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HOW REGULATIONS SAVED AMERICAN BUSINESS

June 13, 2017

HOW REGULATIONS SAVED AMERICAN BUSINESS

When Franklin Delano Roosevelt (a rich and only child whose family owned vast tracts of land in the Hudson River Valley) took office in the spring of 1933, America was on the verge of failed state status. Virtually everyone was broke or headed that way. Unemployment was rampant and even those who had jobs were working for slave wages. I was witness to the massive poverty and despair of that day, and my personal experience with The Great Depression has had a lasting effect on me and how I look at the role of government in our experiment in democracy aka America.

I was six years old at the time FDR was inaugurated. My father was a coal miner and there was little to no demand for the carbon product he helped produce. We were, as the saying goes, “dirt poor.” We could not even afford coal for our stove; we picked up coal along the mine’s railroad tracks that ,had fallen off the mine’s cars en route to mainline tracks in 50 pound gunny potato sacks and brought it home in a little red wagon. We had no car or other means of transport. We walked to the store and church and swimming holes. Our power was cut off frequently because we could not afford the dollar a month charged by the utility. We managed to cook and see with a kerosene stove and lamps.

To even have imagined in those days that I would ultimately become a college and law school graduate would have been pure fantasy as years of daily despair and hopelessness took their toll on our hopes and dreams as well as our bodies, but it happened. How and why? It happened because Roosevelt aggressively adopted policies designed to pull us out of the throes of the depression, policies which at the time earned him designations by corporate America of “socialist” and other unkind expressions in the interest of maintaining their ownership of America’s government and economy. FDR’s classic rejoinder in response to such corporate insults was “I welcome their hatred.” The irony of all this is that the man they hated rescued capitalism and saved them from themselves.

In addition to new agencies he created with acronyms such as the WPA, TVA, FDIC and others, and knowing how corporate America had ravaged the American economy under the laissez faire administrations of his predecessors in office, i.e., Harding, Coolidge and Hoover, he also created the SEC and other such corporate cops to police the markets and strengthened anti-trust enforcement in order to ensure competition with the resulting lowering of prices to consumers and improvement in efficiencies in the production of goods and services due to the competitive and innovative forces his policies unleashed.

The process is itself called regulation and, like in the days of its absence during the 1920s and again today, corporate America and its front man, Trump, are calling once again for less regulation of actors in the marketplace (along with massive tax cuts for the rich and corporate class), the very mistakes that gave us The Great Depression and Bush’s Great Recession. Will we ever learn that regulation of the marketplace provides the stability and competition necessary to prevent the “boom and bust” experiences of the past, or are we driven to comply with the corporate propaganda of the rich and corporate class that regulation strangles economic growth when it plainly and demonstrably does not.

Corporate America’s heyday of virtually no regulation during the 1920s under the laissez faire administrations of Harding, Coolidge and Hoover (which gave a free hand to corporations to effectively decide policy without government “interference” in Wall Street’s shenanigans) gave us The Great Depression. Corporations that mercilessly destroyed their competition as John D. Rockefeller did during the first Gilded Age before Teddy Roosevelt put an end to it with his robust anti-trust policies are up to their old tricks again with their uncompetitive practices and mergers and acquisitions in buying out their competition so they can raise prices to consumers as they are the only game (monopolists) in town.

Anti-trust laws are still on the books but toothless unless enforced, and Trump and his profit-seeking corporate partners advocate still less enforcement, thus placing our economy at greater risk when we know from history that vigorous enforcement of anti-trust laws enhances competition and efficiency in the market which in turn provides stability of the economy and the opportunity for real economic growth as opposed to corporate and banking pursuit of short term profits.

