The following letter appeared in todays Opelika-Auburn News. Regular readers of this blog will find no surprises here:
To the Editor:
D. W. St. John (Regulations often needed in todays world, Thursday) blames both the BP oil spill and the financial crisis on a lack of government regulation.
On the contrary, both disasters were caused by pro-big-business regulations.
BP took unnecessary risks because theyd been given a liability cap of $75 million. Small wonder that they engaged in riskier behavior when they could count on regulations limiting their victims right to sue.
As for the financial crisis, Fed chairman Alan Greenspans manipulation of interest rates distorted price signals and encouraged unsustainable investments, thereby making a collapse inevitable. Calling this longtime regulator a messiah of unregulated markets is ludicrous.
Most government regulations are pro-plutocracy in their effects, regardless of how theyre marketed. Both liberal and conservative politicians are reliable supporters of the big-government/big-business partnership that dominates our economy, though of course they’re careful to wrap that support in anti-big-business rhetoric and anti-big-government rhetoric, respectively.
Its no coincidence that most of the supposedly anti-big-business legislation of the Progressive Era was lobbied for, often even drafted by, the corporate elite, who understood that big businesses thrive when small businesses are choked by regulations.
The grain of truth in the idea that crises are caused by deregulation is that when government grants special privileges to banks and corporations, and then removes restrictions on how these privileges are exercised, perverse incentives take over and catastrophic results predictably ensue.
But the problem is the initial regulations that create the privileges in the first place.
Unchaining a state-privileged entity is not a decrease in state intervention; rather the contrary.
To learn more about why government regulation systematically serves the interests of the wealthy at the expense of everybody else, check out the websites of the Alliance of the Libertarian Left and the Center for a Stateless Society.
Roderick T. Long