It Depends And It’s More Complicated Than That

As I like to tell my students, I consider my Law and Policy class effective if, after taking it, they use two phrases more frequently than they did before they enrolled: “it depends” and “it’s more complicated than that.”

That measure of effectiveness would undoubtedly be incomprehensible to the voters who  installed as President of the United States a man who had neither experience with nor even a rudimentary understanding of government. Evidently, people who would agree that doctors need to attend medical school and serve a residency in order to treat the complexities of the human body think managing an organizational behemoth responsible for the common lives of over 350 million people can be handled by anyone able to fog a mirror and regurgitate talking points.

Brink Lindsey and Steven Teles disabuse readers of that idiocy in the book they recently co-authored: “The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality.” In it, they deconstruct the mindless mantra of “deregulation.”

When Republicans look at what they’ve gotten out of their current moment of unified government, they can point to cutting corporate taxes, some judicial appointments and … not much else. Beyond that, they claim that they’ve teed up the economy for explosive growth through the magic of “deregulation.” But deregulation is a term that should be banned from the nation’s policy lexicon, mixing as it does equal parts wholesome and foul — in this administration, almost exclusively foul.

As they proceed to explain, whether rolling back a given regulation will be helpful or damaging depends on the nature  and purpose of the regulation. It’s more complicated–much more complicated– than the one-size-fits-all “get government out of the way” zealotry that has increasingly characterized the GOP.

The wholesome justification for deregulation arises when government uses its power in ways that gum up the dynamic power of markets. In the long run, our nation’s wealth and the opportunity it provides for improving quality of life depend on the forces of creative destruction. In competitive, open markets, incumbent actors cannot prevent challenges from more nimble competitors, armed with new products or more efficient ways of organizing the production process.

The authors identify a number of regulations that do “gum up” markets, and agree that eliminating or relaxing them would be healthy for the economy and likely to reduce the growing gap between the rich and the rest.

They also note that those aren’t the regulations being eviscerated.

Unfortunately, this is not the kind of regulation that the Trump administration has been attacking. Instead, it has been sharpening its knives for precisely the kinds of regulation that, far from distorting markets, help to improve them. In particular, regulation is often necessary to a properly functioning market when, in its absence, businesses can make a profit by pushing costs onto others, in effect forcing others to subsidize their bottom line. In two areas, the environment and finance, these are exactly the sorts of market-improving regulation that the administration has put in its cross hairs, with the effect of increasing profits via freeloading.

In an article in the New York Times, Lindsey and Teles make the point that there is a critical difference between regulations that operate to protect dominant business interests and regulations that legitimately, if often imperfectly, address real problems of market failure.

Effective deregulation requires knowing the difference.

For that matter, effective government requires public managers who respect evidence, are committed to the common good, and understand how our complicated government works. The looters who are currently in control of all the levers of the state don’t come close to meeting those criteria.

26 thoughts on “It Depends And It’s More Complicated Than That

  1. “It’s more complicated than that” applies equally to the characteristics and motivations of those who elected Trump. To the extent we really want to get rid of that disaster in 2020 we better recognize that.

  2. The “R” folks have been harping, since Reagan, that “Government IS the problem”
    40 years of that lie.

  3. “…there is a critical difference between regulations that operate to protect dominant business interests and regulations that legitimately, if often imperfectly, address real problems of market failure.” “It Depends, And Its More Complicated Than That”; certainly fits this quote regarding the Economic Growth, Regulatory Reliefs and Consumer Protection Act recently passed.

    Does it offer consumers protection; well, that depends and its more complicated than that. This approved legislation will erase a number of our core financial regulations put in effect by the Dodd-Frank Act, as quoted in USA Today, “…as Republicans move a slip closer to delivering on their promises to eliminate rules they claim have strangled small businesses and stagnated the economy.”

    It does not widespreadly appeal of the Dodd-Frank Act and there is no complete repeal of the Volker Act and additional reform is unlikely. Senate Democrats say they “went as far as they could with this vicious reform of SEC regulations”. It will make it easier for consumers to obtain mortgages and loans, including student loans. This appears to me to be suckering in more victims to borrow money with little or no protective regulations for themselves. So; does this legislation provide Consumer Protection, well, it depends and it’s more complicated than that.

  4. Sheila writes, “The looters who are currently in control of all the levers of the state don’t come close to meeting those criteria.”

    The “looters” have been in control of our national government for 4 decades.

    I had a BSU employee of the “economic research” department tell me, “We agree with you that the government is broken. Our solution differs.”

