Maybe America Needs a Nanny After All
January 28, 2012 by Somebody
Several years ago the term "nanny state" became the favorite catchphrase of conservative talk radio hosts across the country. They utilized this expression whenever criticizing any government regulation that placed limitations on the activities of businesses or individuals, or any policy designed to help the less fortunate.
Should we, for instance, promote healthier diets for school children? No, they would say, that would just be creating a bigger nanny state. Should we require tougher safety testing for new pharmaceutical drugs? Nanny state. Give financial aid to the Gulf Coast businesses that were adversely affected by the BP oil spill? Nanny state. Tighten restrictions on the sale of firearms? Nanny state.
The phrase implies that we, the US populace, are big boys and girls, and don't need the government to look out for us or tell us what to do. We can take care of ourselves! That lift-yourself-up-by-the-bootstraps spirit is what once made America great! If Washington would stop interfering in our lives, our former Norman Rockwell state of greatness would surely be restored! So goes the philosophy of the laissez-faire free-market crowd.
We all know, however, that in real life nannies or babysitters are sometimes necessary, especially if both parents are working long hours, or just want to have a night out every once in a while. You can't leave young kids at home by themselves for long periods of time. Everybody knows this is a stupid thing to do.
Why? Because sometimes unattended kids don't behave like mature adults. They want to steal all the toys from their siblings, call them ugly names and start fights, eat all the cookies, play with matches, drink dangerous chemicals, and tear up their parents' houses. They basically want it all and they want it now, and they don't care so much about the consequences. That's what it's like when you're a spoiled brat.
All kids aren't so bad, of course. Some mature quickly and require less supervision, while others seem like sociopaths who are destined for a life of crime. So, what happens when the latter types are allowed to run wild and grow up without much discipline? Undoubtedly, some of them cheat their way through college, put on expensive suits and get high-paying jobs at large corporations.
Some of these fully-grown children undoubtedly worked for Enron during the California energy crisis back in 2000. During that time, as you may remember from news reports, the state was swept with power outages. It was later revealed that the brownouts were largely due to the energy market manipulations of the company Enron. Traders for the energy company had, at one point, driven the price of electricity in California to 800 times the normal rate. This fact was discussed only briefly in the press, while conservative commentators like Glenn Beck placed the blame for California's energy crisis squarely on the shoulders of Governor Gray Davis, who then became the official scapegoat and was recalled from office in 2003.
Meanwhile, due to the institutionalized corruption and greed that permeated all levels of Enron's management, the company collapsed into sudden bankruptcy. This development was a complete surprise to stockholders because the company had been constantly doctoring their financial statements to make it look like all was well in energy-trading land. Thousands of unsuspecting lower-level Enron employees lost not only their jobs, but also their retirement savings, which had been invested mostly in company stock. The phrase "brats running wild" sounds like a pretty good description of the Enron corporate environment. A nanny was clearly needed in that situation, since nobody else seemed to care enough to be responsible and do the right thing.
Enron was certainly not alone in their embrace of the dogma "anything goes, toss the rulebook in the garbage." This mindset which encouraged accounting trickery and corporate excess was rampant in the late 1990s and the early 00s. Only in the most extreme examples, such as in the case of Tyco CEO Dennis Kozlowski, was much media attention given to this wave of white-collar crime. Kozlowski became famous for spending millions in company money on things like paintings, a $6000 shower curtain and strange parties in which models were hired to stand around and pose as Greek gods and goddesses. The party is now over for Kozlowski, he is currently serving a sentence at Mid-State Correctional Facility in Marcy, New York.
Yes, the kids were having one hell of a bash at the end of the millennium while their parents -- the US voting public -- left them unattended. 1999 also brought the repeal of the Glass-Steagall Act, a law which had, since the Great Depression, required that different types of financial institutions, such as banks and securities firms, remain separate. This opened the door for all types of mergers and unholy alliances in the financial industry, such as that of Citicorp, which acquired Travelers insurance, brokerage Smith Barney, and Primerica to become the multi-headed beast known as Citigroup. The increased complexity in the structure of these mega-corps made it harder for regulators to keep track of their activities, and paved the way for economic meltdown a few years later.
Following the passage of that law, which allowed the merging of financial institutions, came the Commodity Futures Modernization Act of 2000, which ended government regulation of hard-to-understand investments called derivatives -- perceptively called "financial weapons of mass destruction" by financial expert Warren Buffett in 2003. Due to the passage of the deregulatory law in 2000, the use of these potentially toxic investments, such as credit default swaps and collateralized debt obligations, increased exponentially. These "financially innovative" products led the big institutions to believe they could invest risk-free in subprime mortgages, which fueled a dramatic increase in home sales. Mortgage lenders threw the centuries-old tradition of prudence out the window and begin giving loans away to anybody able to sign their name, knowing that these contracts could be easily sold to larger institutions. At some point, it turned out that the parties who had issued the derivatives which guaranteed the securitized mortgages realized that so many defaults were occurring that they would never able to cover the losses as they had promised.
I think we can say with certainty that the resulting economic crisis of 2008 was a case where deregulation didn't create greater national prosperity. The fabled invisible hand of the marketplace celebrated its newfound freedom by knocking our whole economy down like a sidewalk fruit stand. Home values plummeted along with the retirement portfolios of people across the country. Where was the nanny that day? Probably bound and gagged in the closet while the kids raided the liquor cabinet and played with fireworks.
When the housing bubble finally burst, the large financial conglomerates were left teetering on the edge of bankruptcy, and US taxpayers were informed that they were expected to save the "too big to fail" companies from their own incompetence. The Troubled Asset Relief Program has transferred trillions -- with a "T" -- into the bank accounts of corrupt financial companies. Those that were bailed out brazenly used the taxpayer money to pay million dollar bonuses to their upper brass. A group of AIG executives famously spent half a million dollars of their too-big-to-fail money in one week at an expensive resort, including $23,000 alone at a health spa.
There has been a lot of well-deserved popular outrage against the TARP heist, resulting in the formation of new political groups like the Tea Party and Occupy Wall Street. Our elected leaders, however, still refuse to put two and two together and admit that all these problems of the last decade stem from the widespread myth that less government inference in the affairs of business leads to increased economic prosperity. Nobody seems to have the guts to come right out and tell the truth: Business, especially big business, needs more regulation, not less.
So, in spite of all the rhetoric you've heard that government nannies are bad, I would like to emphatically suggest otherwise. America needs a tough nanny with a big wooden paddle to spank the butts of our nation's arrogant privileged class, who have clearly grown several sizes too big for their britches. More specifically, we need a well-financed government with strong regulatory powers to prevent these overgrown babies in suits from driving the country over a cliff.
Back in the eighties, Ronald Reagan proudly declared: "Government is the problem." After three decades of this anti-government, deregulatory mindset we now have more problems than ever. It's time for average citizens of the United States to realize that they, not the corporations, are the ones who are supposed to be running the country.