Rewriting history

by Russ Roberts on October 13, 2008

in Regulation

With financial markets in tatters and the housing market in shreds, it is popular to claim that it’s all the fault of Reagan-era deregulation.

Just for the record, deregulation began as a serious public agenda in the Carter administration and credit should go to Alfred Kahn who championed it and defended it.

When things were going well, some people liked to point out that it wasn’t Reagan, but Carter who started the ball rolling. Not if anything bad happens, it’s because of deregulation and we all know that’s Reagan’s fault, right?

If they could blame it on Herbert Hoover, they would.

Of course, government regulation, defined by limits on voluntary exchange has been rising for a long time. Go here (see Table 1) for measures of how much spending and staffing have grown in every decade since 1960.

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{ 23 comments }

Don the libertarian Democrat October 13, 2008 at 11:42 am

It is possible that deregulation has been, in general, a good thing, but that the regulations we had were ineffectual or poorly enforced.

Tim Townsend October 13, 2008 at 11:52 am

Can you believe they gave a Nobel Prize to Paul Krugman? Jesus
Regulations are good for those being regulated and those doing the regulation.
FAA doesn't prevent aircraft accidents the lack of a pilot ejection seat does.

Sam Grove October 13, 2008 at 12:31 pm

It is possible that deregulation has been, in general, a good thing, but that the regulations we had were ineffectual or poorly enforced.

Or that the regulations were odious or overly enforced.

How does one design a 'good' regulation?

If a regulation is bad how much damage must it cause before the political will arrives to remove it?

What incentives are created in setting up regulatory authority?

How is it possible to remove human self interest from regulatory schemes?

What is the ACTUAL record of regulatory establishments?

What do they cost us?

Do the creators of regulatory schemes have sufficient comprehension of economics and human nature to design 'good' regulations?

It is obvious to many regulars here that a certain visitor who advocates for 'good' regulation is impervious to even acknowledging critiques made here of economic regulatory schemes.

This persuades many of us that liberal/progressive/socially democratic/etc. entities who desire to 'regulate' human economic activities, do so out of good intentions and a typically superficial comprehension of economics (from the Austrian perspective) and an idealism that renders them blind to the limitations of political management and why those limitations exist.

The conclusion arrives that those who desire to regulate economic activity, do so in ignorance and those who do understand do not wish to pass regulatory power on to any agency.

If you want to understand why, then you must learn.

Thorndog October 13, 2008 at 3:09 pm

"If you want to understand why, then you must learn."

Who do you think you are, Sam, Yoda? If so, let me help you out. I believe the Green One would have said it this way:

"If to understand why you want, then learn you must."

Just kidding!!! Fight the good fight.

Love,

Dad

Trumpit October 13, 2008 at 6:46 pm

Lehman Bros. ex-CEO Fuld, and many others on Wall St., were quite happy with the Bush-Cheney era deregulations that they lobbied viogorously for that left them, the foxes, in charge of the chicken coop. (This was obvious from his 2003 tax cuts at a time of multiple wars on terrorists and Iraqis.) Fuld walked away w/ approx. $500,000,000 from 2000-2005. His company is in the impounded dog house now. The shameless bums were begging for a bailout while simultaneously drafting checks for bonuses and golden parachutes. Who got left holding the bag? Shareholders, bondholders, employees, the taxpayers, etc. Fuld, Cheney, and Bush, etc. are all laughing their heads off all the way to the bank. Let's loot America! It's so much fun. Red, white, and blue, I love and pay lip service to you. Who cares about history's judgment? We'll all be dead by then, Bush is famously said to have told Carl Bernstein.

No minimum wage, you say, according to some worn out economic theory, yet pay the Forturne 500 CEO's $100,000,000 per annum on average in meritorious "compensation" until the whole stinking mess, comes crashing down like a house of cards, requiring the working stiffs of this country, who take home a "paycheck" in deflated U.S. dollars and are compelled by the low price to buy "Made in Communist China" cheap junk, and tainted produce, such as milk, candy, & dog food, to bailout the whole disgusting mess.

The extension of the Republican conceived and implemented nightmare must be halted. McBush must not win. People who committed white-collar crimes must do hard time. Throw away the keys and the eliminate the country club prisons. I believe in deterrence. Don't you?

Thorndog October 13, 2008 at 7:07 pm

I agree with you Trumpit. Obama's Ministry of Salaries will take care of that little compensation problem. Just relax, Comrade Trumpit, we'll all get justice soon!

vidyohs October 13, 2008 at 8:54 pm

Is this a market problem or is it something else?

