Deregulation dies a sudden death in Washington, DC
Food, financial debacles bring the 'R-word' back in fashion.
by Michael Mandel, Business Week
September 18, 2008 — The 30-year era of deregulation came to a sudden and surprising end on Sept. 16.
Late that evening the Federal Reserve extended $85 billion to take an unprecedented 80 percent stake in American International Group in order to save the floundering insurance giant. Less than two weeks earlier, Treasury Secretary Henry M. Paulson Jr had announced that the federal government was taking over Fannie Mae and Freddie Mac, the colossal mortgage agencies. Suddenly the US financial sector could not survive without government help.
Since the long-ago days when Jimmy Carter was President, regulation has been a dirty word in Washington. Politicians of both parties vied to see how much of the economy they could free from the oppressive yoke of government control. The deregulation movement started when Carter signed the Airline Deregulation Act of 1978. Later, as it spread from energy to trucking to telecommunications to financial services, the rallying cry was the same: Less regulation, more growth.
But the implosion in financial services — until recently seen as the shining example of US-style free market capitalism — is the definitive sign that deregulation has lost its allure. In areas ranging from food safety to airlines to trade, increased government supervision is becoming acceptable to business as well as to voters. . .
Links and sources
30-year deregulation era dies a sudden death, Michael Mandel, Business Week, September 18, 2008
Posted: September 18, 2008
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