Progressive Ponderings: Deregulation
By Joe Mayer
Politicians frequently use "law and order" and "tough on crime" as election slogans. Many of these same politician use "deregulation" for the same purpose. The first slogans refer to citizen behavior – make more laws to crack down on individuals. The latter slogan refers to business and corporate behavior and advocates less regulation of businesses. Deregulation really means to "de-law" business practices. Politicians who advocate these opposing positions are really stating what we already know: They favor business and corporations over citizens.
Deregulation comes about in three ways: 1) Congress passes laws that allow/ encourage business and corporate behaviors that had previously been illegal; 2) The president appoints people to the various regulatory agencies who oppose laws that limit business practices; 3) The president appoints pro-business people to the court system so that many functioning laws are declared illegal. Currently America is affected by all three deregulatory methods.
Deregulation leads to monopolistic, or at least oligarchic, practices where buy-outs and mergers are given approval but which effectively limits consumer options for goods and services. In the past two decades this has occurred in communications (TV, radio, newspapers, telecom), health insurance and HMOs, pharmaceuticals, air travel, banking, insurance, agriculture markets/processing, energy (oil, gas, natural gas, coal, electrical power), among others.
One of the more disastrous results of deregulation happened in the savings and loan industry in the 1980s. Deregulation allowed takeovers that loaded many S&Ls with huge debt. When interest rates turned unfavorable, the takeover artists walked away with millions (billions) in profits while the public (taxpayer) picked up the government-guaranteed debt — $500 billion stated at the time but estimated as high as $1.4 trillion. The Bush family was involved through son/brother Neil. Deregulation in the case of S&Ls favored the privatization of profits while debt was off-loaded to the public. This is the goal of many deregulators.
A second, more recent, result of deregulation happened in the energy industry – ENRON. Deregulation allowed Enron energy traders, not producers, to create contrived shortages, especially in California, to drive the price so high it threatened many with bankruptcy. This time the price to the public besides artificially high-priced energy included the disruption of service (brown-outs and back-outs). Related to this is VP Cheney's secret energy committee. We still don't know all the players (corporate energy insiders) or the schemes decided upon. We do know the results: The highest energy prices in American history along with the highest energy corporation profits in history. Deregulation allowed fewer and fewer companies to control the energy market and allowed the vertical integration — control of oil from the ground to the gas tank. Such integration effectively eliminates competition.
As the world heats up, congressional/corporate sycophants — who deny science and refuse to acknowledge the world's environmental concerns — fight regulation with all the forces money can buy. Bush adamantly refuses any regulation that would transfer to corporations the costs for the pollution they produce. Again, profits are privatized while costs – health, global warming, environmental degradation, and economic insecurity – become the public's problem. Deregulation in the Department of the Interior and the Environmental Protection Agency have gutted consumer and public protections to the point of non-existence in some areas.
The acceptance of deregulation as a good thing is actually promoting the ideology that the market can solve all problems. Government (public programs) is bad; private enterprise is good. The low public opinion of business practices is at least partially due to deregulation.
The "free" in "free trade" is disguised deregulation by market ideologists. Current free trade agreements are designed to supplant national laws – many democratically agreed upon – with a new set of regulations engineered in secret by free trade proponents. These privately written and internationally imposed agreements infringe on national sovereignty. Every free trade agreement in modern times has favored multinational corporations over the rights of individuals and the authority of national constitutions and governments. In fact, the last sentence could serve as a definition of globalization.
Multinational corporations want to exchange national laws (regulations) with trade agreements that undermine sovereignty. Although all corporations are chartered with a nation, they have no loyalty to any one nation and often interfere in elections. Witness off-shoring to avoid taxes, the layoffs in one country to exploit labor in another. Playing one nation against another effectively lowers the common denominator of all nations regarding sovereignty. It is bewildering that the United States with only two dominant political parties has one party completely dedicated to policies that favor corporate practices over citizen needs and the second party leading strongly in that direction. The power of money overshadows all loyalties, commitments, and ideologies.
