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The crazy history of the phony “Era of Deregulation” meme, and the true story of the Overregulation of America...

  Contents —

Introduction. 1

EoD: Trick or Truth?. 1

Ratios of Repeal in Trump’s Era of Deregulation. 1

So What Was the Ratio of Repeal in the Original EoD?. 1

Six Possible Timespans for the Original Era of Deregulation (At Least) 1

Conclusions about the Timing of the EoD.. 1

Chapter 2 Laws and Repeals: What are they really?. 1

Many Ways to Regulate. 1

We Can’t Have Too Many Laws?. 1

Common Sense. 1

Let’s Repeal All Bank Laws Like It’s 1999!?. 1

Chapter 3 Glass-Steagall. What is it?. 1

2017 - The “Repeal” of Dodd-Frank. 1

Why Too Big to Fail 1?

Chapter 4 How Many Banks Should the U.S. Have? (Government Regulators Know the Answer) 1

The Debt Jubilee and the Separation Principle. 1

More Power for the Consumer Financial Protection Bureau (CPFB) 1

Too Many Banks or Too Big to Fail? Or What?. 1

Back to the Repeal of Dodd-Frank. 1

Too Much Regulation for You?. 1

Chapter 5  A Story of Federal Government Regulation. 1

The 8+ Voices that Government Speaks to Us In. 1  — Some of the Major Kinds of Federal Regulations. 1

Kinds of Federal Regulation: #1 Acts of Congress signed into law by Presidents. 1

Kinds of Federal Regulation #2 Presidential Executive Orders. 1

Kinds of Federal Regulation #3 Rulings by Federal Courts. 1

Kinds of Federal Regulation: #4 Taxation as Regulation. 1

Kinds of Federal Regulation: #5 Administrative State. 1

Two Bookshelves of Federal Regulations. 1

 — Regulatory Force Multipliers. 1

Regulatory Force-Multiplier #3: Centralization. 1

Regulatory Force Multiplier #7: Power to Exempt. 1

#8 Assorted Minor Force Multipliers—TIPS and TRICKS. 1

Taxation Without Representation & Taxation as Regulation. 1

Chapter 6  The EoD Deniers And the Final Quest. 1

The final quest for the EoD: No stone unturned. 1


The Left’s Evidence for the EoD.. 1

First List of Deregulations, Wikipedia. 1

The 7 Industries on the Wikipedia List amount to less than 5% of federally regulated American SoHIs. 1

The Deregulation that Did Really Happen. 1

The Era of Energy Deregulation. 1

Obama’s Era of Deregulation: a few stats. 1

Final Answer. 1

Does Deregulation Do Any Good?. 1

The Cost of Compliance. 1

The Era of Compliance: No end in sight. 1

Full Circle: Back to that one famous Repeal... Was it real?. 1

The End of Prohibition, and the Beginning of Double-Triple Mega-Super-Prohibition. 1

The 21st Amendment: Fake News?. 1

Other EoDs. 1

The American Take on the World Wide Era of Deregulation (WWEoD) 1

Buh buh but muh Sweden. 1

Big Deregulation Really Happens (in other countries) 1

Regulation and Deregulation; Liberalism and Neoliberalism.. 1

Q. Why Doesn’t Neoliberalism Work? (Because it doesn’t really happen?) 1

How Does Neoliberalism actually work in relation to Controllism? An 8 Step Program.. 1

UPDATE 2021: Horrors! Was the Dread WWEoD Back???!!! Promises Promises. 1

The Bio of the EoD Meme. 1

The Failure of the Risk Shift + EoD Meme. 1

The Success of the Risk Shift + EoD Memes. 1

The Story of the EoD Meme Brought Up to Date. 1

Overregulation?. 1

Conclusion: 1946 and 1984. 1

— About this book —... 1




From the nature of man we may be sure, that those who have power in their hands will not give it up while they can retain it. On the contrary we know they will always when they can rather increase it.

George Mason


You probably know all about that time in the U.S. when the federal government went all laissez-faire and repealed most of the regulations governing Americans, cutting away vast swathes of the red tape which bound U.S. businesses and individuals, freeing them from the control of politicians and government bureaucrats to make way for unbridled capitalism.