——
Monkeys

Once upon a time, in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, they became harder to catch, so the villagers stopped their effort.

The man then announced that he would now pay $20 for each one. This renewed the efforts of the villagers and they started catching monkeys
again. But soon the supply diminished even further and they were
ever harder to catch, so people started going back to their farms and forgot about monkey catching. The man increased his price to $25 each and the supply of monkeys became so sparse that it was an effort to even see a monkey, much less catch one.

The man now announced that he would buy monkeys for $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.

While the man was away the assistant told the villagers. 'Look at all these monkeys in the big cage that the man has bought. I will sell them to you at $35 each and when the man returns from the city, you can sell them to him for $50 each.'

The villagers rounded up all their savings and bought all the monkeys.
They never saw the man nor his assistant again and once again there were monkeys everywhere.

Now you have a better understanding of how the stock market works.

—–

Is this true?

Sam Grove October 14, 2008 at 2:58 am

Trumpit, no one here defends the unworthy actions of the members of the political you cite above. There should be no bailouts, and the GOP has earned repudiation by the electorate.

Once again, the political class has provided to the electorate two candidates that are each so offensive to the opposite factions that there will again be no serious challenge to the party duopoly.

Looks like you've been sucked into the partisan trap as well.

Very little will change either way.

Trumpit October 14, 2008 at 4:28 am

The 2-party system has been a fact of life for most of U.S. history. but I don't buy the belief that both parties are equally bad. The Republican party is downright evil in my humble opinion. Johnson's war on poverty was working until the Republican's dismantled it. Cowboy Reagan, was truly a joke, who could have destroyed the country and world in a nuclear holocaust. Lucky sane Gorby came along in the nick time. You saw the hard time that Pres. Clinton was given every step of the way even though he started acting much like a Republican with welfare "reform" etc. The impeachment process was a totally unpatriotic partisan process, in case you forgot, putting the country through an unnecessary ordeal. Perhaps with a recession/depression in our midst, Obama will have a honeymoon to enact legislation to reverse some of Bush's pro-rich garbage. Let's hope so for the country's sake.

Hans Luftner October 14, 2008 at 4:54 am

The impeachment process was a totally unpatriotic partisan process, in case you forgot, putting the country through an unnecessary ordeal.

Yes, what an ordeal that impeachment process was! I barely slept! Yes, I totally forgot how traumatic that was. The poor virtuous Democrats trying only to do Good for the Country, while the Evil Republicans kept standing in the way, & undoing all the Good.

Sarcasm aside, you did mention the one & only advantage the Republicans (who I hate) have over the Democrats (who I hate), & that's that the Republicans at least know how to be an opposition party. The Democrats will go along with whatever boneheaded idea Bush has, complaining about what they vote for, but at least under Clinton the Republicans (remember, I hate them, too) knew how to stonewall & foot-drag & not simply give the president whatever he wanted.

Trumpit October 14, 2008 at 5:03 am

"The poor virtuous Democrats trying only to do Good for the Country, while the Evil Republicans kept standing in the way, & undoing all the Good."

I mostly agree with that, although I'd remove the word poor. There are plenty of rich Democrats. Both parties are unduly influence by lobbyists. Ironically, McCain tried to do something about that with McCain-Feingold, which of course the Republicans are dismantling piece by piece by the stooges that they packed onto the Supreme Ct.

Trumpit October 14, 2008 at 5:14 am

"Yes, what an ordeal that impeachment process was! I barely slept! Yes, I totally forgot how traumatic that was."

Maybe, the government could have spent more time dealing with the terrorist threats, that Condie Rice and Bush all but ignored when they came to power, instead of dealing with a blow job cover-up. Maybe, 9/11 could have been prevented. Just maybe. I guess you got your jollies watching Bill Clinton squirm. I'm glad you got off, so some perverse good came from the show trial.

Hans Luftner October 14, 2008 at 6:02 am

I'd enjoy Bush's impeachment, too, if your Democrats weren't a bunch of useless power-worshipers.

The Republicans didn't stop Clinton from preventing 9/11, either.

I love how you're typing this stuff in the "Rewriting History" post. It's much more ironic than McCain's campaign finance law.

Trumpit October 14, 2008 at 6:17 am

"I'd enjoy Bush's impeachment, too, if your Democrats weren't a bunch of useless power-worshipers."

I'll drink to that! (I'd prefer the word "spineless" to "worthless" though.) I'm not quite so cynical as you are.

