Dave Zweifel's Plain Talk: Why we need strong regulation

Dave Zweifel  —  9/04/2008 9:14 am

In the new book "Journals: 1952-2000," a compilation of the diary entries penned by the late Arthur Schlesinger Jr., one of the country's most politically connected historians, there's a revealing snippet about Harry Truman.

Schlesinger had a private meeting with the president in late 1952, near the end of Truman's last year in office.

Truman was miffed at a rash of stereotypical attacks on "politicians," who some of the attackers insisted were nothing but a bunch of crooks anyhow.

"He felt that one of the great white lies was the current attack on politicians," Schlesinger wrote in his journal entry that day. "He feels that, as soon as he learned of any wrongdoing in his administration, he moved immediately to remedy it."

Truman told Schlesinger: "The professional politician is the straightest-shooting man in the country. I don't mean the city machine type, but the man who makes a career of elective politics. The biggest crooks in the country are the businessmen. You know, they'll do anything -- absolutely anything -- for a dollar."

Feisty Harry Truman was being a little more than hyperbolic. Just like politicians, there are plenty of good, honest businesspeople out there providing jobs and services and moving the country and the economy ahead. But Truman's point is one that I wish the knee-jerk all-business-is-good and all-government-is-bad advocates would pause long enough to consider.

We're going through yet another national economic crisis that was brought on by an out-of-control, greedy business sector that has a two-century history of not only dismissing common sense ethics but skirting the law for its own benefit.

The country is only now discovering just how devious and underhanded some of the country's biggest financial wizards were in handling mortgage and credit transactions, inventing new ways to skirt rules and regulations to pad bottom lines and executive bonuses.

Now once again the nation's taxpayers sit on the brink of having to cough up billions to rescue these people from themselves while millions of American citizens suffer the consequences of escalating credit costs and decreasing values of their nest eggs in the form of their own homes.

It would be one thing if this was the first time. But the irresponsibility of corporate greed and manipulation goes all the way back to the "panics" of the 1800s, the wild lending and undercapitalization that contributed mightily to the Great Depression of the 1930s, and the savings and loan scandals that cost American taxpayers tens of billions of precious dollars in the 1980s. If only we could have spent some of that money on schools and health care.

It seems that about every 20 years or so, the country is forced to suffer through an economic mess brought on by lack of government oversight and a financial community that acts like the proverbial kid in the candy store when no one is looking.

No sooner had the federal government, for instance, relaxed some of the safeguards enacted by Franklin D. Roosevelt to save the banks in the 1930s than unscrupulous marketers -- many of them from large and respected national corporations -- found ways to exploit the system to pad their bottom lines. Trouble is, it wasn't just crooked, it wasn't sustainable. Now even the innocent are paying the price.

I often wonder how long it will take the loud disciples of economist Milton Friedman and his unfettered free market theories to see that unregulated finance in this capitalist society just doesn't work. How many times, after all, can they be whacked over the head?

And how many times can the taxpayers and the innocents in this country stand being burned by policies that refuse to recognize the need for fair and constant regulation of the marketplace?

Yes, regulation can sometimes be a strain on the economy.

But at least it will save that economy from being blown up by those who Harry Truman said would do anything for a dollar.

Dave Zweifel is editor emeritus of The Capital Times.

Dave Zweifel  —  9/04/2008 9:14 am