How do we know? Well, our boom and bust economy for roughly every 20 years in history was interrupted by no “busts” of consequence following adoption of FDR’s New Deal policies of regulation and anti-trust enforcement beginning in the 1930s through both Republican and Democratic administrations up to that of Ronald Reagan, who decided that “government is the enemy,” following which (and predictably) the boom and bust forces reasserted their ownership of the economy which, along with the disastrous repeal of the Glass-Steagall Act of 1933 that outlawed the merger of investment banking with commercial banking and Bush’s massive and first in history wartime tax cut for the rich and corporate class during his Iraqi caper gave us Bush’s Great Recession and both a domestic and global recession, a crisis now in remission though still felt in certain sectors of the economy and our work force as automation and offshoring took their piece of economic flesh in response with trillions lost in home equity via mortgage foreclosures when millions of people lost their homes due to Bush’s demand-deadening recession in which Wall Street bankers exacerbated the crisis with their mortgage fraud and packaging of such worthless mortgages for sale to unwitting investors such as teachers, firemen and police retirement funds.

So now we are asked by Trump and his corporate and banking sponsors to reset the stage with the same conditions that brought us near ruin and trust corporate America to manage the risk on our behalf without regulation or input of government because it’s good for business? What about the vast majority of the rest of us who are not “in business?” Have we learned nothing from history and what works for all of us and not just the coddled few? Apparently not, not in this age of corporate propaganda and a Congress that has abdicated any pretense to representation of the real interests of real people in the real world in favor of campaign contributions (aka bribes) from those whose interests they in fact represent. That’s their “real world.”

So what now? To restate the obvious > Remove the representatives of the money changers and their corporate welfare recipients and install representatives of the people to positions of power so that we can have a regulated economy that works for all of us, including even those who are regulated though they cling to the notion of Gilded Age politics. FDR made it happen in 1933 and for years afterwards,  and it’s our turn to make it happen again, starting today.      GERALD      E

 

 

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One Comment
  1. Niel Johnson permalink

    Another home run, re FDR Jerry – Loren mentioned to me your blog on FDR and the New Deal, and how it saved our capitalist system.  He lavished praise on it, and got a similar reaction from someone he passed it on to.  Of course, I agree with that assessment, and have only a postscript to add to it–namely, that Truman understood well the merits of the New Deal and extended it in many respects with his Fair Deal. Truman added to it mainly by advancing civil rights with his two executive orders regarding desegregation of the armed forces and providing equal employment opportunities for African-Americans in the federal government.  Eisenhower, with the help of Democratic majorities in Congress, also presided over a period of advances in civil rights, mainly because of favorable court decisions–which he enforced, as in the Little Rock desegregation struggle.   I will be sending you a statement I received recently on the cost of hospital visits in the last two or three months, including an item of $10,800 for a cat-scan.  That is so absurd, and it is not the only item that is grossly out of line.  I talked to the hospital’s cashier and she indicated agreement that such amounts are unreasonable, but has no authority to change them.  The way most hospitals compute their billing statements has been the subject of newspaper investigations, with scandalous conclusions, but nothing seems to get done.  I told her I had Medicare and Mail Handlers and they would take care of most if not all of it, but if I could not afford insurance premiums, I would be stuck with a huge debt.  She said the hospital does discount for those of low income, but even if they were to reduce by 50 or 75 percent, I said the cost would still be prohibitive in most cases.  I then spoke up for Truman’s plan for national health insurance, in which everyone, including the poor–according to their means–would contribute so all could benefit.  I added the suggestion that those of low income would be discouraged from wasting their money at gambling casinos, which are a drag on the economy..  I added an aside that Trump hates losers, but he has become rich off of losers–all those who lose at his casinos. I expect to send a copy of the hospital statement to both Senator Blunt and Congressman Cleaver, and ask why we put up with such absurdity in our health care coverage system.  I expect this new atrocity that the House of Reps passed and which the Senate has to deal with will probably start the ball rolling toward a Medicare for all type program, and that many Repub. obstructionists will find themselves on the outside looking in after next year’s Congressional elections.  Kansas has already seen a turn for the better with an override of Brownback’s veto of a plan to increase revenues for underfunded education, infrastructure, etc. in his benighted state. Let’s hope that this is a straw in the wind, that will be reflected in next year’s elections.Niel   

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