Self Delusion and How the Rich Wrangle What They Want Out of Government

This is very interesting. It is a Pulitzer Prize-winning article from the Wall Street Journal presenting the case of "don't worry, nothing can go wrong with deregulation".

From the vault of Pulitzer Prize organization:

What's Wrong? The Deregulators

By: Jacob M. Schlesinger
October 17, 2002; Page A1

On an unseasonably warm February morning in 1987, three bank executives squared off against the Federal Reserve board in a crowded hearing room in Washington, D.C. Their mission was to persuade the Fed to start tearing down the half-century-old regulatory walls between the business of banking and the business of selling stocks and bonds.

Paul Volcker, the Fed's gruff chairman, was leery. He worried that easing the limits set by the Glass-Steagall Act of 1933 posed dangers: lenders recklessly lowering loan standards in pursuit of lucrative public offerings; banks marketing bad loans to an unsuspecting public.

Thomas Theobald, then vice chairman of Citicorp, countered that three "outside checks" on corporate misconduct had emerged since the financial shenanigans of the Roaring Twenties had led to Glass-Steagall. He cited "a very effective" Securities and Exchange Commission, knowledgeable investors, and "very sophisticated" rating agencies, according to a tape of the hearing.

Mr. Volcker remained hesitant, but most of his colleagues thought it was time to free the markets from the restraints of Glass-Steagall.

The erosion of that landmark law was one of many steps that added up to a free-market sweep of Washington over the past quarter-century. Policy makers transferred onto the shoulders of investors more of the responsibility for steering financial markets and policing wrongdoing. Republicans and Democrats joined forces to loosen federal control over crucial economic sectors. Along with banking, they unshackled telecommunications and energy.

From the 1930s to the 1970s, Washington embraced an ever-greater role for the federal government. But the economic stagnation of the 1970s convinced politicians in both parties that the pendulum had swung too far. By the decade's end, Democrat Jimmy Carter launched the modern deregulation movement by freeing up the airline and trucking industries. His successor, Ronald Reagan, even more enthusiastically embraced the wisdom of markets over bureaucrats.

The reforms, the officials believed, would unleash innovation and raise living standards. Those good things did happen. Deregulation and low interest rates spurred a burst of technological investment that accelerated the growth of the economy and slashed the unemployment rate. But the savviest policy makers knew they were making a choice "between economic growth with associated potential instability, and a more civil . . . way of life with a lower standard of living," as current Fed Chairman Alan Greenspan recently put it.

Go read the rest of the article.

I fall down laughing at this bit in the above:

He cited "a very effective" Securities and Exchange Commission, knowledgeable investors, and "very sophisticated" rating agencies, according to a tape of the hearing.

The SEC had been shrunk under Bush and didn't have the staff to do its job. Bush had appointed a "hands off deregulator" to run the SEC. The "knowledgeable" investors who sold steaming turds called "securitized debts" that came with thousand page documents that explained "the details" but nobody had the time to read or understand. Even the Wall Street banks drank their own Kool-Aid and took on tens of billions in securitized debt that blew up and became worthless. And the ratings agencies stamped AAA on everything because that was the only way to win business. So these "guarantees" were like the "sacred promises" that the White Man gave to the natives as they proceeded in a three century progress of genocide that "cleared the West" for settlement. These "promises" by the bankers were in that same spirit of "clearning up regulations" so that banks and saavy investors could get a free hand to scalp and pillage the unsuspecting investors who thought the government was "on the job" making sure that liars, cheats, and criminals weren't running the show. But, as 2008 demonstrated: the liars, cheats, and criminals were running the show.

This article is filled with the hogwash that Wall Street sold the public while it bribed politicians through political money under the table. This is what led to the near death experience for the economy, the crash that resulted in the Great Recession.

The same guys that sold this snake oil still hold powerful positions in the Obama administration, still have bought pretty well all of Congress, and still control the media. So we still get the propaganda of "lower taxes to 'unleash' the entrepreneurial spirit" and "deregulate, deregulate, deregulate" and "government is not the solution, government is the problem". These lies are still pumped out every day. People are in a stupor from having been fed this propaganda for years, decades!

Meanwhile the infrastructure in the US is in decay, schools are being shutdown, libraries closed, police and firemen laid off. The very heart of America is being closed down and sold off to help lower taxes for the ultra-rich and make them even more wealthy. Wages for the bottom 90% are stagnant. Jobs have disappeared. And with the November elections, fanatic right wing politicians are in full fury trying to shut down the federal government and at the state level are removing collective bargaining rights and cutting spending on public business to allow more tax cuts. Oh, and they are selling off public assets for a song to rich "investors" who just happened to have slipped some money under the table to the right politicians.

When will America wake up to the horrors it has brought upon itself by allowing the rich to sell them this fable of "trickle down" economy? the idea that if you make the rich even richer that they will suddenly become philanthropic and spread the wealth? that government, the very rules of social conduct, are "the problem" and that you can trust the scheming and ruthless to "self police" themselves?

The article ends with these infamous words:

... Mr. Greenspan still believes in the value of an unregulated derivatives market. Those instruments, he said in a speech in September, "have effectively spread losses from defaults by Enron, Global Crossing" and others, cushioning the blow to the economy. "So far," he insisted, "so good."

That was 2002, just 6 years before all hell broke loose and the economy of the US ground to a halt because of this right wing "deregulation" craziness. "So far, so good." Well, it is obvious now, there was nothing good lurking in the future. Instead it was the pit of hell waiting for the nation and the whole world. But these snake oil salesmen continued selling their wares. Worse... even after the disaster, the right wing Republicans continue to push their nostrums of "lower taxes to 'unleash' the entrepreneurial spirit" and "deregulate, deregulate, deregulate" and "government is not the solution, government is the problem".

When will the sleeping giant of America -- the solid citizens -- wake up and realize the crazy lies they have been fed for over 30 years and throw off the yoke of right wing fanaticism?