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<DIV><FONT size=2 face=Arial>Conservatives and especially libertarians
romanticize "free market unregulated capitalism." They regard it as the best of
all economic orders. However, with deregulated capitalism, every decision is a
bottom-line decision that screws everyone except the shareholders and
management.<BR><BR>In America today there is no longer a connection between
profits and the welfare of the people. Unregulated greed has destroyed the
capitalist system, which now distributes excessive rewards to the few at the
expense of the many.<BR><BR>If Marx and Lenin were alive today, the
extraordinary greed with which Wall Street has infected capitalism would provide
Marx and Lenin with a better case than they had in the 19th and early 20th
centuries.</FONT></DIV>
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<DIV><FONT size=2 face=Arial><FONT face="Times New Roman"><FONT size=2
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<DIV><FONT size=2 face=Arial><FONT face="Times New Roman"><FONT size=3>An
interesting article on unintended consequences by ex Reagan Treasury
man....<BR><BR></FONT><B><FONT size=4>The Little Things That Annoy
</FONT></B></FONT></DIV>
<H1><B><FONT size=5><FONT color=#990000>The Big Things That
Matter</FONT></FONT></B> </H1>
<DIV><FONT size=4>By PAUL CRAIG ROBERTS </FONT><BR><BR>I write about major
problems: the collapsing US economy, wars based on lies and deception, the
police state based on "the war on terror" and other fabrications such as those
orchestrated by corrupt police and prosecutors, who boost their performance
reports by convicting the innocent, and so on. America is a very
distressing place. The fact that so many Americans are taken in by the lies told
by "their" government makes America all the more depressing.<BR><BR>Often,
however, it is small annoyances that waste Americans' time and drive up blood
pressures. One of the worst things that ever happened to Americans was the
breakup of the AT&T telephone monopoly. As Assistant Secretary of the US
Treasury in 1981, if 150 per cent of my time and energy had not been required to
cure stagflation in the face of opposition from Wall Street and Fed Chairman
Paul Volcker, I might have been able to prevent the destruction of the best
communications service in the world, and one that was very inexpensive to
customers.<BR><BR>The assistant attorney general in charge of the "anti-trust
case" against AT&T called me to ask if Treasury had an interest in how the
case was resolved. I went to Treasury Secretary Don Regan and told him
that although my conservative and libertarian friends thought that the breakup
of At&T was a great idea, their opinion was based entirely in ideology and
that the practical effect would not be good for widows and orphans who had a
blue chip stock to see them through life or for communications customers as
deregulated communications would give the multiple communications corporations
different interests than those of the customers. Under the regulated regime,
AT&T was allowed a reasonable rate of return on its investment, and to stay
out of trouble with regulators AT&T provided excellent and inexpensive
service.<BR><BR>Secretary Regan reminded me of my memo to him detailing that
Treasury was going to have a hard time getting President Reagan's economic
program, directed at curing the stagflation that had wrecked President Carter's
presidency, out of the Reagan administration. The budget director, David
Stockman, and his chief economist, Larry Kudlow, had lined up against it
following the wishes of Wall Street, and the White House Chief of Staff James
Baker and his deputy Richard Darman were representatives of VP George H.W. Bush
and did not want substantial Reagan success that would again threaten the
Republican Establishment's hold over the party. Baker and Darman wanted to be
sure that George H. W. Bush, and not Jack Kemp, succeeded Ronald Reagan, and
that required a muted Reagan success that they could claim as theirs for
moderating an "extremist" program.<BR><BR>I told Secretary Regan that if I had
another deputy assistant secretary, I could reach a reasonable conclusion
whether the breakup of AT&T was sensible. He replied that he was sure that
was the case, but that once I had three deputies the headlines in the Washington
Post and New York Times, Business Week, Newsweek, and so on, would be:
"Supply-sider builds empire at Treasury." He said it would sink me<BR>and
that without me he could not get the President's economic program out of the
President's administration. "Which do you want to do," he asked, "save AT&T
or cure stagflation?"<BR><BR>Curing stagflation gave America twenty more years.
Ironically, the good times started to erode when Reagan's other goal was
accomplished and the Soviet Union dissolved in 1990. "The end of history"
resulted in India and China opening their labor markets to American capitalists,
who began producing offshore with foreign labor the products that they sold to
Americans. The labor costs savings pushed up corporate profits, shareholders'
returns, and managerial bonuses. But it deprived Americans of middle class
incomes and wrecked the balance of trade. The US income distribution and the
trade deficit worsened.<BR><BR>Many progressives blame the worsening income
distribution on the Reagan tax rate reductions, but the real cause is the
offshoring of manufacturing, industrial, and professional service jobs, such as
software engineering.<BR><BR>None of us in the Reagan administration foresaw
jobs offshoring as the consequence of Soviet collapse. We had no idea that by
bringing down the Soviet Union we would be bringing down America. During the
Reagan years India was socialist and would not allow foreign corporations, had
they been interested, to touch their labor force. China was communist and no
foreign capital could enter the country.<BR><BR>However, once the Soviet Union
was gone from the earth, the remaining socialist and communist regimes decided
to go with the winners. They opened to Western corporations and sucked jobs out
of the developed West.<BR><BR>But this is a different story. To get back to
deregulation, nothing has worked for the consumer since deregulation.
Deregulation permitted corporations to impose their costs of operation on
customers without having to send them a bill. For example, corporations use
voice recognition technology to keep customers from salaried customer
representatives. I remember when a customer with a problem could call a utility
company or bank and have the problem immediately corrected.<BR><BR>No more.
