Deregulation: A Leap Into The Abyss

by Tom Sevigny
January 25, 2001

Someone once defined insanity as doing the same thing over and over again and expecting a different result.

If this is true, politicians have to be the most insane people in the world. Take the supposed panacea of deregulation.

Ever since the late 1970s, politicians have been touting the benefits of deregulation while they systematically removed government regulations controlling various industries.

This policy began with the transportation industries during the late 1970s and has continued ever since with financial institutions during the Reagan and Bush years right on through to the Clinton administration in the case of the telecommunications business.

The arguments for deregulation have always been the same: Removing government restrictions on the private sector would let free and open competition rule the marketplace. Getting rid of regulations would spur the growth of new companies. Existing companies would become more efficient or perish. Competition would create jobs, drive down prices and benefit consumers and businesses alike.

That's the theory. Reality is totally different. Since deregulation of the airlines in 1978, more than a dozen airline companies have merged or gone out of business, causing more than 50,000 people to lose their jobs. Since deregulation of the trucking industry in 1980, more than 100 trucking companies have gone out of business and more than 150,000 workers have lost their jobs.

Since deregulation of the savings and loan industry in 1982, about 650 thrifts have folded and taxpayers are stuck with a bailout of half a trillion dollars.

In other words, deregulation has led to merger mania, lost jobs, reduced wages for workers, increased taxes and higher costs for services. The same results are beginning to be felt in the recently deregulated telecommunications industry. Larger companies are swallowing smaller ones, and bills for cable TV and phone service have risen.

As competition becomes more and more intense, look for layoffs, decreased wages, poorer service and higher bills.

Connecticut politicians, however, must believe such logic does not pertain to the deregulation of the utility industry. We once again heard the same arguments two years ago - lower prices, the miracles of the competitive marketplace, consumer choice - despite past evidence to the contrary and warnings from various consumer groups. Instead of waiting a few years to fully analyze utility deregulation in California and other states, our legislators jumped off the deregulation bridge and, if the California deregulation debacle is any indication, they jumped right into a tidal wave.

According to Greenpeace USA adviser Harvey Wasserman, these state-by-state battles over utility deregulation have made this much clear: Although much of the environmental community saw deregulation as a way to shut down America's aging nuclear power plants - which cannot compete - they now have come to the realization that deregulation is a scam to prop up the nuclear industry while killing advances in renewable energy, conservation and pollution control.

Consumer groups, some of which saw deregulation as a path to lower rates, are now warning that deregulation will drive prices down for big industrial users but up for renters, homeowners and small businesses.

Nationally, deregulation is already creating a merger frenzy that will lead toward a utility market that U.S. Rep. Dennis Kucinich, D-Ohio, has described as a "Jurassic Park run by a few T-Rex utility giants, in which the consumer and the environment are the inevitable prey."

State legislatures are bailing out utility companies to the tune of $135 billion in bad reactor investments, plus billions more in obsolete and environmentally unsafe coal and oil burners; there has been a major impact on consumer electricity bills in California and Massachusetts.

Despite all this additional evidence, Connecticut legislators led our state toward the hell of utility restructuring singing the same old hymns from the deregulation gospel. The newest hymn was that everyone else is doing it, so Connecticut should also. When children use this line of reasoning, mothers often ask, "Would you jump off a bridge if everyone else was doing it?" I guess most of our legislators would answer yes.

Thomas J. Sevigny is co-chairman of the Green Party of Connecticut Originally published in The Hartford Courant

Further reading: California's Deregulation Disaster By Harvey Wasserman (The Nation, Feb 12, 2001)

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