K Street Apologia
Posted: January 18, 2011 Filed under: Bailout Blues, Barack Obama, Voter Ignorance, We are so F'd | Tags: externalities, K Stree Lobbying, Regulations, social costs 46 CommentsThe President has written a WSJ op-ed and an executive order to declare war on ‘unnecessary’ regulation while looking 
for necessary regulation. He’s evidently a little bit pregnant.
This must be the new and improved, more business friendly President. (Like he wasn’t business friendly enough already? What about bailing out GM, Chrysler, and most of the finance industry?) This is the one that needs to raise $1 billion in campaign funds for re-election and knows it won’t come from unemployed and financially struggling voters.
This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.
When is the last time you read a Democratic politician that suggested something like “remove outdated regulations that stifle job creation and make our economy less competitive”? There’s something even more weird and ironic about this sudden urge to op ed for the WSJ. This is an interesting day for the release of a new improved middle path that’s sounds like something the Club for Growth can really sink its teeth into. On this very same day, “The Financial Stability Oversight Council on Tuesday released its six-month study into the Volcker rule and held its third public meeting.” according to FT Alphaville. This group has just made it very clear that removing what several administrations thought was “outdated regulations that stifle job creation and make our economy less competitive” caused the biggest financial melt down and global recession since The Great Depression. They want more regulation not less.
At the moment, banks are playing musical Special Purpose Vehicles; a delightful accounting parlor game that does nothing to get rid of systemic risk. According to the FT article, this includes “creatively shuffling their more obvious proprietary trading operations internally (for example, into asset management and ETF desks) and externally into spun-off funds”. Sure, like that saved ENRON all that nasty embarrassment of bad decision making.
While this report is trying to pick up the pieces of nuclear financial meltdown by suggesting which gaps in regulation need to be filled, the President is chatting up the CEO set on the WSJ op-ed page. There are not even any code words or in-between the lines nudge, nudge wink, winks in these statements. He’s just pandering away.
As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices. And it means making sure the government does more of its work online, just like companies are doing.
Does this mean the bidding window is open on which regulations the K street minions want thrown out next? That worked so well with looking the other way for the shadow banking industry and letting the commercial banking industry run a virtual casino, didn’t it? There’s a list of ten major regulatory blueprints coming from The Financial Stability Oversight Council. Are investors, holders of 401ks, pension plans, and savers expected to take any of this seriously given the Wall Street missive?
Regulations reflect the social cost of private consumption and private production of goods and services that have bad side effects. (See this Wikipedia entry on market externalities for more information.) Markets with externalities have bad side effects that do not fall completely on the private producer or the private consumer. This leads to market inefficiency. Goods and services with negative externalties get overproduced, they are under priced, overconsumed and the side costs hit all of us with some of us suffering more than others. Usually, the ones that suffer the most are those least able to get out of the way or stop the problem. The experiences of Hinkley California, people that get lung cancer from secondary smoke, and any of us that were invested in financial or housing assets in the last five years suggests that you cannot just let people and businesses run amok and hope they’ll do right by the people they hurt. Without an effective and accessible judicial system and a vigorous system of sticks and regulatory oversight, you get all kinds of social costs that we get to manage without having any of the fun of buying and using the product or service. Ask me. I’ve spent the last five years living with the results of badly built levees and dealing with the first year of a BP Oil disaster. Let’s point to my 403(B) and my home price that are still in a recovering state from the shadow banking boys run amok. I’m sure you can list a boatload of the ones that the Federal Government ignored recently to give business a more ‘competitive environment” too that have cost you more than they’ve been worth. Sure, they’re now creating more jobs along the Gulf Coast right now but would you seriously let one of your children on to a fishing boat or deep water drilling rig? Do you seriously want your child sitting next to a chain smoker day in and day out?
