Today, Center for Progressive Reform Member Scholar and University of Texas law professor Thomas O. McGarity published an op-ed in the New York Times entitled,”What Obama Left Out of His Inequality Speech: Reguation.”
In a speech last week, the President highlighted the problems associated with extreme socio-economic disparity.
But, as McGarity notes in his piece:
There’s a crucial dimension the president left out: the revival, since the mid-1970s, of the laissez-faire ideology that prevailed in the Gilded Age, roughly the 1870s through the 1910s. It’s no coincidence that this laissez-faire revival — an all-out assault on government regulation — has unfolded over the very period in which inequality has soared to levels not seen since the Gilded Age.
History tells us that in periods when protective governmental institutions are weak, irresponsible companies tend to abuse their economic freedom in ways that harm ordinary workers and consumers. The victims are often less affluent citizens who lack the power either to protect themselves from harm or to hold companies accountable in the courts. We are in such a period today.
The laissez-faire revival of the past 35 years was no accident. The protective statutes and liberal common-law doctrines of the late 1960s and early 1970s — what can be called the Public Interest Era — had a profound impact in such areas as occupational safety and health, environmental protection, consumer finance and the safety of food, drugs and consumer products. This legislative and judicial activism placed far more constraints on the economic freedom of corporate America than had any legal regime preceding it.
But Mr. Obama’s failure to examine (or even mention) the laissez-faire revival was a missed opportunity. Deregulation may not be the central cause of the soaring inequality of recent decades, but it has certainly magnified its consequences, making it ever more difficult for workers and consumers to resist the rapacious predations of abusive employers and companies. The weakening of what used to be the great American middle class cannot be understood without also considering the embrace free-market theology. By omitting this critical factor in the rise of inequality, Mr. Obama left unchallenged the argument, recited by business like a mantra, that regulation and economic expansion are inherently in tension.
Sadly, the crises resulting from deregulation will almost certainly continue until political forces realign themselves and a new social bargain is struck under which the business community’s economic freedoms are once again constrained by a government that is more willing to impose greater responsibilities on powerful economic actors and a legal system that is capable of holding them accountable for the harm that they cause. Until then, a crucial check on the seemingly inexorable advance of economic inequality will be missing.