There was an error in my phone bill today, which I had corrected without result
on two previous occasions. As everyone knows by now, it takes 10-15 minutes,
usually, to get a live person who can actually fix the problem. After
listening to sales pitches for 12 minutes, I got a live person. Once the problem
was understood, it was pronounced to be an upper level problem out of his hands.
I waited another 10 minutes while he tried to reach a superior who had the code
to fix the problem that the phone company had produced in my account. The entire
time I listened to product advertisements.<BR><BR>How many times has this
happened to you?<BR><BR>Whoever invented these artificial voice capabilities is
the enemy of mankind. Whomever a customer calls--utilities, credit card
companies, banks, whatever, the customer gets a voice machine. Some voice
machines never tell the customer how to get a live person who can, on occasion,
actually fix the problem.<BR><BR>In my opinion, the strategy behind the endless
delays is to cause the customers to give up, slam the telephone down and play
the higher incorrect bill as it is cheaper in time and frustration to correcting
the problem and being billed in the correct amount. These ripoffs of the
customer are produced by Wall Street pressures for higher earnings.<BR><BR>The
frustrations, of course, multiply when one reaches an offshored service
somewhere in the Third World. The incentive is to hang up and to pay the
excessive bill so that phone, internet, or credit card services are not cut
off<BR><BR>Had Don Regan and I known that the high speed Internet was in our
future and that American corporations would use it to destroy the jobs
traditionally filled by US university graduates, possibly we would have decided
to save the regulated telephone monopoly and to deliver the economy over to
stagflation.<BR><BR>The reason is that sooner or later something would have been
done about stagflation, but nothing whatsoever has been done about offshoring.
Saving the economy from offshoring would have been a greater achievement than
saving the economy from stagflation. However, in my time stagflation, not
offshoring, was the problem.<BR><BR>I regret that I did not have a crystal
ball.<BR><BR>Deregulation proponents will say that the breakup of AT&T gave
us cell phones and broadband, as if foreign regulated communication companies
and state monopolies do not provide cell phone service or high speed Internet
connections. I can remember attending corporate board meetings years ago at
which the European members had digital cell phones with which they could call
most anywhere on earth, while we Americans with our analogue cell phones could
hardly connect down the street.<BR><BR>What deregulation did was to permit Wall
Street to push the deregulated industries-- phone service, airlines, trucking,
and later Wall Street itself-- to focus on profits and not on service. Profits
were increased by curtailing service, by pushing up prices and by Wall
Street creating fraudulent financial instruments, which the banksters used
America's reputation to market to the gullible at home and
abroad.<BR><BR>Consider air travel. Admit it, if you are my age you hate it. The
deterioration in service over my lifetime is phenomenal. Studies in favor of
airline deregulation focused on short flights between A and B and concluded that
small airlines serving high density areas were more efficient because they were
not regulated. What was left out of the analysis is that regulated airlines
served low density areas and permitted free stopovers. For example, if one was
flying from the US to Athens, Greece, the traveler could stopover in London,
Paris, and Rome without additional charges. Moreover, passengers were fed hot
meals even in tourist class. In those halcyon days, it was even possible to
travel more comfortably in tourist class than in first class, because flights
were not scheduled in keeping with full capacity. Several rows of seats might be
unoccupied. It was possible to push up the arm rests on three or four center
aisle seats, lay down and go to sleep.<BR><BR>Perhaps the best benefit of
regulated air travel for passengers was that airlines had spare airliners. If
one airplane had mechanical problems that could not be fixed within a reasonable
time, a standby airliner was rolled out to enable passengers to meet their
connections and designations. With deregulation, customer service is not
important. The bottom line has eliminated spare airliners.<BR><BR>With
deregulated airlines, Wall Street calls the tune. If your flight has a
mechanical problem, you are stuck where you are unless you have some sort of
privileged status that can bump passengers from later fully booked flights.
"Studies" that focus only on discounted ticket price omit major costs of
deregulation and thereby wrongly conclude that deregulation has benefited the
consumer.<BR><BR>When trucking was regulated, truckers would stop to provide
roadside assistant to stranded travelers. Today, with deregulated trucking,
every minute counts toward the<BR>bottom line. Not only do truckers no longer
stop to aid stranded travelers, they travel at excessive speeds that endanger
automobile drivers. Trucks have expanded in size, weight and speed. Trucks raise
the stress level on interstate highway drivers and destroy, at taxpayers
expense, the roads on which they travel.<BR><BR>Conservatives and especially
libertarians romanticize "free market unregulated capitalism." They regard it as
the best of all economic orders. However, with deregulated capitalism, every
decision is a bottom-line decision that screws everyone except the shareholders
and management.<BR><BR>In America today there is no longer a connection between
profits and the welfare of the people. Unregulated greed has destroyed the
capitalist system, which now distributes excessive rewards to the few at the
expense of the many.<BR><BR>If Marx and Lenin were alive today, the
extraordinary greed with which Wall Street has infected capitalism would provide
Marx and Lenin with a better case than they had in the 19th and early 20th
centuries.<BR><BR><B>Paul Craig Roberts</B> was an editor of the Wall Street
Journal and an Assistant Secretary of the U.S. Treasury. His latest book,
<A href="http://www.easycartsecure.com/CounterPunch/CounterPunch_Books.html"
target=_blank>HOW THE ECONOMY WAS LOST</A>, has just been published by
CounterPunch/AK Press.</FONT></DIV></BODY></HTML>