Bushwhacked_ Life in George W. Bush's America Large Print - Molly Ivins [8]
Of course George W. Bush and his petty self-dealing at Harken did not cause the collapse of Enron et al. What we are looking at is not causation but connection. If one wanted to paint with a broad brush, surely Bill Clinton, president during the enormous stock market boom of the second half of the nineties, has more responsibility for the eventual collapse than does George W., president for only eighteen months when it happened.
But an even broader brush shows a different pattern. Starting in 1980 with the presidency of Ronald Reagan (or even the 1978 deregulation of the airlines, if you’d like to include Jimmy Carter), this country has been going through a deregulatory mania. Supply-siders, Milton Friedman, free-marketeers of all stripes, “movement conservatives,” The Wall Street Journal’s editorial page—not to mention a motley assortment of anti-government cranks from militias to Republican candidates—have been trying to persuade us that government can’t do a damn thing right and that free markets are the answer to absolutely everything. There’s a true-believerism about the free-marketeers that is genuinely unsettling, as though it were a cult or a religion in which certain fundamental assumptions are never questioned. All you have to do to believe is ignore history and experience.
Capitalism is a marvelous system for creating wealth. On the other hand, unregulated capitalism creates hideous social injustice and promptly destroys itself with greed. A marketplace needs rules. From the very beginning, capitalism has required careful regulation. In the market towns of medieval England there were as many as twenty or thirty laws governing just the balance scales, and whether you could put your thumb or any other digit on the scale. Mostly what we’ve learned from the American experiment is that competition is good, but we need rules because people cheat. And there are some natural monopolies that need regulation or they end up in cartels that rip everybody off.
Government regulation and the much-maligned trial lawyers are the two instruments by which we control corporate greed. It seems to me government is neither good nor bad but simply a tool, like a hammer. You can use a hammer to build with, or you can use a hammer to destroy with. The virtue of the hammer depends on the purposes to which it is put and the skill with which it is used.
Of course government regulation is burdensome and often absurd. One famous federal form required employers to “list your employees broken down by sex.” “None,” read one reply. “Alcohol is our problem.”
What has changed in this country over the course of the past twenty-some years is that government has served less and less as a brake on corporate behavior and more and more as a corporate auxiliary, because of the corrupting effects of the system of legalized bribery we call “campaign financing.”
And here we find the root cause of the stock market collapse. During the nineties the SEC was increasingly starved for funds by the Republican Congress on the grounds that regulation is bad, and so it suffered a tremendous erosion of its authority. While the press was telling the Enron disaster story and CEOs were stepping forward like Baptists at an altar call to restate their companies’ earnings, Bush fought for a bare-bones SEC budget, recommending $576 million in July 2002. (The House authorization at the time was $776 million.) Clinton’s SEC appointee, Arthur Levitt, had struggled valiantly for such obvious reforms as expensing stock options and monitoring accounting firms, but the politicians paid no attention during the years of go-go and the all-absorbing crisis over the president’s sex life.
Phil and Wendy Gramm made a significant husband-and-wife contribution to the mess. In 1992, just a few days after Bill Clinton’s election, Wendy Gramm, in her last days as the lame-duck chair of the Commodity Futures Trading Corporation (which was short two of its five members), pushed through a federal rule that exempted energy-derivatives contracts from federal