So, my next question is did I just read that every regulation is now going up to the highest bidder? Maybe, at least, if we get them off the books, we won’t have the moral hazard of thinking any one pays attention to them anymore. If that’s the case, we should all be trial attorneys litigating hazard suits. From where I sit–in a city reeling from the social costs of externalities–our biggest problem is that no one takes regulations or regulators seriously any more because the federal government prioritizes the bottom lines of the perpetrators and not the suffering and the well being of the victims.
peej
Carissa
bostonboomer
ecocatwoman
mablue2
peggysue22
quixote
skydancingguestblogger
Mona (aka Wonk the Vote)
Sky Dancing 
Isn’t there any chance that someone will wake up and rescue the country? This is so discouraging. Imagine if the WH actually listened to the people who understand what caused the mess we’re in and how we can get out of it? But it seems we’re going to have to wait until things get a lot worse before that happens.
How weird is it that this op-ed came out the very same day that a report on the failures of deregulation occurred? How absolutely out of it does your staff have to be to not notice this?
Maybe they wanted to distract attention from the report?
I think you are on to something there BB!
From the Business Insider:
Read more: http://www.businessinsider.com/obama-wall-street-journal-editorial-2011-1#ixzz1BRTj7TMq
That certainly explains why they are sending fishermen out into toxic waters and rig workers on to rigs with unsafe practices.
Jobs at all costs!!!
Hello Sky Dancers!
Obama could create jobs with one stroke of his pen. He does not need to rely on business to do so.
http://www.huffingtonpost.com/marjorie-cohn/obama-create-jobs-by-exec_b_780147.html
He is so full of crap.
Hi! Thanks for the link!! I must’ve missed that one. BB had me hanging over there on Empty Wheel for awhile. You should go check it out.
Yeah madamab, that is one thing Obama is full of, crap!
madamab,
I had been thinking of dropping in to wish you a Happy New Year. (((waving)))
Dak, have you been following the discussion at FDL about the “neoliberal blogosphere?” Emptywheel has a new installment.
http://emptywheel.firedoglake.com/2011/01/18/blindspots-and-fear-of-the-working-class/
No. I haven’t! I’ll go look I always like emptywheel!
That’s a great discussion and I guess it’s burning up the twitterverse too. All the little apologetic gen x’ers with their tiny yuppie fists screaming where’s mine!!! who me?
From that article I was struck by this comment:
Yep, they seem to have us.
Exactly why they gave us a safety net during the great depression. Unions were strong and there were wobblies. They feared a Russian style revolution. the cold war let them throw nazis and commies and unions and liberals and lefties and fascists in the same basket. They’ve split left and right wing populists with culture issues. Even the left has embraced it by only calling themselves progressives now. And now they have drones. The can mow down people with guns that have computer programs and not hearts and a bunch of kids desensitized to computerized killing.
I wanted to add disenfranchise the middle class to, what’s left of it.
And yep they have us. What can we do? Vote Dem? They are just as corrupt. We know where the Repubs stand, they are open and blatant about it. Our Dems are just sneaky but pretty much toe the corporate line.
And if we ever tried mass demonstrations, you’re right they have drones. And would the corporate-owned news ever cover them?
It’s amazing…I listened to my grandparents’ stories about the depression, my parents’ stories of being children in the depression. Then my father coming out of the military to a very comfortable middle class mode of living and here we go in my or the next generation’s going back to god knows what or how bad.
It feels like the segue to some bad Arnold Scharzeneger movie.
Fredster, it is funny that you mention your grandparents’ stories, and your parents’ stories…I touch on that in this mornings reads.
Rachel Maddow just reported that “suspicious package” that was found near an MLK parade route in Spokane, Wa, was a real bomb that could have been triggered remotely, according to the FBI.
http://www.msnbc.msn.com/id/41139894/ns/us_news-crime_and_courts/
Just saw her Tweet about it.
undoubtedly one of those Palin haterz again!
(snarkity snark snark snark)
‘Baby Doc’ Duvalier charged with corruption in Haiti http://gu.com/p/2mfkn/tf
At least something over there is functional.
He is already out, so perhaps it was for show, since everyone was so shocked to see him back after all the years of oppressive rule.
Obama makes me sick. What’s with this guy? One of the major factors to the issue we are facing now is the total lack of regulation throughout the industries.
I’m thinking of hiring a “food taster” since that industry is cutting so many corners that we have no idea what the hell we are eating anyway.
