Summary List Placement
It’s quite possible that the greatest trick that trickle-downers ever pulled was framing the battle over government’s relationship to business as regulation versus deregulation. It sounds simple, a binary choice between all or none: Either you want businesses to be regulated, or you want to deregulate the market. “Deregulation” in this context sounds sleek, minimalist, and freeing, while “regulation” sounds cumbersome and complicated.
But here’s the dirty little secret about deregulation: It doesn’t really exist.
There’s no such thing as “fewer regulations,” only a shell game that shifts ownership of regulations from one authority to another. What we call “deregulation” simply stands for a belief that corporations should act only in ways that suit their preferences — with no consideration for anything beyond shareholder value.
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In other words, human activity within a society is always regulated — the only question is who’s doing the regulating.
All that really changes when, say, the Trump administration moves to roll back regulations on oil drilling in the Alaskan Arctic, is that the government cedes control over drilling regulations, handing the reins to the oil industry. While the government’s regulations sought to protect unspoiled public lands, the oil industry’s “regulations” seek to enrich shareholders and executives at the public’s expense by exploiting irreplaceable environmental resources in exchange for a quick buck.
Back in 2008, we saw what happened when the federal government systematically ceded control of regulations to the banking industry over the span of decades. Left to their own devices, the banks set in motion a mortgage crisis by building up a pyramid scheme that nearly brought down the global economy. The banks’ regulations favored immediate profits over long-term sustainability, and the rest of us paid the price.
That economic collapse is part of the reason why this week’s guest on the Pitchfork Economics podcast, Anat Admati, half-jokingly refers to herself as “a recovering finance professor.” Admati, who still teaches finance at the Stanford Graduate School of Business, says the egregious failures of unfettered capitalism have caused her to look at banking regulations in a new way.
“I’ve become very interested in why capitalism and democracy are failing us altogether,” Admati told Pitchfork Economics hosts Nick Hanauer and Jessyn Farrell. Admati’s fascination with regulatory collapses led her to her role as director of the Corporations and Society Initiative, which seeks “to promote more accountable capitalism and governance,” and also inspired her to coauthor a book titled “The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It.”
Admati realized that the financial industry was ill-equipped to regulate itself in 2013, when Wells Fargo CEO John Stumpf argued against new Federal Reserve regulations that would require the bank to stop making risky, debt-laden bets like those that caused the financial crisis. Stumpf bragged that “because we have this substantial self-funding with consumer deposits …read more
Source:: Businessinsider – Politics