That was the famous “Era of Deregulation”, which happened in the 20th Century, we are told. As we will see, in the 21st Century almost all of media and academia —even writers on the right side of the political spectrum — took it for granted that the Era of Deregulation was a real period in American history (even if, as we will find, there is no agreement on when the EoD started, how long it lasted, or exactly what the ‘deregulation’ was).


SPOILER ALERT: The Era of Deregulation is itself a work of fiction. It never happened, and we can prove it. The story that this book tells is indeed about of the Era of Deregulation, but not as a real period in history, but rather as a persistent and elaborate lie. A fiction very useful to the political left. By the end of this book, we will recount the perhaps surprising story — a biography — of the birth and life of the EoD lie. But we also tell another story, about the truth. We tell the true story of what really happened to government regulation in the 20th C, and what is happening to it in 21st C. And it isn’t pretty. It is the truth about the U.S. era of Overregulation. Which really did happen and continues to happen, and it is a very scary story.


This book (a series about published by Rightful Freedom) tells the true story of the infamous Era of Deregulation (EoD).



EoD: Trick or Truth?

The more prohibitions that are imposed on people, the poorer the people become. The more laws and regulations that exist, the more thieves and brigands appear.

Lao Zi, Tao Te Ching (circa 550 BC)


“The Era of Deregulation was a time in American history when government deregulators repealed many laws, slashing most of the federal legislative red tape. And in the opinions of left-leaning journalists, historians, and government officials, the Era of Deregulation led to disastrous excesses of freedom. Or so we have been told.


In 2020, a search of the internet for the phrase “deregulation meme” found a lot of funny (or meant-to-be funny) pictures with captions at the top and bottom. Those were of course “memes”, a genre of internet joke.


In the early 21st Century, memes were being weaponized right and left. A Wired article (“Memes Are Helping People of Color Cope with the Trump Era”) told about how the alt-right, under banners of Pepe-the-Frog, himself a meme, “…took their Great Meme War to the streets, sparring bloodily with antifascists”. https://www.wired.com/story/guide-memes/


Then in 2021 a new meaning of “meme” emerged in the phrase “meme stock”, referring to crowdsourced stock trading coordinated on the internet using social media to manipulate the prices of stocks such as, most famously, GameStop. So “meme” was coming to mean a kind of internetted idea — i.e. spread spontaneously by the internet — but not the same as ‘viral’.


But it was not always so, of course. An earlier meaning of “meme” (introduced by Richard Dawkins in The Selfish Gene in 1976), although it seems that it may not have been entirely original, as it was preceded by Richard Wolfgang’s not very dissimilar idea of the ‘mneme’) was as a ‘cultural element’ which could travel from one person’s mind to another, like a sort of mental virus. That kind of “meme” (a meme itself it would seem) was taken seriously by scientists and philosophers for some time, and some scientists proposed that a human mind is really a “meme machine”. A science of memeology or memetics was established, or the attempt to do so was made. (Maybe a law or regulation itself is an example of a meme?)


The meme meme was no longer taken very seriously as a scientific idea by 2021, when Pepe the Frog and GameStop were memes, but if there really were such things as memes as a kind of mind virus, the Era of Deregulation itself may have been a classic one, predating the internet and Dawkins’ book.


According to the Era of Deregulation meme, as purveyed by the media, the EoD had a beginning, an end, and then destructive long term effects.


In 2008, the media reported the end of the EoD, for example in a Bloomberg Businessweek article “30 Year Deregulation Era Dies a Sudden Death”.

http://www.nbcnews.com/id/26774653/ns/business-stocks_and_economy/t/-year-deregulation-era-dies-sudden-death/#.W1vP3LiQzg4 Bloomberg Businessweek (However, we will find that reports of the time of death of the EoD vary.) 2008 was the beginning of the Financial Crisis, and that was not a coincidence. The time of its birth vary much more widely, as we will see.


One year further into the “Financial Crisis”—in “Against Self-Organization” published in 2009—Steven Shaviro blamed the EoD’s birth on the right-thinking economist Friedrich Hayek who “…provided the rationale for the massive deregulation, and empowerment of the financial sector, of the last thirty years—and for which we are currently paying the price.”

