Friday, 12 June 2009

The Myth of Bush the Economic Libertarian II Banks

(The primary version of this blog, including graphics, is available at Barry Stocker's Weblog)

The book illustrated above (Sarbanes-Oxley for Dummies) illustrates the nonsense, but widely believed nonsense, of claiming that Bush presided over years of anarchic financial deregulation. In 2002, at a time of a Republican dominated Congress, he signed into law the Sarbanes-Oxley Act, regulating financial institutions. So complex and significant is this act the For Dummies series thought it worthwhile to bring out two editions of a book to explain the act in understandable terms. The best known books in this series introduce the use and programming of Windows, Mac and Linux operating systems. We can safely say that detailed regulation governing the financial markets continued to grow under Bush as it has continued to grow constantly, certainly since the New Deal, and I would guess further back. And that includes the periods of Reagan and Bush. There were some deregulatory measures, but in both cases such measures were exceeded by new regulations and laws.

Sarbanes-Oxley alone has been widely blamed for loss of US competitiveness in world financial markets. This is just one place. Even the New York senator, Charles Schumer, a Democrat, has been concerned about the effect on the New York Stock Exchange. The London SE has been growing since Sarbanes-Oxley, in relation to the NYSE and Sarbanes-Oxley is widely believed to be a major reason. That is during the time that Bush was supposedly on a mad descent into deregulatory chaos, something like Marlon Brando as Kurtz in Apocalypse Now, lost in the hell of his creation.

Again Veronique de Rugy is the best source for a clear and comprehensive picture of how the Bush years were not free market years. This time in co-operation with Melinda Warren. Their report Regulatory Agency Spending Reaches New Height points to a constant increase in the number of regulations, the number of people employed as regulators and the expense of regulations (all figures are equalised for inflation) since 1960, including the presidencies of Ronald Reagan and George W. Bush.

The impression that Bush was a deregulator has been enhanced by the idea that his activities in bailing out financial institutions and automakers, carried on by Barack Obama, was the result of a sudden turn around, like the moment of clarity Kurtz-Brando has at the climax of Apocalypse Now. The truth is that Bush did not recover from deregulatory intoxication in the same way that he is a teetotal recovering alcoholic in his personal life. The bailouts were an acceleration of intervention in the financial markets, and the economy as a whole, and not an about turn.

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