results of the past economic policies and the hundreds of billions of taxpayer dollars going to bailout business that are "too big to fail," the bipartisan goal in Washington is to achieve a "soft landing" to the recession, one that preserves the economy we have, not one that creates the economy we want.
As President-elect Barack Obama puts together his cabinet, he is receiving high marks from the free-market crowd for choosing a "centrist" cabinet of economic advisors, one that shows Obama's impulse to weigh experience more heavily than ideology. In a quest for a bipartisan solution to our current woes, however, Obama and his party must now do what legions of Democrats refused to do in the past: argue vociferously that regulation is not only necessary for a healthy society, but also good for business.
