Volume 3  Number 91

Regulation. The very word sounds creepy. It makes one think of “big brother,” people spying on your every move to bend you to their will. Certainly, it has become part of the conservative mantra, “Low taxes, free trade and deregulation.”

Let’s look at it another way. This is a large country with a large population, operating in a huge world. It has been shown time and time again that the purpose of business is to make more money. Left unwatched, many businesses will inevitably go over the edge.  Perhaps someone should be there to say, “No. You can’t do that.” That is the role of regulatory agencies.

Nowadays, few industries escape regulation. During the 20th century, as we became a national and global marketplace, an alphabet soup of federal regulatory agencies grew up. Most people have heard of the biggies according to money.howstuffworks.com:

  • FCC: Federal Communications Commission. This covers the telephone, telegraph and broadcasting industries.
  • ICC: Interstate Commerce Commission. This body governs railroads, trucking and shipping.
  • FDA: Food and Drug Administration. This agency regulates products and their labels.
  • SEC: Securities and Exchange Commission. This body covers our stock exchange.
  • OSHA: Occupational Safety and Health Administration. This covers the safety and health of our workers.
  • EPA: Environmental Protection Agency. This takes care of the environment and human health concerns.
  • FAA: Federal Aviation Agency. This body regulates air travel.

There are countless smaller agencies at the federal level and also state and municipal regulatory groups. Again according to money.howstuffworks.com, “Regulation can be designed to protect the public against monopolies, high prices, poor service or some danger. It can also be designed to insulate businesses and industries against the free market risks.” The danger is that regulation can stifle competition and limit opportunities for businesses to grow and be innovative.

Probably the last thing an industry wants is to be regulated. So, as soon as these regulatory agencies were set up, businesses began to push back. Industry has increasingly hired lobbyists to influence lawmakers regarding their needs, set up public interest groups and public relations agencies to convince the citizenry on their behalf.

This gave rise to deregulation. This is the phenomenon wherein, “Governments signal their intention to leave the market economies to the market forces and not stifle it and constrain it with myriad laws, rules and regulations,” according to www.managementstudyguide.com. This means that businesses determine their own destiny without government interference. In theory it allows the natural market forces to operate, weeding out the inefficient and rewarding the more efficient corporate entities.

Proponents of deregulation are right–sometimes. After all, regulation can lead to inefficiencies, corruption in the form of cozying up by regulators to the industry they are intended to regulate, and to the industries thinking they could be more profitable with less regulation.

We have seen how deregulation led to the expansion of business so it has truly become an international marketplace with great benefit to the consumer and business. Also, doing away with Fair Trade laws by 1975, whereby a manufacturer mandated the retail price of its goods, led to lower prices and more choices for consumers for countless products.

Deregulation has become a major push by Republicans since the Reagan era and was even abetted during the Democratic President Clinton’s years. But through changes in the regulatory laws, we now have a giant experiment out there that permits us to see how this works out and affects our everyday lives. Sometimes it is not so good.

Broadcasting: Congress passed the Federal Telecommunications Act of 1996 because station owners and broadcasters convinced the regulators that this would lead to new developments and improve service. What we got was a giant like Clear Channel owning more than 850 stations across the country, where before a broadcaster could only own a limited number of stations in one market. This makes for limited music choices and the same music wherever you go.

It also did away with the notion that stations had to give equal political viewpoints to both the left and right side of the political spectrum. This led to the complete domination of the radio airwaves by big corporations and the rise of conservative voices like Rush Limbaugh and Sean Hannity dominating the industry without equal access to more liberal viewpoints.

Telecommunication: As a result of the break-up of AT&T in 1984 and the Telecommunications Act of 1996 we wound up with a few mega companies controlling communications in this country. That means consumers are forced to buy hundreds of unwanted cable TV stations in order to see the few wanted. Also, because of limited competition prices have gone up astronomically in recent years.

Airlines: The Airline Deregulation Act of 1978, instead of lowering prices and providing more service to customers, we wound up with a handful of companies controlling the whole industry. The net result is that each major airline has a virtual monopoly in their hub markets. So we have higher prices, despite declining fuel prices, crowded planes, virtually no service on board, fewer direct flights, fewer markets served and an ancient fleet of planes.

Finance: Getting rid of The Glass-Steagall Act of 1933 in 1999 took down the wall between banks that made routine loans and the ones that made risky ones. Also, instead of banks being local or just in one state, they were now allowed to go across state lines, ultimately creating a handful of national megabanks. This directly led to the gigantic mortgage collapse of 2007, where these large banks had bundled together risky mortgages into what they claimed were secure offerings. This explosion caused the loss of millions of homes and devastated the economy with the worst financial crisis since the Great Depression.

Railroad Losses: When the Railroad Revitalization and Regulatory Reform Act of 1976 passed, the railroads got rid of unprofitable routes, merged and began to charge higher rates. On the negative side, railroads also were able get rid of passenger routes, depriving consumers in rural areas access to convenient travel and costing thousands of conductors their jobs.

While deregulation sounds good in the short term, we have just seen a handful of examples that affect our everyday lives, how the long term consequences can be less inviting. Once the free marketplace begins to operate, invariably, this leads to consolidation and price fixing. It can create oligopolies in which a few companies act a lot like the old fashioned monopolies. This is not a good thing for the consumer or for our economy.

So when politicians say they are going to expand the economy by doing away with onerous regulations, take it with a grain of salt. “Big brother” may be watching, but sometimes this is not a bad thing.

Now the new businessman President, Donald Trump, is hell-bent on trying to dismantle all of the regulation agencies that have been carefully built over the last 75 years. Instead of being proponents of the agencies they lead, his appointees intend to be destroyers (if Congress, the Courts and the American people let them). Hatchet men and woman include the proposed and approved heads of:

  • Environmental Protection Agency: Scott Pruitt, who over years sought to stop the agency’s enforcement efforts.
  • Secretary of Education: Betsy DeVos, accused of trying to undermine traditional public schools.
  • Housing and Urban Development: Ben Carson, who questions the need for safety net programs for the poor.
  • Health and Human Services: Tom Price, is bent on eliminating President Obama’s signature Affordable Care Act.
  • Secretary of Labor: Andrew Puzder, is opposed to significantly raising federal minimum wages and is against making more workers eligible for overtime pay (since recalled).
  • Attorney General: Jeff Sessions, who is charged with protecting our citizens but whose past shows him to be a racist and opposed to any immigration acceptance. He is also a climate change skeptic.
  • Chief Strategist and member of the National Security Council, Steve Bannon, was formerly editor of the racist ultra-right wing publication Breitbart and is also known for his ultra-nationalistic stance, desiring abolishment of all U.S. international treaties.

What a collection. It is like a passel (not posse) of foxes is being turned loose in hen houses all over the country. With friends like these heading them up, the agencies have no need for enemies. It is a toss-up as to whether our democracy can survive this group long enough to throw them out or if they will truly wreck our country for a long time to come.

 

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