Stop swinging the outrage pendulum
TEXT OF COMMENTARY
Scott Jagow: Congress is looking at ways to discourage oil speculators. Opponents say there's no need to tinker with the free market. It's a classic battle between the forces of government and business. Commentator Robert Reich says every so often, one of them takes control of the other.
Robert Reich: The great pendulum of American economic outrage moves back and forth over time between anger at big government and anger at big business. For almost 30 years, big government has been the target -- starting with Ronald Reagan's admonition that government is the problem, not the solution, through Bill Clinton's declaration that the era of big government is over, and George W. Bush's hands-off brand of free market fundamentalism.
We deregulated much of the economy and pretty much allowed corporations to do what they wished. And for the first 20 years the result was largely good -- a buoyant economy, a bullish stock market, a strong dollar.
But now, we're experiencing what happens when the pendulum swings too far, and big business is given so much leeway that the public is harmed and the economy jeopardized. The corporate looting scandals that began with Enron were a wake-up call.
Then came the practice of post-dating executive stock options. And more recently, an epidemic of unsafe products -- drugs like Vioxx, tainted foods, heperin and lead-painted toys imported from China.
We've had defense contractors that don't deliver on their contracts, and insurance companies that won't deliver on their promises. And just this past year, the subprime loan mess, a financial meltdown on Wall Street, out-of-control hedge funds and derivatives. Perhaps manipulation of oil futures markets.
The reality is that neither big government nor big business is the problem. Both are necessary parts of a modern economy. Problems arise when they're out of balance -- as they were by the 1970's, when government had grown so large it was stifling the economy. Or as they have become this decade, as big business, including Wall Street, grew so irresponsible as to undermine public trust and threaten the economy.
Now, the pendulum of outrage is swinging back against large corporations. America is heading toward another era of regulation. The real question is how smartly we go about it, and whether we can keep the pendulum from swinging too far.
Jagow: Robert Reich teaches public policy at the University of California Berkeley.