Dear business leaders:
If you are disturbed by the recent passage of healthcare reform, perhaps you might want to take away this little lesson:
The financial crisis of 2008 was the fault of big business’ failure to regulate itself. Greenspan and the ‘free marketeers’ were able to sell their radical no-regulation platform as long as the internet boom and the housing boom were keeping the economy super-bouyant. It’s easy to argue that regulation is stifling while the trend is good.
The problem is, that, inevitably, we’ll get to the top of the hill, the top of the roller coaster, and then things will start to look bad. And the less regulation that was in place during the ascent, means the steeper will be the fall. This was what Keynes and co discovered during the great depression, and was a major reason why the Fed and anti-trust laws got enacted in the first place.
The nature of the business cycle does not change: it will always be like this, and thus it will always need some regulation. It’s up to business to regulate itself, or rather to allow government to regulate it responsibly, when the going is good, so that when the going gets tough, we don’t have a major crash.
Thus: businessmen were irresponsible. They took too great of risks, they wanted too much profit, they got too greedy. They convinced government to let them go. Government let them go. The crash inevitably came. It was big; it was bad; it was hard.
Because the public saw the crash as the fault of runaway corporate greed, they voted a major democratic majority–just like in the 1930s. And, just like in the 1930s, Obama has now been able to pass landmark social legislation, which adds significantly to the government oversight of major sectors of the economy, precisely becasue of big business’ failure to regulate itself.
Thus, we return to my first point, which is: Hey business leaders… if you don’t want more long-term ‘socialism’ in the US, ala labour protection laws, union protection laws, medicare, and universal healthcare… then don’t go too crazy during the next economic boom!