There is another method used by free market profiteers to deregulate on an international basis. Organizations ostensibly set up to alleviate world poverty use debt to inflict harsh economic and environmental measures on Third World countries. Structural adjustment (deregulation) programs mandated by these international organizations impose sovereignty-crushing, multinational-corporate enhancing laws. Wealth wins; the poor, the environment, communities, and nations lose.
CEOs of multinational corporations sometimes slip and inadvertently speak truth. One statement uttered in various forms states their goals: National governments are now irrelevant.
Deregulation, globalization, privatization, free trade, democracy promotion, free markets, ownership society, liberty, market economy, economic liberalism, tax cuts, reform, growth are all terms used glowingly by corporate government proponents and brandished by corporate media to disguise corporate takeover. All are interrelated. None of them state their objectives. None by itself suggests corporate dominance. None by itself sounds anti-democratic. Collectively they form a deceptive agenda of corporate dominance. Catchwords and slogans used repeatedly to propagandize have robbed citizens of their ability to choose and govern themselves wisely.
How did this happen? How did the corporate agenda overcome the democracy agenda? How did the corporate agenda become the American agenda? How did corporate balance sheets and economies become richer than many nations? How did the ideology of the rich become an ideology for those who are ruined, hurt, impoverished and imprisoned by it?
Among the many possible answers, media deregulation would have to be considered a major cause. Through deregulation of giant corporations, the corporate mind decides what to air and print, whose opinions to promulgate, who and what is important, and what is fair and balanced. Madison Avenue advertising sells soap, cars, beer and politicians with an equal amount of cunning and deceit. A nation ruled through propaganda has been the victim for so long that it brags of its superiority and pretends to promote democracy, which it doesn't understand. It is time to uncover the facts and make corporate stealth so clear that action is deliberate and decisive.
Politicians frequently use "law and order" and "tough on crime" as election slogans. Many of these same politician use "deregulation" for the same purpose. The first slogans refer to citizen behavior – make more laws to crack down on individuals. The latter slogan refers to business and corporate behavior and advocates less regulation of businesses. Deregulation really means to "de-law" business practices. Politicians who advocate these opposing positions are really stating what we already know: They favor business and corporations over citizens.
Deregulation comes about in three ways: 1) Congress passes laws that allow/ encourage business and corporate behaviors that had previously been illegal; 2) The president appoints people to the various regulatory agencies who oppose laws that limit business practices; 3) The president appoints pro-business people to the court system so that many functioning laws are declared illegal. Currently America is affected by all three deregulatory methods.
Deregulation leads to monopolistic, or at least oligarchic, practices where buy-outs and mergers are given approval but which effectively limits consumer options for goods and services. In the past two decades this has occurred in communications (TV, radio, newspapers, telecom), health insurance and HMOs, pharmaceuticals, air travel, banking, insurance, agriculture markets/processing, energy (oil, gas, natural gas, coal, electrical power), among others.
One of the more disastrous results of deregulation happened in the savings and loan industry in the 1980s. Deregulation allowed takeovers that loaded many S&Ls with huge debt. When interest rates turned unfavorable, the takeover artists walked away with millions (billions) in profits while the public (taxpayer) picked up the government-guaranteed debt — $500 billion stated at the time but estimated as high as $1.4 trillion. The Bush family was involved through son/brother Neil. Deregulation in the case of S&Ls favored the privatization of profits while debt was off-loaded to the public. This is the goal of many deregulators.
