In the Las Vegas Sun article, "Laissez-faire loses luster," Sun reporter Alexandra Berzon writes,
In the past two years, the concept of a smaller role for government in regulating business has come under tough scrutiny.
Nationally, the foreclosure crisis and national banking meltdown have been traced in part to federal deregulation of the banking industry. Now even ardent deregulators, including John McCain, are joining Democrats in calling for more regulation of Wall Street.
First, John McCain, co-author of McCain-Feingold, can hardly be called a deregulator. In fact, Republicans for the last eight years cannot even be called deregulators. Under the Bush administration, Republicans have massively expanded the role of government increased government spending, and fattened our regulatory books.
Appropriations for regulatory agencies under Bush increased from $21 billion in 2001 to $45 billion in 2007 – according to George Mason University's Mercatus Center, Washington University's Weidenbaum Center and the Heritage Foundation. Staffing exploded from 144,000 regulators to 244,000. The Code of Federal Regulations increased to 145,816 pages, more than 4,500 pages longer than in 2001, when Bush took office. Even the Federal Register (a list of daily regulatory activities) was up to 72,090 pages in 2007, which was higher than in Bill Clinton's last year as president.
Even the Gramm–Leach-Bliley Act, which big government regulators and their cheerleaders like to vilify as the cause of our economic crisis, was an act that was signed by President Clinton.
The idea that deregulation caused the crisis is a myth of monstrous proportions. Even worse is this idea that the United States has been – in the lifetime of anyone living today – a laissez-faire country.
How can the United States have a laissez-faire economy when we have the Securities and Exchange Commission, Federal Deposit and Insurance Corporation, Comptroller of the Currency, the Office of Thrift Supervision, the Federal Reserve, Environmental Protection Agency, or the Occupational Safety and Health Administration? Just looking at the US Department of Commerce there is the Bureau of Industry and Security, Economic Development Administration, International Trade Administration, Minority Business Development Agency just to name a few. Toss in the Department of Labor to manage and regulate labor relations, Department of the Interior to manage government owned property, the Department of Agriculture to keep food prices high and subsidize mega agro-corporations, or the Department of Education which oversees and regulations a nationwide government monopoly on education services.
The reason laissez-faire, limited government and free trade have received a bad rap is because Republicans promised these policies in Washington and then delivered nothing. When the financial sector suffered its heart attack, and the finger-pointing and blame escalated, it was only the unfulfilled rhetoric that could be genuinely cited, not the real actions that were taken.
America suffers from too much government, highly restricted trade, high taxes, too much government spending and really bad regulatory policies. But, as social psychologist Erich Fromm pointed out many years ago, people fear freedom. Thus policy wonks, power-hungry politicians, childish bloggers, and journalists were eager and quick to point fingers in the wrong direction.
The only thing good, or at least effective, about big government and lots of regulation is the supporting PR operations. Advocates of big government have done a great job spinning the truth and perpetuating myths and outright lies to keep their ideology afloat.