It's often been said that President Franklin D. Roosevelt saved capitalism from itself.
Elected at the height of the Great Depression, FDR moved quickly to regulate banks, set up the Securities and Exchange Commission, form the National Labor Relations Board to protect unions and enact several other government regulations to stop unbridled capitalists on Wall Street from bringing the economy to its knees again.
Conservatives, many of whom were victims of the economic collapse themselves, nevertheless were livid at Roosevelt for sticking the government's nose in their businesses. Socialism, they called it. But the country's vast majority agreed that governmental oversight was necessary if the U.S. economy were to survive.
The president didn't nationalize any businesses — although he did initially consider it for the banks — and he didn't challenge the system of private profit. He did, however, believe the financial system needed a watchdog. Capitalism was presumed to be the best system, but capitalists couldn't be trusted to keep the nation's interests at the forefront.
Roosevelt's initiatives were really an extension of regulatory actions the government had taken since the early 1900s. Despite the favorite Republican battle cry that regulations stifle business, the likes of the Teddy Roosevelts and Bob La Follettes were able to enact laws to bust up competition-killing trusts.
Standards were put in place at slaughterhouses, a system was established to provide regular meat inspection, pharmaceuticals were subjected to regular testing to protect the public from bogus drugs, banks and insurance companies had to adhere to rules so unsuspecting consumers weren't harmed, railroad transportation charges had to be justified to prevent discriminatory pricing and hundreds of other rules were enacted to protect the public.
It was more than evident that the time had come to do the same with the finance industry. The Glass-Steagall Act was passed in 1933 to prevent savings banks from using depositors' money for risky investments. Gimmicks that had been invented to lure people into risky stocks were outlawed.
While the reforms enacted during the Depression were successful in helping turn the nation's economy around and setting the stage for the boom that followed World War II, it didn't take long for the special interests to begin lobbying for regulatory relief.
Much of it was no longer needed, they argued; not only could businesses be trusted to act responsibly, they could even regulate themselves. And without the shackles of regulations, the economy would soar to even greater heights. That was the mantra of new politicians like President Ronald Reagan and, later, President George W. Bush.
We're seeing just how well that's been working. Even Glass-Steagall, which had been the bulwark to keep banks from playing fast and loose with depositors' money, was repealed in the 1990s. That decision, hatched by congressional Republicans and approved by Democratic President Bill Clinton, helped bring about the Great Recession of 2007-08, costing millions of Americans their homes and jobs.
The eroding of government oversight was called a key factor in the Deepwater Horizon oil explosion in the Gulf of Mexico in 2010 because the Interior Department under President Bush had essentially ceded its oversight of offshore rigs to the oil drillers themselves. That disaster was just one of dozens of environmental and industrial catastrophes that resulted from watered-down regulation.
The tragic crashes of the Boeing 737 MAX airplanes in recent weeks are but the latest examples of how "self-regulation" by certain industries can be dangerous. Boeing itself was responsible for ensuring the safety of the new planes. The Federal Aviation Administration stepped down from supervision.
Alarmingly, this is just a small example of what's been going on behind the scenes in the Trump presidency. Under President Donald Trump, as Public Citizen's Amit Narang recently pointed out in The Hill, "attacks on regulations that protect the public have reached a feverish pitch."
Federal agencies have issued "virtually no significant new health, safety, environmental or consumer protections" since Trump was elected and, worse, agency enforcement numbers have plummeted dramatically, which, Narang says, shows that the agencies are doing nothing to protect the public from bad actors.
The Consumer Financial Protection Bureau is a prime example. The bureau, enacted under President Barack Obama, has been ordered under Trump to stop putting restraints on payday loan outfits and to scale back restrictions on huge overdraft fees and late credit card payments.
History is replete with stories of how some businesses can't be trusted to not let greed and profits get in the way.
As FDR showed us all those years ago, capitalism needs to be constantly saved from itself.
Dave Zweifel is editor emeritus of The Capital Times. email@example.com, 608-252-6410 and on Twitter @DaveZweifel.
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