Deregulation's demons

Surging electricity rates and faulty tires prove that Washington's role in protecting consumers is a vital necessity.

By Joe Conason
Published August 29, 2000 6:00PM (EDT)

For American consumers this millennial summer is truly the season of their discontent -- and a moment when they should realize that in the new century, government regulation is a vital necessity rather than a hoary anachronism.

That didn't always seem quite so obvious during the past decade, when a Democratic president said he agreed with a Republican Congress that "the era of big government is over." Although Bill Clinton's famous pronouncement of seemingly liberal surrender may well have been as insincere as his conservative critics suspected, it did seem to crystallize a national consensus in favor of deregulation, diminishing Federal responsibility and unleashing the private sector. So much for the "nanny state" and all those obscure alphabet agencies in Washington.

What had once been a popular mandate to protect the public didn't disappear by accident, of course. Business-funded think tanks and conservative media outlets have spent many years and many millions of dollars to discredit the distant bureaucracies of government. They portrayed agencies that defend public health and safety from corporate depredation as obstacles to economic growth and enemies of personal freedom.

While there was an element of truth in that unflattering ideological portrait, it purposefully ignored a more fundamental fact: Without government intervention, consumers are virtually defenseless against shoddy, often lethal merchandise and crooked providers of essential services. Although they are hardly the only examples to arise recently, the latest corporate scandals involving deregulated electric utilities and the Firestone/Bridgestone tire manufacturers are two very pertinent cases in point.

Electricity deregulation, instituted state-by-state as well as on the federal level over the past few years, was supposed to reduce rates by doing away with nasty local monopolies. Competition among the generators and distributors of energy would force down prices with the magic of the market, according to politicians of both parties.

The results have hardly lived up to that early publicity, however, with residential and business consumers suffering huge, sudden rate increases and brownouts at peak usage times. The "free market" in electricity turned out to be overheated, uncoordinated, inadequate, and unfriendly to customers. Accurate and objective information about pricing, the sine qua non of an efficient market, was unavailable to most consumers.

Worst of all, those same nasty monopolies reappeared in new forms, with energy companies reorganizing themselves to take advantage of loosened regulation. Some even stand accused of concocting bogus transactions to push prices upward illegitimately. In the wake of enormous price spikes, a wave of intense consumer outrage is pushing politicians toward renewed regulation. Last week, federal regulators announced a probe of the practices of prominent Southern California utility companies.

The case of the disintegrating Bridgestone/Firestone tires, which appear to have caused the deaths of 62 people and injuries to over 100, demonstrates how much worse off the nation (and the world, since these tires are sold internationally) would be if the automotive industry were not subject to regulation. Does anyone imagine that these companies would have recalled their suspected lethal products -- and eventually agreed to reimburse customers who replaced the bad tires with those made by Bridgestone/Firestone competitors -- without pressure from Washington?

Conservative ideologues and corporate lobbyists who have undermined consumer protection ever since the Reagan administration bear a measure of responsibility in this tragedy. As they love to remind us, ideas have consequences. In the investigations and lawsuits that will ensue, we are likely to learn that increased Federal scrutiny is imperative if we are to avoid hundreds more unnecessary highway fatalities.

If the left once mistakenly believed that humanity could be perfected, then the right has often been similarly deluded in its worship of markets. Markets are not perfectible; they remain subject as they have been throughout history to manipulation, concentration and coercion. Individual consumers and families are no match for corporations aggrandizing and agglomerating on a global scale -- and without strong, smart government they will stand defenseless.

Note: On Aug. 8, I wrote a brief article about leaks concerning a new grand jury convened by the Office of Independent Counsel to consider indicting President Clinton in the Monica Lewinsky case. An Associated Press story about the grand jury appeared just hours before Al Gore delivered his acceptance speech to the Democratic Convention, arousing suspicions about renewed partisan meddling by the OIC. Last week, however, Richard Cudahy-- a Federal appeals judge appointed by former President Carter-- stepped forward to take responsibility for confirming the new grand jury's existence to an Associated Press reporter.

My article noted that angry Democrats had no proof for their belief that this ill-timed leak had emanated from the OIC. And while the judge's forthright admission may not be the end of this story, the record should be clear: There is no evidence that the OIC leaked word about the new grand jury for political purposes or any other reason. The editors of Salon and I regret any implication otherwise in the story or headline.

Joe Conason

Joe Conason is the editor in chief of To find out more about Joe Conason, visit the Creators Syndicate website at

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