Apr 1, 2021 in Economics

Key Issues and Consequences of Economic Deregulation
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The history of the American social development contains several periods of economic deregulation. More precisely, the Carter and Clinton administration supported the idea of limited state control over the economic institutions during the 1970s and in the era of globalization, respectively. Despite the sufficient differences in the initial circumstances, the economic deregulation led to the rise of corporate power and emergence of social issues.

 

Main Patterns of US Economic Policies

During the 1970s, the US history was marked by the deregulation of national economy due to the inability of the American government to decrease the high inflation rates. A set of factors including the trade deficit, the decrease of industrial production as well as the contemporary oil crisis led to the staggering rise of inflation and the subsequent relocation of industrial enterprises overseas and elimination of highly paid jobs through automation. The Carter administration responded to the pending crisis by decreasing the government regulation and cutting the budget expenditure. While decreasing the state support for the domestic programs, Carter deregulated the trucking and airline industries. Such approach had the far-reaching effects on the overall well-being of the American citizens. The inability of the Carter administration to surpass the economic stagnation led to the growing popularity of conservative politicians who promoted the opposition to the federal government, the decrease of the military budget, the reduction of social programs, and lower taxes. The anti-liberal agenda of conservative officials largely benefited business and homeowners while preventing the allocation of much-needed funds for schools, libraries, and other public services. The historical accounts clearly indicate the overall inability of the state authorities to handle the economic crisis in the 1970s. The tendency resulted in the growing decrease of state control over the national economy as well as the gradual deterioration of living standards.

Alternatively, the Clinton administration supported the deregulation of the US economy as a part of globalization strategy. The American leader strongly believed that the promotion of economic interdependence is a promising strategy for the future economic elevation of the USA. In Clintons words, our decision... to create the system of global, expended, freer trade and the supporting institutions played the major role in creating the prosperity of the American class. The US President clearly considered the participation in the economic globalization the only way we can pass the American dream of the last 40 year to our children. The pursuit of financial stability became the main reason for participation in the Uruguay round of GATT negotiations that aimed at opening the national borders for foreign investments, protecting the corporate property, and limiting the governments control over the national economy. However, the American economic strategy led to the unforeseen consequences in spite of the initial success. While the trade liberalization resulted in the stock market boom and internationalization of American corporations in the late 1990s, the deregulation of the energy sector, telecommunications, and stock trading rendered them vulnerable to the effects of the subsequent scandals regarding the stock frauds and the hidden information about the real condition of American firms. In the early 2000s, the media reports about the corrupted brokerage firms, accountants, and corporate executives and illustrated the drastic effects of economic deregulation. Therefore, the US government failed to harness the power of economic globalization due to the internal factors. Specifically, the lack of state control was one of the reasons since the federal authorities fail to secure the secure the financial stability in the USA.

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Social Impacts of Economic Deregulation

The growing influence of conservatives has numerous impacts on the American social life including the enforcement of traditional family values and gender boundaries. Firstly, the political campaign of anti-liberal officials was laced with the harsh criticism of the liberal government. In the 1970s, conservatives strived to gain the popular support in the suburban areas by highlighting the decline of morality and the overall respect to the federal authorities. The Christian fundamentalists further promoted the conservative rhetoric by demanding the reversal of legal ban of prayers at schools, the prohibition of abortions and pornography. Secondly, while reporting the moral impoverishment of the American society, the conservative groups and their supporters largely succeeded in preventing the adoption of progressive civil rights legislation. In 1972, the political opposition to the Equal Rights Act (ERA) organized massive protests against the ratification of a new law in states and prevented the extension of womens freedom in the public sphere. The proponents of traditional gender hierarchy claimed that the enactment of the ERA would destroy the institution of family by discrediting the role of mothers and wives in the maintenance of social harmony. The evidence strongly indicates the direct correlation between the economic misfortunes and the backlash against the promotion of gender equality. The inability of the Carter administration to cope with the financial crisis led to the gradual shift of the political affiliations toward the conservative leaders and the subsequent dissemination of anti-liberal rhetoric.

The social impacts of economic globalization were equally devastating since they led to the economic inequality. While the corporate executive enjoyed the benefits of trade intensification, the low-income population suffered the consequences of businesss relocation overseas. The salary of a chief executive officer was 310 times higher than that of an average worker in 2000. Furthermore, the domestic firms could not compensate the loss of jobs, relocated to the developing countries by creating new ones while most of the common workers worked for 14 dollars per hour. The statistical data indicates the uneven distribution of state wealth among different social groups. Moreover, numbers indicate the extensive concentration of wealth in the hand of upper-class. The assertions highlight the substantial discrepancies between the intended goals of trade liberalization and economic deregulation and the actual results.

 
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Rise of Corporate Power

The significant decrease of state control over the national economy led to the striking empowerment of corporations during the 1970s. The tendency was primarily the result of the mobilization of corporate power. While the big business faced the wave of harsh criticism from the environmentalist groups including Friends of the Earth, Public Citizens, and Environmental Action and struggled to bypass the environmental legislation, a well-known corporate attorney Lewis Power published a memorandum that called for the revival of the former corporate power. More precisely, the document emphasized the strong necessity for uniting against the imminent threats to the American capitalism including the criticism of the social science faculties through the well-organized and thoroughly planned action. One of the immediate results of such calls was the formation of Roundtable in 1972; the name of an organization is the collective term for the series of private institutions such as foundations, think tanks, lobbying agencies and publications that were well-equipped for the manipulation with the public opinion. The corporations applied a large variety of strategies to achieve their goals including the formation of the short-term coalitions with other political players to secure the favorable outcomes of the decision-making process as well as the discredit of opponents. The presented findings illustrate the gradual empowerment of corporations in the 1970s as the accumulation of tremendous financial and human resources allowed the business elite to design the effective strategies for the promotion of corporate interests.

Corporations enjoyed the similar benefits related to the deregulation of the national economy during the era of globalization. The rise of corporate power is generally attributed to the protection of corporate rights by the domestic legislation and the international agreements. Since the 1970s, a series of court decisions significantly contributed to the expansion of corporate rights. Despite the absence of any rational arguments, the US Supreme Courts upheld corporations right for the commercial free speech and spending money to influence the results of referendum as well as the protection of private property against the unwarranted searches, being tried twice for the same offense. Meanwhile, the ratification of NAFTA provided the international corporations with the legal tools for influencing the domestic policy of host countries. Under the provisions of the trade agreement between the USA, Canada, and Mexico, the foreign companies should enjoy the same favorable treatment as the domestic ones as well as receive the financial compensation for the devaluation of companys property of future profits that resulted from the adoption of new regulations. For instance, the American waste disposal company MetalClad Corporation received 16,7 dollars from the Mexican government as the compensation for the prohibition of construction works that threatened the environmental safety of the local community in the small town of Guadalcazar in 2000. The provided facts vividly illustrate the positive influence of domestic legislation as well as the economic interdependence and trade liberalization on the rise of corporate power during the last several decades. The assertions illustrate the high potential of international companies for the generation of enormous power in the homeland and abroad.

Conclusion

While the Carter and Clinton administrations initiated the economic deregulation under different circumstances, the policy led to the extension of corporate power as well as the emergence of grave social problems during the 1970s and the era of globalization. The paper is based on the historical accounts, primary sources, and statistical data that largely concur with the conclusion. The further study of the question under discussion may help to identify the intricate connections between government, corporations, and contemporary social trends.

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