I'm guest posting over at Red's US Poverty blog at Change.org this week - please take a minute to check it out, and check out Change.org generally, as they're doing a lot of interesting stuff.
Before she left for London, Red and I got into one of our long, often economic-based debates, this time about the Reagan years. I forget, at times, that Red is a child of the eighties, not the seventies, as I am. But she's read up and I rely mainly on memory, so she has me on some very good points about just how bad the Reagan years were in terms of shredding the social safety net.
Still, if I had to pick an area of truly long lasting damage, I'd point more immediately to the Reagan-era urge for "deregulation", an argument that, somehow, the real problem for America - especially American business - was an overabundance of unnecessary rules and strictures. And so, from airlines to banking, to mining and beyond... we started to deregulate.
And, as Paul Krugman points out today, the legacy of deregulation - in his well reasoned case, the way Savings & Loan deregulation can be seenas directly causing the mortgage crisis - continues to haunt our problems today.
And that's all I was planning to say about it... but then I realized, we're not actually past it yet.
I took Red's post as a "how could this have happened" type post; I suspect she meant it more as "my God, this is just awful" type observation... but how we got to Reagan is important, I think, to understanding how his Administration managed to cause so much damage. And, as I said to her, I maintain that Reagan was simply able, as the seventies ended, to sell people on the idea that things had "gone too far" and we needed a new way. And that way was... back to the old ways.
Reagan's ability to sell a hazy, ill defined notion of some "better America" was nicer, more family oriented, less urban. He celebrated the notion of small towns and simple virtues, basic thrift and good manners. This, from a divorced father of four who had terrible relations with his kids, who left his small town for the big city (LA) and never looked back, and who helped create, in their time, the largest government deficits in our nation's history.
There's more... but let's start there.
Reagan's arguments about excessive regulation - like his demonizing of mythical "welfare queens" living high on the public dole, too lazy to find decent work - met a receptive audience, largely older, who had resisted many of the social changes of the sixties and seventies. It also meant a boon to people who stood to benefit from loose regulations in banking, airlines and the like - business people able to invest in opportunity, and who planned to profit from lax enforcement. What Reagan's simplistic argument for deregulation ignored was the reason we had regulations to begin with - the excesses, frauds and waste that had marked the periods before regulation of banking, or the environment, and such.
And it didn't take long to see that removal of regulations led us right back to old problems - airline deregulation led airlines into cycles of bankruptcy, loosening of environmental rules led to worse pollution, and banking deregulation led to the Savings and Loan crisis... and now, to the mortgage mess.
Unfortunately, we still live with the Reagan mindset - while Bill Clinton and Barac Obama made good, left wing arguments both for returning to a larger role for government in markets and in our lives... both shied away from a return to ambitious reregulation of industries and concerns. Bill Clinton signed the repeal of Glass-Steagall, the Depression era law that separated investment banks from performing other functions. Even he could barely move to rein in some excesses of the airlines. And the failure of his healthcare plan was a lesson to many that government moving to new heavily regulated roles was a nonstarter with the public.
And while Barack Obama has pushed stimulus packages and agressive moves at Treasury and the Fed to "save" banking, his Administration has been low, and shy, to seriously discuss new regulations on banking. The latest proposal - some sort of "banking ombudsman" to lead all regulatory efforts - pretty much died on the vine after being proposed. There's no indication that Depression era rules, never mind beefing up regulation of derivatives or giving to the SEC, are anywhere in the cards. Even the "credit card" rules meant to clean up that business have been met with mainly with shrugs, and knowing conclusions that they will do little, if anything, to stop banks from charging excessive interest, or really tighten up poor distribution of credit, never mind change our debt culture... a debt culture that grew exponentially starting with... Ronald Reagan.
The thing is, when conservatives romance the notion of "The Reagan Years" in some sense, they're right - Reagan's revolution really was successful, and he really did lead the right to a kind of success they'd really not known before. And while they can never get it back - something they have to learn before they can solve their current problems, one thing they do have is the lingering sense of what Reagan gave us - the ability to pretend, that much better, that what we want to see is all we need to see, and that we should think more of ourselves and less of others - that stuck. As lom=ng as Democrats can't quite bring themselves to a full throated belief in government regulation as necessary, a lesson taught to us by experience, Republicans don't need to worry... the Revolution was already won.