    Since BSU is a Libertarian mecca with Koch dollars flowing in, their “market solution” is get rid of all forms of government. If you read anything about the Koch’s logic, you’ll learn they want to completely eliminate government of all forms and let the markets decide what is best (Liberty). Our votes are narrowed down to where we spend our dollars.

    If you drill down further, their logic is flawed and produces excellent results for those already rich and assumes all human beings are rational agents. As this blog has excellently pointed out numerous times, Americans are far from rational.

    No wonder they use propaganda to gather voters. If the people were properly informed of Koch logic, they might question it. Instead, they use propaganda backed by institutions called, “Americans For Economic Prosperity”.

    Pure BS.

    And our puppet government just rolled back regulations on the financial market which required $14 trillion in cleaning up. The NYSE is inflated because of all the easy money flowing into the financial system. Complicated???

    Wait till the next collapse…experts say less than two years.

  5. patmcc: A lot of bullshit started with Reagan. He was too old to be president when he was elected. He was the perfect pitch man for 20 Mule Team Borax and the new conservative vision of America – no government to get in the way of his wealthy contributors. I worry that Trump’s legacy will be like Reagan’s – his “ideas” and “policies” may be held up as examples of how “good” government “works”.

  6. As the end of the semester in my undergraduate class in philosophy approached, we implored the professor for an explanation of what the final exam would entail. His approach then, 60+ years ago was much like yours; it depends and it’s complicated. He answered saying each time he taught the class that he asked the administration to allow him 20 years before giving us a grade. In the meantime he would visit us and audit our personal library and be able to give a grade. In the current administration guess who would fail – not just the President.

  7. Indeed,things are always more complicated…

    [snip]
    With localized wealth comes localized political power, and not just of the kind that shows up in voting booths. Which brings us back to the depopulation paradox. Given the social and cultural capital that flows through wealthy neighborhoods, is it any wonder that we can defend our turf in the zoning wars? We have lots of ways to make that sound public-spirited. It’s all about saving the local environment, preserving the historic character of the neighborhood, and avoiding overcrowding. In reality, it’s about hoarding power and opportunity inside the walls of our own castles. This is what aristocracies do.[end]

    https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

    Yes,I’ve come to believe the above quote encapsulates much of the recent pearl clutching in the last year and a half…..since the problems within the country predate the Trump regime. The truth is,no one from the DNC and DCCC wants to govern effectively. Especially to govern in a manner that would threaten the 9.9% of which there are a few among this crowd. No wonder the fear is palpable,and it’s not only Trump they fear,but they fear Bernie Sanders as well. This does explain why so many here want a power structured solely by the DNC and DCCC. The following elections in 18 and 20 are about the eventual takeover of the Democratic Party by the Reagan Democrats in the hope of totally supplanting the genuine progressive left. This is why it is verboten to speak of class issues.

  8. daleb:” A lot of bullshit started with Reagan. He was too old to be president when he was elected. He was the perfect pitch man for 20 Mule Team Borax and the new conservative vision of America – no government to get in the way of his wealthy contributors. I worry that Trump’s legacy will be like Reagan’s – his “ideas” and “policies” may be held up as examples of how “good” government “works”.

    Yep,and those ideas and policies will be eventually held up (and continued) as exemplary examples by Democrats.Speaking of which, I have not read any dissatisfaction at this forum for Obama’s continuation of the policies of the Bush and Cheney administration.Why is that?

  9. seems corp America is making a case when people,the working class,, are …..required to work this memorial day.. corp seems to have it to deregulate the natl holiday,as,,,meaningless, or, see it,as no regard why,we have this day to remember,but then again , the elite, never HAVE to serve,,,,in war today….ask the pres..

  10. “When Republicans look at what they’ve gotten out of their current moment of unified government, they can point to cutting corporate taxes, some judicial appointments and … not much else.”

    This sentence seems to diminish the importance of “…some judicial appointments…” In the long run, this will cause us to pay a very high price for the current administration and is the scariest part of all. If Dems can’t take the Senate this year (and it looks like they won’t), we may all live to regret it.

  11. The business community is defined by one rule, make more money regardless of the impact on others. That’s each business’s singular objective and it is universally reinforced by accountants.

    Regulation manages the “impact on others” so it’s always in conflict with the mission of every single tax paying business but it is friendly to the “others”, consumers and workers and other businesses, also taxpayers.

    We all collectively depend on businesses for jobs because the more jobs there are relative to the workforce the better the odds are of all of us having one that we can count on to pay the bills and our taxes so we all have a stake in a robust business community and a growing economy.

