The Conservative Bubble Boys

The bubble did it. Or so goes the newly fashionable, no-fault explanation for the cascading corporation scandals now posing a clear and present danger to the U.S. economy. "The '90s were a period of excess," intones head White House economist Lawrence Lindsay.

Every economic bubble since the Dutch Tulip Mania in the 1500s has been marked by scandal and crime. We were all swept up in the craze, captured by the desire to get rich quick. Since we're all implicated, no one is responsible. The market is coming back to earth; we'll sort out the few "bad apples," the lawbreakers, and move on.

Bull. This bubbleology would allow conservatives to shirk responsibility for what they have wrought. The fact is that after the "excesses" of the 1920s drove us into the Great Depression, there was no equivalent epidemic of financial and political corruption for 50 years until the current crime wave. That's because Franklin D. Roosevelt's New Deal put cops on the beat to police corporations and regulate their behavior.

The Securities and Exchange Commission was created to review the books. The Glass-Steagall Act separated investment houses from commercial banks to end corrosive conflicts of interest. The Federal Trade Commission and the Justice Department limited mergers and monopolies. Unions, some 30 percent of the workforce, made companies more responsible to their workers.

It is no accident that the current wave of costly corporate scandals followed the rise of modern conservatism to political power two decades ago. Ronald Reagan governed while denigrating government as "the problem, not the solution." He starved agencies of resources and placed committed ideological opponents in charge of them. Reagan's Commerce Department drew up a hit list of regulations resented by business ("the Terrible 20"). And of course Reagan signed the law that deregulated the savings and loans associations, while his appointee revoked requirements that any S&L have 400 shareholders. The resulting infamies cost taxpayers many billions.

The conservative assault on government reached fever pitch when Newt Gingrich led the "perfectionist" caucus of the Republican right to take over Congress. For Gingrich conservatives, government regulation was creeping Stalinism. House Majority leader Dick Armey said that in the New Deal and the Great Society, "you will find, with a difference only in power and nerve the same sort of person who gave the world its Five Year Plans and Great Leaps Forward -- the Soviet and Chinese counterparts."