Deregulation

Ronald Reagan, the patron saint of the Republican party, left office in 1989 after his successful efforts at deregulation. Republicans champion small government with strict limits on regulations and Reagan was their hero. They currently threaten a government shutdown and risk subsequent default to get their way in budget negotiations. They want fewer regulations, smaller government, and a balanced budget; but they want the IRS hamstrung with limited staff and a limited budget. What is their motivation and what has been the result?

The underfunded FAA is using outdated software that caused a recent complete shutdown of all domestic flights. In 2019, the FAA blamed the fatal crash of an Ethiopian Airlines plane on an earlier government shutdown and delays in getting out a fix of software for the Boeing 737 Max’s flight-control feature. The government shutdown referenced was overseen by Donald Trump and was the longest one on record. He caused the shutdown in a standoff over financing for his US-Mexico border wall.

Even with some government regulation and oversight, poor implementation, and limited motivation to work on the task at hand can be disastrous. The original Ponzi scheme was around decades before the use by its namesake, Charles Ponzi in the 1920s. It was later refined by Bernie Madoff to the tune of around $65 billion. The SEC had been notified numerous times of the Madoff fraud but looked the other way. People around the globe suffered. More recently, FTX collapsed in another fraud missed by the FTC.

Newly minted House Republican George Santos worked for Harbor City Capital which, according to the SEC, was a fraudulent Ponzi scheme. Harbor City raised more than $17.1 million by offering fraudulent unregistered securities to finance his business of online “customer lead generation campaigns,” in which online sales leads are created and sold to third-party businesses. They were shut down. I guess the SEC is finally, after 100 years, learning how a Ponzi scheme works.

We need good government regulation, not excessive regulation, and not a “let the chips fall where they may” philosophy that Republicans seem to want to promote. The wealthy and their pawns in Congress, want to cripple the IRS so that Jeff Bezos, Elon Musk, Michael Bloomberg, George Soros, Donald Trump, and others of the billionaire class can pay no taxes while the government is financed by wage earners and the working class who can’t afford tax attorneys and accountants.

When you hear that the wealthy pay more in taxes than the rest of us, you will find that these numbers don’t address the “true tax” rate. While you and I may pay an average 13% adjusted true tax on all income, a Forbes study of the 25 richest Americans showed that they averaged around 3.4%. Warren Buffet saw his wealth grow by $24.3 billion between 2014 and 2018 but paid only 0.1% in taxes. It is understandable that the wealthy would not want a healthy IRS with a staff capable of performing complex audits.

So, when a political party promotes deregulation and touts the benefits of financially unconstrained business being a boon to our economy, just remember the downside of this. Deregulation of the financial industry allowed greedy lenders to issue highly questionable mortgages and promote speculation on bundles of these mortgages. This was the primary cause of the 2008 financial crash.

Deregulation promoters will claim that small businesses will enjoy lower costs that they pass on to consumers. They will hire locals and the local economy will thrive. You don’t have to be a financial analyst to see that this just didn’t happen. Drive down Main Street America and let me know if those small businesses are thriving or if it could be that Walmart on the outskirts of town. You know the one doing the bulk of their business with underpriced imported goods who pay wages so low that many employees need food stamps. As you make that drive down Main Street keep your eyes on the road as you might just get run down by an Amazon delivery truck.

Deregulation in the form of the Telecommunications Act of 1996 eased the cap on how many radio and TV stations, including cable stations, a company could own. The FCC also eased restrictions on the ownership of TV, radio, cable, and newspapers in the same market. The result is that just a few corporations control most of the information available to you.

The Swanson “TV Dinner,” which hit grocery store cases on September 10, 1953, was an immediate success. In 1954, Swanson sold more than 10 million units, and the next year, 25 million.

Deregulation of the airline industry saw more competition, the abandonment of less profitable routes, and airline seats re-designed for the “average” American traveler. That passenger is 5’2” tall, weighs 98 pounds, and travels with a small carry-on bag. Yes, prices got cheaper, but tell yourself that as you opt for a first-class ticket so you can relax in a 1970s-size seat and eat a free meal that would compare favorably with a 1953 Swanson's TV dinner.