    When politics is practiced as it is designed to be goverment balances the demands of individual and groups of tax payers in order to maximize jobs and pay government’s bills. When oligarchy gets its nose under the tent that balance is compromised by corporations and their beneficiaries, who are inherently wealthier than working individuals and thus can have undue political influence.

    Of course the combination of Agent Orange and the GOP means that the camel is not only in the tent but fully occupying the single bed therein.

    Sleeping with a camel stinks.

  12. This matter of deregulation is one of my favorite peeves and the subject of perhaps a dozen or more of my blogs, so don’t get me started. To be succinct, every economy whether organized as capitalist, socialist, communist, or even libertarian is regulated and even a lack of regulation is in fact regulation by default. Truth is, we don’t therefore know what we are talking about with our political broadsides of “regulation that throttles business, incentive, etc.,” since the criteria we select depends upon the particular economy’s organizational basis and the politics of the day. Currently we are in the death throes of capitalism (unless reformed quickly) what with wage inequality both here and in the United Kingdom and other such venues. It isn’t working though it could if there were a fair and equitable distribution of the income and wealth of the economy to all – but we appear to be headed in the other direction, so hang on to your hat.

  13. It’s a cycle that keeps repeating. The Koch’s libertarian arguments are analogous to John C. Calhoun’s before the Civil War, to justify slavery. The wealthy always, always find ways to take over, and the rest of us always, always have to refight the same battles our forebears fought. This was probably going on way back in the days of Ur, and will be fought again if colonies are ever established on the moon or Mars. There’s no choice but to keep educating ourselves (thanks to folks like Sheila), and keeping up the fight.

  14. Before we heap all the problems of deregulation on Ray-Gun and the Republicans, we should examine the Clinton Regime.

    The Clinton Regime trashed Glass-Stegall, allowed the further conglomeration and concentration into the McMega-Media giants, we have today via the 1996 Telecommunications Act. Among other things, the bill brought deregulation to the cable industry and lifted the national cap on radio station ownership.

    Good article: October 1, 2013
    Bill Clinton on deregulation: ‘The Republicans made me do it!’
    The ex-president seriously mischaracterizes his record:
    Among the gems contained in this article:

    >>> Clinton installed Robert Rubin and Larry Summers in the Treasury, which resulted in the Gramm-Leach-Bliley Act, which officially did in Glass-Steagall and the Commodity Futures Modernization Act, which left the derivatives market a laissez-faire Wild West (not to mention a disastrous strong dollar policy that was a critical and underrated factor in the bubble). He also reappointed Ayn Rand-acolyte Alan Greenspan, who has as much responsibility as anyone for creating the crisis, as Fed chairman—twice.<<>>In 1999, on signing Gramm-Leach-Bliley into law, Clinton said, “This is a day we can celebrate as an American day” and that ” the Glass-Steagall law is no longer appropriate for the economy in which we live” and “today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority” and “This is a very good day for the United States.”<<< https://archives.cjr.org/the_audit/bill_clinton_the_republicans_m.php
    =======================================================
    So, it was not just Ray-Gun who went with deregulation, it was that New Democrat Bill Clinton, who served the interests of Wall Street.
    =================================
    It is not only the ancient political history of the Clinton Presidential Regime recently from The Intercept:
    Legislators from both parties came together this week to put the finishing touches on a sweeping measure to weaken bank regulations put in place to respond to the 2008 financial crisis.

    In a shock to some observers, 33 House Democrats and 17 Senate Democrats ultimately joined with nearly every Republican to send the bill to President Donald Trump’s desk.

    Trump, at the bill-signing ceremony, gloated about receiving support from the Democratic Party, a voting bloc that made passage possible in the Senate. “Dodd-Frank was something they said could not be touched and, honestly, a lot of great Democrats knew that it had to be done,” he said.

  15. It seems like maybe all of the myths that claim that Democrats are behind everything wrong done by the GOP are based on the concept that Republicans never accomplish anything on their own volition.

  16. Peggy,

    “If Dems can’t take the Senate this year (and it looks like they won’t), we may all live to regret it.”

    It takes PATRIOTISM and COURAGE; it’s apparent, we just don’t have enough of it. The Vietnam War was more costly than we first imagined: Amnesty for the draft-dodgers and condemnation, at first, for those who fought. Consequently, this has led to the election of three DRAFT-DODGERS: Bill Clinton, George Bush, and the “King of them all,” Donald Trump.

