Regulation after Bush
What does the future hold for regulating Wall Street?
Regardless of who wins today's election, both Barack Obama and John McCain have staked out different positions on issues involving economic regulation – and each is very different than the outgoing president.
The Economists' Voice looks at what we might expect in the post-Bush era:
While the presidential candidates have been diverted by critical issues ranging from Barack Obama’s taste in lettuce to John McCain’s condo, it’s hard to deny that, once elected, serious questions involving economic regulation—everything from housing finance to alternative energy mandates—will be front and center. And here, at least, the divisions are clear: Obama would use a heavy hand to push the economy back on track, while McCain would do his best to put the free back in free markets.
Or maybe not.
Ever since the New Deal, Democrats have largely accepted the label as the party of regulation—defenders of the weak from the vagaries of soulless capitalism. Republicans, for their part, position themselves as the nemeses of the social engineers and do-gooders who would sap the economy of vigor. But once in office, reality bites. Thus, with more than a little encouragement from Detroit, Ike committed the GOP to the biggest public works project in history— the Interstate Highway System. Richard Nixon imposed price controls to contain inflation, while Ronald Reagan protected the swooning steel industry from foreign competitors and the first President Bush championed market intervention in the name of cleaner air and accommodations for the disabled. The second Bush hasn’t stood on principle either, lavishing seniors with heavily subsidized prescription drugs and supporting bailouts for both investment bankers and the giant private mortgage insurers.
Democrats, of course, have been no better at sticking to their script. Carter deregulated airlines and trucking, while Clinton deregulated telecommunications and nuclear enrichment as well as opening the door to cheap Mexican imports.
Thus, while Obama and McCain may both lull true believers with the bromides of an earlier generation, a subtler mix of ideology and interest group muscle is bound to drive the regulatory agenda once elected. Consider just a few of the big choices ahead.
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Source:
"Regulation after Bush"
Robert Hahn and Peter Passell
The Economists' Voice: Vol. 5 : Iss. 4, Article 5. (2008)
http://www.bepress.com/ev/vol5/iss4/art5
http://www.bepress.com/cgi/viewcontent.cgi?context=ev&article=1389&date=&mt=MTIyNTc5OTY1Nw==&access_ok_form=Continue
Tuesday, November 04, 2008 | 03:00 PM | Permalink
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Comments
For the sake of clarity, pundits ought to distinguish between different meanings of the word "regulation". There have been regulations to protect consumers and investors, and there have been regulations designed to fix prices and inhibit competition. There's a world of difference between these two uses of "regulation".
Posted by: DaveinHackensack | Nov 4, 2008 4:32:40 PM
We have now learned that capitalism left alone DOES have the means to destroy itself. I have always thought less regulation was best for our "free" markets. BOY was I wrong!! You have to establish some limits. Although some years down the road when the going gets good again, someone will say "Limits.. we don't need no stinkin' Limits"...
Posted by: mw | Nov 4, 2008 4:42:48 PM
We act as if the markets have a life of their own. Have we advanced from the time of ancient Greeks or have we just changed gods? The markets will work fine in a free market system. The problem lies not in the market but in each of us. The markets do not need regulation. People need regulation. Force is used to keep people regulated. We are going to force and we will collectively rebel against the force because the nature of who we are is simple. I do not need regulation but my next door neighbor needs regulation. I only hope that the regulators are sensible. If they are not, our cure could be much worse than the disease.
Posted by: JT | Nov 4, 2008 5:15:47 PM
Long some of those 7.5 cent McCain contracts on INtrade . . .
Posted by: txchick57 | Nov 4, 2008 5:47:17 PM
It does seem that Jimmy Carter, a democrat, was the last fiscal conservative we had in office.
Maybe the lack of common sense regarding the use of money and credit over the past 25 years or so is at the root of all the problems we're having now.
Posted by: super-anon | Nov 4, 2008 6:19:26 PM
We have now learned that capitalism left alone DOES have the means to destroy itself. I have always thought less regulation was best for our "free" markets. BOY was I wrong!! You have to establish some limits. Although some years down the road when the going gets good again, someone will say "Limits.. we don't need no stinkin' Limits"...
I would argue that if we had free markets, then the Federal Reserve and the government would not have intervened in the correction that was beginning in 1998, and many of the problems we have today relating to leverage and the hedge fund industry would never have been able to materialize.
In fact historically you see this same phenomenon occurring time and time again before major financial and economic disasters - deliberate intervention by the government in the markets to prevent market corrections and economic contractions.
If there is truth to the simple premise that recessions are natural events that remove excesses from the economy and the financial system then it only follows that a government's attempts to avert recessions will lead to great excesses and ultimately more damage.
History seems to support this view.
BTW this isn't an argument against government regulation of business; it is an argument against government attempts to regulate the business cycle.
Posted by: super-anon | Nov 4, 2008 6:28:06 PM
There's no way to argue this in a blog entry comments. Read Bastiat. Please.
Posted by: beth | Nov 4, 2008 9:57:10 PM
The Myth that Laissez Faire Is Responsible for Our Financial Crisis
http://georgereisman.com/blog/2008/10/myth-that-laissez-faire-is-responsible.html
Posted by: Tom | Nov 4, 2008 10:00:58 PM
As comments to the next post are locked. BTW this is a sign of upcoming way of life in USSA, I'd say: Saddam Hussein or Barak Hussein does not scare me. I'll watch it from outside. Sorry for the ones who don't have this option.
Posted by: sergtat | Nov 4, 2008 10:27:07 PM
