What has the Government Deregulated?

Perhaps the question ought to be, has deregulation by government been successful? Maybe the question should be, how does deregulation affect a free economy? 

 

Let’s look at the items that are involved.

 

1. Jim Cramer at Bucknell University

An impassioned and sometimes fiery Jim Cramer, the investing guru and host of CNBC’s “Mad Money,” told a packed audience at Bucknell University’s Weis Center that government deregulation was nothing short of a “covert attempt” to eliminate the federal government’s responsibilities to its citizens.  He blamed both Republicans and Democrats for a “hands-off democracy” and “rough-and-tough capitalism,” but was especially critical of government institutions like the Federal Reserve under then-Chairman Alan Greenspan for failing to “curb the Internet boom before it became the dotcom bomb recession of 2001.”

He said Greenspan could have curtailed that boom by using the rules that Congress gave the Fed to curb excessive margin lending that exacerbated the Internet stock boom.

2. Airline Industry

This is part of a commentary and explanation from alternet.org. The High Price of Airline Deregulation dated September 15, 2005.  “In the 27 years before airline deregulation, no airline went bankrupt. Since 1978, 160 airlines have come and gone. In the last quarter-century, the rate of bankruptcy among air carriers has been as much as 10 times higher than that of the general business community. In 2005, virtually all major airlines are either in bankruptcy (United and US Air were joined Wednesday by Delta and Northwest) or on the verge of bankruptcy. How did we come to this?

In the late 1970s, the airline system was straining under an inflexible and cumbersome regulatory system. A long, drawn-out proceeding was needed simply to get permission from the Civil Aeronautics Board (CAB) for employees of two affiliated airlines to wear similar uniforms! Something needed to be done.”

We all know what is happening today in the airline industry.  The high cost of fuel is driving up prices and reducing service.

 

3. Radio and Television Industry

This is Los Angeles.  It’s the second largest city in the nation.  The UHF local television stations are channels 2, 4,5, 7, 9, 11, and 13.  Channels 2 and 9 are owned by the same company.  Channel 5 is owned by the Tribune Company along with the Los Angeles Times newspaper.

 

The Tribune Company also owns the Chicago Tribune, Newsday, Hartford Courant, Orlando Sentinel, and the Baltimore Sun.  Tribune Broadcasting is now immersed in television, with 23 stations located in 19 markets including WGN.

 

Radio is now dominated by major companies that own multiple outlets in many cities.  At least threee major stations in Los Angeles are own by Clear Channel.  The are KFI AM, KOST FM, and KTLK AM.

 

Most cable televison stations are owned by the large networks Fox, NBC, ABC, and CBS.  This is no news to anyone.   

 

4. California Energy Utilities

The crises of 2000 and 2001 resulted from the gaming of a partially deregulated California energy system by energy companies such as Enron and Reliant Energy. The energy crisis was characterized by a combination of extremely high prices and rolling blackouts.  The city of Los Angeles was spared because the city owns the water and power company that serves those living within the city limits.  The rest of the state’s population suffered from the deregulation.  The governor’s sucessful recall was a consequence of this horrible event.  Someone actually acquired a recording of manipulators laughing about the entire situation and tellinghow they had impacted the state. 

 

5. Banking and Financial Industry

It’s obvious there was little or no oversight.  Banks are now permitted to act a stock brokers.  Mortgage companies were allowed to enter the banking system (Countrywide Mortgage had its own bank).  Insurance companies were permitted to operate banks.  There are no capital requirements established for stock brokerage companies, insurance companies, or investment banks.  No one said “No” to home loans for those who could not afford them.

 

6. Food and Drug Administration

There have been numersous incidents of a lack of oversight by the FDA in the management of food processing companies.  The one coming to mind ws the slaughtering of sick cows at a processing plant in the Los Angeles area that was caught on video tape.

 

 

Barack Obama is too new to have a record.  It will be easy for him to take a strong position in favor of more regulation.