    I saw it all coming in 1968. It’s been 50 years. As I best remember the specifics, I saw it when I would help Alan Clark walk down the street, with only his one artificial leg, with my arm around his shoulder, the other leg had become infected; so he had to forego wearing his prosthesis. At that time, no one cared about his loss. The responses were horrible.

    All I could do was to take my protest to The Dallas Morning News. I had a good friend, who was an executive producer at the paper’s affiliated TV station. He joined me. The paper finally understood the problem and published a “Special Page”in their, next, Sunday Edition which honored those who had lost their lives in Vietnam; the page was directed to be tacked on the front door of every home. Many honored the request, but not that many.

    I’m no better than anyone else, except I did have an opportunity to see another side of the outcome of the Vietnam War. As Dietrich Bonhoeffer would say, “The loss of CIVIC COURAGE.”

    Sometimes, like the present, you have to close your eyes at first, then go ahead, and do what is necessary despite the obvious dangers.

  17. There I go again, it’s Allen Clark, not Alan Clark. Things get a little cloudy, when you’re in your 80’s. I guess this Memorial Day was especially cloudy for me.

  18. The Captured Economy is a great book. But what’s discouraging is the breadth of the rent seeking we are experiencing. Over 1,100 licensed (i.e., protected) occupations?! The protections for the affluent are deeply embedded in our society at all levels – federal, state and local. Although the Rs are really off the tracks, the pervasiveness of laws and regulations that distort, rather than support, markets affects both parties. But here’s a question. Can a politician who sides with the interests of the majority (the common good), against the interests of the motivated, rent- or protection-seeking minority, get re-elected?

  19. Monotonous; thank you. Bill Clinton fully repealed the pitiful remains of the Glass-Steagall Act in 1999, before handing over the Keys to the Banking Kingdom to George W. who took full advantage of full deregulation. Was this a pre-planned bipartisan arrangement? We will never know but the results are still with us.

  20. When talking about capitalism and Republicanism, one must add the phrase: “It’s more dangerous than that.” to the discussion. Without regulation, Karl Marx’s prophecy will be fulfilled.

    Economies MUST regulate themselves irrespective of their labels. Why? Well, despite the philosophy, humans are greedy, hoarding cave dwellers who care not about destroying the other tribe…unless that tribe supplies some goods or services. Our capitalists, however, have clapped on the blinkers such that they don’t see that screwing the consumer actually screws themselves. They are SO loath to pay for labor, that they pressure government to change the rules so they can keep making profits and become more wealthy while the working classes suffer.

    When a threshold is crossed with this suffering, revolutions and/or civil wars result. But humans won’t ever learn from those lessons. In the U.S., the rich will just ignore the noise and the poor will get more guns.

  21. All would be outraged if a person held themselves out as a physician (or any professional) without appropriate education and practice. A surgeon needs years of study & practical experience under a superior mentor to learn this medical art. However, we don’t have that here with the current President. He doesn’t have the knowledge or experience of governing or Government or how it works, and certainly not of regulation and its impact. And we are the worse for it. Without a change to the make-up of the Congress, we have little hope of stemming the tide to the ‘deconsturction’ of our system of government.

  22. The following is a good explanation of CONTEXTUAL INTELLIGENCE. It’s almost impossible to take successful ACTION without it.

    “So what is contextual intelligence? It can be described as simply enough, as to INFLUENCE ANYBODY, in any place, at any time. It requires recognizing the dynamic variables in a situation, what behaviors are deemed important in that situation, and adjusting your behavior to exert the right influence to achieve your desired goal.”

    “An important key to understanding contextual intelligence is the application of two words CONTEXT AND INTELLIGENCE. The word context originated from the Latin contextere and means to weave together. As a term used to describe the creation of tapestries, context is literally the interwoven and tied together fabric of a situation, which creates an intricate and unique appearance. Without context there is no meaning. Perhaps we best understand the concept of context as it relates to the enjoyment of classic literature or epic stories. As you know any good story relies on the author’s ability to create context, which in turn conveys meaning about the characters and the story line.”

    “Intelligence is a conjunction of the two Latin words, inter and legere. The first, inter, means between , and the second, legere, means to chose or read. Originally, an intelligent act occurred when an individual chose correctly between two or more variable options. Of course choosing correctly is relative, but generally the correct course of action was one that put one’s self, family, or community in a better position than it had previously been. The other application of intelligence consists of one’s ability to read between the lines. Reading between the lines is about understanding the meaning or implications of something that is not explicitly stated. Ultimately intelligence comes back to choosing the best option; and many times that choice is made after deliberating over several different opportunities any one of which might lead to an improvement over the present situation. Of course, when any of several options is an improvement the operative phrase is “best option.”