We’re all going to be so caveat emptor these days we’ll have to have our own little chemical testing kits.
and also they’re much more concerned about a terrorist nun getting on a plane than a plane falling from the sky because of shoddy, low cost outsourced maintenance … the stupid, it hurts!
Meanwhile, I’ll go eat at the hospital, sure to satisfy my taste buds.
Yeah Pat. I walk through the produce dept and want to keep asking: “Is it safe?” “Is it safe?”
Why didn’t he just say “job-killing” regulations and get it over with?
because it will only be killing jobs in the US
No, I mean, he’s using all the rightwing talking points…why doesn’t he just go ahead and use that one too?
because he’s a little big pregnant?
Be grateful he’s not calling it “The War on Corporate Poverty.”
That’s one of those that you just don’t know if you should laugh or cry because I could actually see him doing that and some how, magically, some folks would agree!
“A Great Society Would Be an Oligarchy”
Why is the U.S. so awful at job creation?
Labor markets in most advanced nations are recovering quickly. But the United States lags far, far behind
and while we are all adjusting to our new financial overlords:
Immanuel Wallerstein
THE GLOBAL ECONOMY WON’T RECOVER, NOW OR EVER
What we are witnessing as a result is chaotic fluctuations of all kinds — economic, political, sociocultural. These fluctuations cannot easily be controlled by public policy. The result is ever greater uncertainty about all kinds of short-term decision-making, as well as frantic realignments of every variety. Doubt feeds on itself as we search for ways out of the menacing uncertainty posed by terrorism, climate change, pandemics, and nuclear proliferation.
The only sure thing is that the present system cannot continue. The fundamental political struggle is over what kind of system will replace capitalism, not whether it should survive. The choice is between a new system that replicates some of the present system’s essential features of hierarchy and polarization and one that is relatively democratic and egalitarian.
You can rule out the “democratic an egalitarian” part with the present make up of congress and the lack of sincere voting reform continues to be ignored.
Our current economic system is going to look quite different in the next generation and most of us will be hanging on by a thread just to pay the rent. The middle class is about to shrink and the American Dream will be just that.
How stupid is it that the way our regulatory system works it actually rewards business for repeatedly violating regulations. For example, say a company has multiple violations it can then negotiate lower amounts rather than the full violation fine. BCBS was even more craven getting out of their behavior by threatening to tie the regulatory agency and funds with court fee after court fee.
I know and you better believe they’ve built that into the equation. oops! we got caught … what was the bill last time?
U.S. officials privately say WikiLeaks damage limited — (Reuters) –
No surprises there! Can all the pearl clutching stop on this now?
I can’t remember now if I got this link from here at Sky or where, but it’s certainly appropriate for this thread:
http://www.nakedcapitalism.com/2011/01/matt-stoller-understanding-the-strategy-of-the-democratic-power-class.html
Haven’t seen that one, but evidently the entire left part of the blogosphere is discussing something like that …
Now that’s a good article, Fredster -even if it’s a little deja vu…
Obama continues this trend. It isn’t that he’s not fighting, he fights like hell for what he wants. He whipped incredibly aggressively for TARP, he has passed emergency war funding (breaking a campaign promise) several times, and nearly broke the arms of feckless liberals in the process. I mean, when Bernie Sanders did the filiBernie, Obama flirted with Bernie’s potential 2012 GOP challenger. Obama just wants policies that cement the status of a aristocratic class, with crumbs for everyone else (Republican elites disagree in that they hate anyone but elites getting crumbs). And he will fight for them.
There is simply no basis for arguing that Democratic elites are pursuing poor strategy anymore. They are achieving an enormous amount of leverage within the party. Consider the following. Despite Obama violating every core tenet of what might have been considered the Democratic Party platform, from supporting foreclosures to destroying civil liberties to torturing political dissidents to wrecking unions, Obama has no viable primary challenger. Moreover, no Senate Democratic incumbent lost a primary challenge in 2010, despite a horrible governing posture. Now THAT is a successful strategy
Also saw this on a link from Suzie Madrak’s site. Makes you concerned about even bringing a thumb drive with you on vacay.
http://www.salon.com/news/politics/us_house_of_representatives/index.html?story=/opinion/greenwald/2011/01/15/laptops
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