Econ 4 The Bottom Line: Regulation

We are economists who think that the economy should serve people, the planet and the future.

Rules are as important in an economy as they are in sports. When gamblers rig the game, players flout the rules, or competent referees are not on the field, the result is a charade and not a fair contest.

Yet some claim that regulations are always bad for the economy. They believe that “freeing” business from rules that protect public health, maintain competitive markets, and ensure financial solvency is the route to prosperity. This ideological opposition to regulation, epitomized by the repeal of the Glass-Steagall Act, dismantled the firewall between commercial banking and investment banking, and opened the door to the greed and reckless behavior that culminated in our current economic crisis.

Some claim that regulation “kills jobs.” They tell us that firms will hire more workers if they don’t have to worry about such things as safe workplaces, fair wages, clean air and water, or transparent accounting standards. They’re dead wrong. Sound regulations don’t deter investment. Sound regulations don’t deter job creation. On the contrary, sound regulations are a necessary ingredient in any healthy economy.

It was unregulated financial markets that killed millions of jobs, as surely as unregulated pollution kills people.
Some claim that we should treat corporations as people, allowing big business and banks to finance political campaigns, and giving free rein to their lobbyists. We’ve tried letting politicians and corporate CEOs police themselves. The verdict is in: we’ve paid the price in stolen lives, damaged health, massive bailouts, and vanished jobs. It turns out that “anything goes” means that anything goes to those who can pay for it. We need fair and transparent rules to govern our political system that are robustly enforced.

Sound economics supports sound regulation, and sound regulation supports a sound economy.

We call for regulations that prevent big banks from making our nation’s financial system a heads-they-win, tails-we-lose casino.

We call for regulations that safeguard the solvency of working families, the health of the public, and the natural environment as the common heritage of present and future generations.

We call for regulations that put the burden of proof on corporations to prove that it is safe to introduce new chemicals into our air and water, and new financial instruments into our capital markets, just as food and drug manufacturers must do under FDA rules.

We extend our support to the goal of building an economy where businesses, banks, and politicians are held accountable to the people, the planet, and the future.

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