Deregulation, Jobs, and a Brief History Lesson

Along with tax breaks for businesses (which we already covered a few posts ago), deregulation is another myth from the conservative party they believe spurs innovation and job growth. Let's look at this a little deeper, and see how that worked out for America in the past...

First, for those who aren't familiar- Merriam Webster's definition of Deregulation is fairly straight forward: 

"the act or process of removing regulations or restrictions." 

Essentially, allowing businesses more freedom by reducing the number of rules they must follow. 

Rules- some think they're needed to keep people in check, while others think they put handcuffs and prevent them from achieving even more (If you watch or read the news at all, I'm sure you've heard the handcuffs metaphor from conservatives numerous times). 

But what happens when we take these handcuffs off? Here are a few examples, and if you haven't heard of any of these people, google them, you might not like what you find, but at least you'll be a little smarter.  

Enron

Once named "Americas Most Innovative Company" for 6 consecutive years by Fortune, is now known for its corporate fraud and corruption

Jeffery Skilling

 Former President of Enron Corporation, now serving a 24 year prison sentence.

Enron, and President Jeffery Skilling- what was once a powerful energy company, is now an embarrassment and perfect example of how companies can take advantage of a system with little regulation. They were known to turn off power plants in California (Blackouts anyone?) to drive up the price of electricity. Basically creating a supply shortage so they could instantly sell their service at a higher price. And they sold ELECTRICITY, something EVERY household uses. Enron did some shady deals with companies they controlled, which allowed them hide their debts and losses from their financial reports. In the end, the company filed for bankruptcy in 2001, which was the largest Chapter 11 bankruptcy at the time. This is an example where there wasn't enough oversight and regulation, and since there weren't many rules in place- Enron decided to make up some of their own. 

Good Documentary - ENRON: The Smartest Guys in the Room (On Netflix Instant if you've got an account)

Bernie Madoff

Former stockbroker and investment banker, now serving a prison sentence of 150 years

Bernie Madoff- Founder of Bernard L. Madoff Investment Securities LLC. He spent decades running one of the biggest ponzi schemes in history. He single handedly destroyed life savings accounts, charities, and countless others- cheating them out of $50 Billion. A simple explanation of how he did it, was by using the money he got from NEW investors to pay off OLD investors. Essentially, no real money was being made, he just looked for more people who wanted to "invest" their money with him to keep the cashflow coming. 

More recently, President Obama passed the wall street reform bill, which a big part was aimed for increased consumer protection, along with other regulations intended to prevent the need for future bailouts in case of another financial crisis (Regulators to set standards for how much money banks need to keep on hand, new limits on how Wall street banks manage their own accounts and hedge funds, etc.) A lot of the bill means little to most of us, unless you have a degree in business or finance, but the main benefits to everyone comes from the creation of the Consumer Financial Protection Bureau, which helps prevent consumers from being victims of abusive credit card or mortgage practices. This means a reduced number of "Pre-Approved" credit cards sent out in the masses, as well as no credit card companies prowling around on college campuses. Most college students are not financially independent, and a lot aren't even mature enough to manage their own finances.  I'm not saying all credit is bad, just irresponsible credit is bad. If you give an 18 year old a piece of plastic with a $10,000 spending limit, he's probably going to do some damage with it... and the banks will be making some nice change off him. I got a credit card when I was in school, so some may call me a hypocrite. But I assure you- I am not! I mean, I was instantly pre-approved for a platinum card just for signing up for a free pita. Plus- I was a broke college student, and I was hungry; who would've done anything different?