The biggest mistake made by most human beings is listening to only half, understanding just a quarter and telling double.
The recent confluence of crises undermined the bedrock assumptions of laissez-faire minimalism. The stage was set after the 2008 elections to recapture the spirit of reform that permeated the Progressive, New Deal, and Public Interest eras and to enact fundamental changes to reduce short-term profit incentives and enhancing the public good. After all, the economy had been nearly destroyed as a direct result of reckless risk-taking by financial institutions, enabled by decades of deregulation.
Unfortunately, far-reaching reforms have not been forthcoming. The business community’s idea infrastructure shifted to defensive mode and — with help from lavish corporate spending to influence elections — beat back the most significant reform proposals of the Obama administration and congressional Democrats, like the suggestion that giant banks be broken up because they are not only too big to fail, but also too big to manage or regulate….
We cannot know for certain whether Mr. Obama’s hesitancy to embrace robust regulation results from his own blind spots — which resemble those of his Democratic predecessors Mr. Carter and Mr. Clinton — or from a calculation that a more progressive tax system, investments in education and defending the social safety net (and his embattled health care reform) are so politically daunting that anything that might further antagonize corporate executives should be put off for another day. Most likely, it’s a combination of both.
But Mr. Obama’s failure to examine (or even mention) the laissez-faire revival was a missed opportunity. Deregulation may not be the central cause of the soaring inequality of recent decades, but it has certainly magnified its consequences, making it ever more difficult for workers and consumers to resist the rapacious predations of abusive employers and companies. The weakening of what used to be the great American middle class cannot be understood without also considering the embrace free-market theology. By omitting this critical factor in the rise of inequality, Mr. Obama left unchallenged the argument, recited by business like a mantra, that regulation and economic expansion are inherently in tension.
(Source: The New York Times)