From the Prof (now I will remove myself from my soapbox until this topic comes up again)
One of the most common and misleading economic myths in the US,
most often espoused by Libertarians, Far R. politicians, Separatists and some
religious fundies, which comprise some of the more vocal responses to this OP),
is the idea that government rules and regulations only “interfere” with the
natural beneficial workings of the market. Nothing could be further from the
truth. Our “free” market system would simply not exist as we know it without
the presence of an active government that creates and maintains the rules and
conditions that allow it to operate efficiently. To summarize:
By the end of the 19th century, the government concluded that
major corporations such as Standard Oil, Carnegie Steel and Union Pacific
Railroad had grown too powerful. As a result, laws were created to offset this
power. The Sherman Antitrust Act of 1890 outlawed monopolies. The Food and Drug
Administration was created in 1904 and vested with litigation of companies that
broke new purity laws. The Federal Trade Commission was created in 1914 to
regulate competition among American companies.
The Security and Exchange Act of 1934, The Wagner Act of 1935
(labor relations and unions) The Fair Labor Standards Act of 1938 (national
minimum wage) all were implemented to level playing fields and bring about more
fairness to the economy. Without these and other Acts, the rich would have
become richer, the poor, poorer, and the US wouldn’t have a thriving middle
class. As I’ve stated before, a Darwinian survival of the fittest economy may
be ruthlessly efficient, but it is also ruthlessly indifferent to inequality and
suffering.
There are many other rules and regulations passed by the government that make business possible. Under a purely capitalist system, none of these laws or entities
should exist. Essentially, each act limited markets by granting the federal
government the power to regulate business. The US and most W nations have a managed
economy -- by definition, a non-market economy since it doesn't exist solely
on supply and demand. Strong government control of the economy is a Keynsian
model, whereas Milton Friedman, darling of the supply siders and Libertarians,
believed that government should stay out of everything. Both of these models of
course should be employed for a diverse strong economy.
Some believe the Keynsian
model is too present today; I agree in principle, but I have zero trust in business
leaders to do the right thing for everyone. Most would greedily extract the
last drop of oil from the planet for profit regardless of the impact it had on
the environment, the economy or global warfare and strife, for example, without
strong controls.