    “By combining the concepts of CONTEXT and INTELLIGENCE, we arrive at the term, contextual intelligence, which literally means to read between the lines and then EXECUTE the best decision.”

    “Contextual Intelligence: Smart Leadership for a Constantly Changing World” by Matthew R. Kutz (rtg Publishing, Perrysburg, Ohio, 2013)pp. 8-9.

  23. JoAnn @ 11:26 am, >> Was this a pre-planned bipartisan arrangement?<< I would say yes. Lost in the antiquity of deregulation memory is the Savings and Loan collapse of the 1980's and 1990's.

    The Lincoln Savings collapse led to the Keating Five political scandal, in which five U.S. senators were implicated in an influence-peddling scheme. It was named for Charles Keating, who headed Lincoln Savings and made $300,000 as political contributions to them in the 1980s. Three of those senators, Alan Cranston (D–CA), Don Riegle (D–MI), and Dennis DeConcini (D–AZ), found their political careers cut short as a result. Two others, John Glenn (D–OH) and John McCain (R–AZ), were rebuked by the Senate Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating.

    Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.3 billion. Neil Bush, the son of then Vice President of the United States George H. W. Bush, was on the Board of Directors of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing.

    As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners.

    Neil Bush paid a $50,000 fine, paid for him by Republican supporters, and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion. An RTC suit against Bush and other Silverado officers was settled in 1991 for $26.5 million.

    Jeb Bush defaulted on a $4.56 million loan from Broward Federal Savings in Sunrise, Florida. After federal regulators closed the S&L, the office building that Jeb used the $4.56 million to finance was reappraised by the regulators at $500,000, which Bush and his partners paid. The taxpayers had to pay back the remaining 4 million plus dollars.
    http://www.rationalrevolution.net/war/bush_family_and_the_s.htm

    So, I stand by my yes answer, it is bipartisan – Crony-Capitalism is an equal opportunity corrupter. Privatize, the profits and Socialize the costs.

  24. ML:

    Yes, corruption is rampant everywhere. Where the money is large, the corruption and the individuals involved are larger. George H.W. Bush, you might recall, was also head of the CIA for a time, and could have made life miserable for those pursuing justice against his sons. That included George W. Bush whose Air National Guard “service” was totally covered up.

  25. One aspect of government on which the same opinion is shared by both Democrats and Republicans is agreement that the bigger the better. We will fight to the death over whom government should benefit, but not over whether it’s time for some shrinkage. Yes, there are still politicians who preach to their constituents about smaller government, but they are simply repeating the catechism they leaned at Reagan’s knee – they never vote to back up their faux opinions. A case in point is the recent tax bill that garnered 100% of the Senate Republican’s vote. It adds $1.5 trillion to the deficit and slashes rates for corporations, provides new breaks for private businesses and temporarily reorganizes the individual tax code. It is a case of blatant rent-seeking (improving profits through the use of government policy) and dramatically increases income inequality.

    Lindsey and Teles add nicely to the body of knowledge about why capitalism no longer works for anyone but the wealthy. I glanced at their book on Amazon, and if their figures concerning how rapidly capital is moving up to the top rungs on the wealth ladder are correct, and if the current trend holds, our grandchildren will indeed be living in a cashless world. Factoring in capitalism’s instability, its disdain for the environment, its inability to replace jobs at the rate they are disappearing, its winner-take-all nature, its lofty rewards to executives who fail, its exclusive focus on short-term results, its constantly declining benefits, its definition of stakeholders as only those at the top of the corporate food chain, its amiability toward wars, its market control by the wealthiest among us, its utter lack of a social conscience, its rewards for criminality and corruption, and its silly assumption of infinite growth in a world of finite resources leads to the conclusion that its days are numbered.

    I hate knowing that Marx’s analysis was mostly correct, but I will miss capitalism because it may represent the best humans can do in constructing an economic system. But just like our favorite legislators, capitalism is for sale to the highest bidder. But it’s ultimately doomed if the highest bidder equates the highest good with his personal welfare.

  26. The question faced by regulators in the Lincoln Savings Bank collapse was not should we cover the investment loses of five Senators but should we bail out thousands of investors who were pursuaded to invest their retirement savings in a bank that those selling the investment did or should have known was failing.

Comments are closed.