A second, more recent, result of deregulation happened in the energy industry – ENRON. Deregulation allowed Enron energy traders, not producers, to create contrived shortages, especially in California, to drive the price so high it threatened many with bankruptcy. This time the price to the public besides artificially high-priced energy included the disruption of service (brown-outs and back-outs). Related to this is VP Cheney's secret energy committee. We still don't know all the players (corporate energy insiders) or the schemes decided upon. We do know the results: The highest energy prices in American history along with the highest energy corporation profits in history. Deregulation allowed fewer and fewer companies to control the energy market and allowed the vertical integration — control of oil from the ground to the gas tank. Such integration effectively eliminates competition.
As the world heats up, congressional/corporate sycophants — who deny science and refuse to acknowledge the world's environmental concerns — fight regulation with all the forces money can buy. Bush adamantly refuses any regulation that would transfer to corporations the costs for the pollution they produce. Again, profits are privatized while costs – health, global warming, environmental degradation, and economic insecurity – become the public's problem. Deregulation in the Department of the Interior and the Environmental Protection Agency have gutted consumer and public protections to the point of non-existence in some areas.
The acceptance of deregulation as a good thing is actually promoting the ideology that the market can solve all problems. Government (public programs) is bad; private enterprise is good. The low public opinion of business practices is at least partially due to deregulation.
The "free" in "free trade" is disguised deregulation by market ideologists. Current free trade agreements are designed to supplant national laws – many democratically agreed upon – with a new set of regulations engineered in secret by free trade proponents. These privately written and internationally imposed agreements infringe on national sovereignty. Every free trade agreement in modern times has favored multinational corporations over the rights of individuals and the authority of national constitutions and governments. In fact, the last sentence could serve as a definition of globalization.
Multinational corporations want to exchange national laws (regulations) with trade agreements that undermine sovereignty. Although all corporations are chartered with a nation, they have no loyalty to any one nation and often interfere in elections. Witness off-shoring to avoid taxes, the layoffs in one country to exploit labor in another. Playing one nation against another effectively lowers the common denominator of all nations regarding sovereignty. It is bewildering that the United States with only two dominant political parties has one party completely dedicated to policies that favor corporate practices over citizen needs and the second party leading strongly in that direction. The power of money overshadows all loyalties, commitments, and ideologies.
There is another method used by free market profiteers to deregulate on an international basis. Organizations ostensibly set up to alleviate world poverty use debt to inflict harsh economic and environmental measures on Third World countries. Structural adjustment (deregulation) programs mandated by these international organizations impose sovereignty-crushing, multinational-corporate enhancing laws. Wealth wins; the poor, the environment, communities, and nations lose.
CEOs of multinational corporations sometimes slip and inadvertently speak truth. One statement uttered in various forms states their goals: National governments are now irrelevant.
Deregulation, globalization, privatization, free trade, democracy promotion, free markets, ownership society, liberty, market economy, economic liberalism, tax cuts, reform, growth are all terms used glowingly by corporate government proponents and brandished by corporate media to disguise corporate takeover. All are interrelated. None of them state their objectives. None by itself suggests corporate dominance. None by itself sounds anti-democratic. Collectively they form a deceptive agenda of corporate dominance. Catchwords and slogans used repeatedly to propagandize have robbed citizens of their ability to choose and govern themselves wisely.
How did this happen? How did the corporate agenda overcome the democracy agenda? How did the corporate agenda become the American agenda? How did corporate balance sheets and economies become richer than many nations? How did the ideology of the rich become an ideology for those who are ruined, hurt, impoverished and imprisoned by it?
Among the many possible answers, media deregulation would have to be considered a major cause. Through deregulation of giant corporations, the corporate mind decides what to air and print, whose opinions to promulgate, who and what is important, and what is fair and balanced. Madison Avenue advertising sells soap, cars, beer and politicians with an equal amount of cunning and deceit. A nation ruled through propaganda has been the victim for so long that it brags of its superiority and pretends to promote democracy, which it doesn't understand. It is time to uncover the facts and make corporate stealth so clear that action is deliberate and decisive.