Hans Luftner October 14, 2008 at 6:18 am

I hope Obama does win so the flowers will grow. I like flowers.

I like birds, too. If Obama wins the birds will sing.

What about the sunshine? Will Obama bring sunshine? I like sunshine, so yes, he will.

Do I dare hope Obama will put smiles upon the faces of our precious children? Yes, I dare to hope. I have the audacity to hope.

Trumpit October 14, 2008 at 6:42 am

I believe that life is tenuous, and the world my come to end as we know it, even if Obama wins in November. Suppose the Iranians fully outfit their long-range missles with nuclear warheads, and in an act of madness, Hitler style, decide to wipe out Israel. I'll stop predicting right there because that scenario will interfere in the worst way with blossoming flowers, singing birds, sunny days, and smiling children. Can we hope that doesn't happen and that Obama has a successful presidency should he happen to win? Why wouldn't you want him to succeed? Do your politican view trump your good will, and patriotism as an American? Please don't booby trap and sabotage a Obama presidency. I don't think you are a terrorist or an assasin. We've had enough of those in recent history. Also, a little hope helps one get through the rough times. Hope is better than despair. Life's hard enough without going to pieces. I have to go to bed, so good night.

Hans Luftner October 14, 2008 at 7:23 am

I hope for the best, always, for each & every person everywhere. I hope no one harms anyone else, ever. I hope that each & every person is able to pursue his peaceful dreams to his fullest, without interference from anyone else. This is why I despair over whatever results from this upcoming election. I see no possibility of either likely winner having a "successful presidency" without causing violence & destruction to someone else. That's inherent in what they're promising, after all. The last thing I hope for is their success in carrying out what they claim to want to do.

Please forgive me if I was snarky, but I have very little patience for partisan double standards.

I don't think you are a terrorist or an assasin.

Good. I'm not. It's my opposition to violence that leads me to oppose the inherent violence in nearly everything Obama or McCain advocate.

As long as I'm on the subject, they're also liars, thieves, & fools.

vidyohs October 14, 2008 at 11:53 am

LOL! Oh my God.

"Why wouldn't you want him to succeed?
Posted by: Trumpit | Oct 14, 2008 6:42:12 AM"

Succeed in what? His announced plans, goals, and desires? Well, wow, since everyone of those is based on the socialist doctrine, my answer is HELL NO I don't want him to succeed. And, HELL YES I will do my part in the anti-socialist role to combat his chances at success. Furthermore, it is not just Obama the figure head I fear that will work to the destruction, it is all those idiots that carry the name democrat that are in the House and Senate that are chomping at the bit.

What can I do, just simply refuse to crater to the idiocy of the socialist evangelicals and continue speaking and writing the truth.

Trumpit October 14, 2008 at 1:26 pm

I hope you fail in everything you attempt, vidyohs. Failure is your middle name, anyway.

Sam Grove October 14, 2008 at 1:27 pm

The 2-party system has been a fact of life for most of U.S. history. but I don't buy the belief that both parties are equally bad.

It all depends. The Republican party is better when out of power and restraining the worst impulses from the other side.
The Democratic party seems better when the GOP is in power.

From my view, the GOP is the less trustworthy.

Or as someone put it, one is the stupid party and the other, the evil party.

Yeah, RR fooled everyone with his anti-government rhetoric yet oversaw huge increases in spending.

But those are generalizations and we should judge policies independent of their sponsors, and their rhetoric.

Sam Grove October 14, 2008 at 1:31 pm

It is also ironic that McCain proposed several years back the Fannie Mae and Freddie Mac be subject to regulatory reform which wa opposed by Barney Frank.

vidyohs October 14, 2008 at 9:14 pm

"I hope you fail in everything you attempt, vidyohs. Failure is your middle name, anyway.
Posted by: Trumpit | Oct 14, 2008 1:26:05 PM"

Piss ant, it is too late for your fondest wish to come true. LOL LOL LOL LOL LOL.

I am quite comfortable, thank you very much, and it is all because of my knowledge of business and my own consistent hard work. As a matter of fact at age 67 I still get up and go create wealth daily and I will never quit. Last but not least I do so in appreciation of the full knowledge that my presence in the market is probably keeping some snotty nosed whiny little socialist idiot from making any money and is therefore without health care, food, clothing, and shelter. LOL

Piss ant, socialism, the religion of piss ants.

Sam Grove October 14, 2008 at 9:47 pm

To live well is the best revenge.

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