The following is a summary of an article from Business Week, explaining the current trend of growing government regulation in the US economy. (Click on the title to see the whole article.)
According to the article, since Jimmy Carter was President, the past 30 years were the era of deregulation. 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
However, this 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% stake in American International Group (AIG) 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 (FNM) and Freddie Mac (FRE), the colossal mortgage agencies. Suddenly the U.S. financial sector could not survive without government help.
Today’s financial crisis starts to show that deregulation of US-style free market capitalism is losing its power. In areas ranging from food safety to airlines to trade, increased government supervision is becoming acceptable to business as well as to voters.
2 comments:
I think that this major financial meltdown is just the markets correcting themselves. And I get the feeling that the government bailouts are just telling these companies that what you did might be wrong but its alright we'll help take the load. I know that hundreds of thousands if not millions of jobs would be lost but I don't think that this is going solve all the problems. In fact I feel that this might create more problems. For one I think inflation is going to become a problem because the government is giving liquid funds for control of stocks. That is just increasing the money supply. I know I sound like a sadist but I wonder if it might have been better to let these companies fail so that the market will correct itself....
I feel that this if this article proves to be true on some levels. The re-centralization will only occur in some industries such as finance or insurance industries. Although deregulation may cause change in some policies, capitalist America will still for the most part hold strong mostly without regularization.
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