Labels: deregulation, Joe Mayer
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2 Comments:
I am not sure Mr Mayer did his homework on Enron. Enron, at the time of its collapse, was not a utility and was not formed out of deregulation in the energy sector. Enron was created by mergers of natural gas companies in Omaha and Houston in the mid 1980s. Enron sold off its generation businesses for the more lucrative 'energy trading' business where Enron would be the broker buying and selling energy for other utilities off 'the grid' (the national electricity network). As demand rose and fell in different parts of the country, Enron would be the broker between utilities charging fees to utilities buying and selling power. This was an unregulated business within the energy sector and because Enron was the major player in energy trading could charge whatever they wanted for trading energy between utilities.
What happened in California in the late 1990s and early 2000s was partly the fault of Enron, but the real culprit was the Democrat-controlled California Legislature stepped in and capped rates utilities could charge their customers. Northern California gets most of its electricity generated by hydro-electric and California electricity demand has skyrocketed as capacity is reaching critical mass. The drought of the late 1990s led to severe decreases in hydro-electric power forcing California utilities to buy power from other utilities because they had no nulcear, coal or natural gas plants to rely on for backup.
Enter Enron. Enter the California Legislature.
As the price of purchasing power from outside of California began to rise, the California Legislature capped the rates utilities could charge. So, rate payers never saw higher bills that indicated they need to reduce their consumption which is the natural inclination of the market -as prices go up, consumption goes down. California Utilities were not able to recoup their increased costs of buying energy off the grid and paying Enron's high brokerage rates. This led to the California utilities becoming cash-strapped to the point of bankruptcy. Since the California Utitities were running out of money because they couldn't pass on their higher costs and didn't have any more money with which to pay the higher fees, Enron shut off the trading to them because the California Utilities could no longer pay the rates. This, in turn, exacerbated the problem because the California Utilities now could not produce their own power due to the drought or buy energy from other utilities because they were out of money.
If the California Legislature had not capped the rates during the drought and allowed their utilities to pass on the high costs of purchasing energy off the grid to their rate-payers, there would not have been brown outs and black outs because rates payers would have scaled back their consumption.
Now, Enron was no saint in this situation and took full advantage of it to their gain and to the detriment of California rate-payers. Enron knew they could charge whatever they wanted and because the California Utilities had no choice but to buy off the grid, Enron toyed with them charging outrageous fees. But, what started it all was the fact that the California Legislature capped the rates utilities could charge their rate-payers. If the market had been allowed to work, there would have been no brown or black outs.
But, those Democrats in the California legislature that got the rate caps passed in to law got re-elected because they 'did something' about high utility rates - they capped them. And we know that all that really matters is getting re-elected. We all know government doesn't cause problems. Government only solves problems.
Uh huh.
Dick Cheney's nefarious 'secret energy' task force was not in a position to affect what happened in California with Enron. The Clinton administration turned a blind eye to Enron because Enron ponied up a lot of money to the Clinton Administration during the halcyon (albeit fraudulent) days of the 1990s. The collapse of Enron and the gaming of the energy trading market was long in the works before Cheney's secret task force arrived on the scene.
Just ask Al Gore.
Joe,
Interesting comment, but you need to give more consideration to the “tools” used by business. Namely, how campaign contributions result in tax subsidies and policy influence.
As long as our country collects taxes via anything but consumption, there will be manipulation of who pays … and generally, the people that get the tax breaks are those that influence the legislation.
Influence is not only on tax policy, but also in regulatory and administrative functions. Look at the FDA and the pharmaceutical industry, or the Interior Department and the oil / timber industry. And, through the exposure of the DOJ Federal Prosecutors purge, we are learning the importance of voter fraud as a pinnacle issue for the Bush Administration.
Would we have the Drug Prescription Benefit without benefiting (or protecting) the pharmaceutical industry?
With the power shift in Congress, it is being proven with every quarterly campaign contribution report, that business is willing to support whoever is elected. The question to our elected officials is, “will you allow those contributors to influence your vote?”
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