Steven Shaviro, Against Self-Organization (2009)  http://www.shaviro.com/Blog/?p=756


Whenever it ended, the damage done by the EoD did not stop at the 2008-2012 “Financial Crisis” though. Douglas Amy, writing in 2017 on his website governmentisgood.com asserted that, “…many of the problems we are now facing are the predictable result of this failed political philosophy.” The “failed philosophy” being the “deregulation mantra” of Republican presidents up to and including George W. Bush.


The EoD was the subject of thousands of news stories, articles, and books (mostly from 2006-2019, but some appearing even earlier) produced by the media, academia, the federal judiciary, candidates for President, and other information outlets. They all described and discussed an American Era of Deregulation, a major event, lasting decades, which, they said, happened in the 20th Century and/or early 21st in the United States (other Eras of Deregulation had been reported in other parts of the world, as we will see).


But was it true? Was there a pre-Obama, Era of Deregulation in post-New Deal, post-WWII U.S history? Say, between 1950 and 2010? So many writers said so that the Era of Deregulation became, by 2020, universally recognized as a real thing.


We will answer the question, unambiguously and unambivalently, yes or no. But while the answer will be simple, the path to it won’t. It will lead us through the U.S. government system of regulation (it will be necessary to do that to find deregulation, and you will see why), which was as of this writing one of the largest and most complicated of all the systems ever created by humans. The purpose of our journey though is not solely to find the true answer about the EoD; hopefully, the trip will be edifying in other ways as well.


The Bloomberg article said that the EoD was that time period when regulation was “a dirty word in Washington”. And, “Politicians of both parties vied to see how much of the economy they could free from the oppressive yoke of government control.” (Although the phrase “oppressive yoke of government control” was probably used sarcastically.)


Insert Image 1 here


­So, to make it clear, the Era of Deregulation meme is the idea that there was a period in U.S. history, probably beginning sometime during or after the 1960s and probably ending on or about onset of the Obama Administration. The EoD was a time when a large number of the federal laws which regulated us and our industries, businesses, and other systems of human interaction were repealed, and federal regulation in general was rolled back. Causing great societal damage, at least in the accounts of the left.


The EoD is still an important concept as of this writing, although it has slipped a bit in the national consciousness as other concepts have come to the fore. But the EoD is still alive, and in 2019 and 2020, lingering negative consequences resulting from the original pre-Trump EoD were, for example, still being used as a reason for increasing federal regulation. As the COVID epidemic of 2019-2020 brought a government lockdown and new financial crisis, memories of 2008-2010 that “financial crisis” and subsequent “Great Recession” were brought back to the national mind, and so were beliefs that the cause of that earlier crisis was the Era of Deregulation. (Less well remembered by the media were the assurances made in 2010 that vast amounts of new government financial regulation would make future financial crises impossible.)


New laws are created and sometimes extant laws are repealed. Right? During the Era of Deregulation, a lot of laws were repealed and the amount of government regulation was reduced, we are told. The EoD seems to be a very simple idea. Surely it is easy to find out if and when it really happened, you would think.


The EoD was a time when there were a lot of repeals of government regulations; in fact, there was then a net decrease of the regulatory burdens borne by Americans, as more regulations were repealed than new ones were passed. So a real EoD implies a ratio of the passage of repeals to the passage of new regulations. What was that ratio? It's a good question to ask as we begin to look for the truth about the EoD. But to answer it let’s start with some recent Deregulation History.


[2017 Enter Trump Stage Right]

Excessive regulation is a tax on the economy, costing the U.S. an average of 0.8 percent of GDP growth per year since 1980. This taxation by regulation has increased sharply in recent years, with approximately 500 new economically significant regulations created over the last eight years alone. Through a thorough review of the literature, the Council of Economic Advisers (CEA) finds that deregulation will stimulate U.S. GDP growth.

“The Growth Potential of Deregulation”, issued by the Office of the President of the United States, October 2, 2017


Soon after taking office in 2017, President Donald Trump announced an era of deregulation. President Trump declared that his new EoD would repeal two old regulations for every new one created.



Ratios of Repeal in Trump’s Era of Deregulation

Many federal regulations harm health and safety, so President Trump’s executive order requiring “agencies to revoke two regulations for every new rule they want to issue” could potentially be quite beneficial.

Hans Bader, “Trump ‘2-for-1’ Executive Order Could Save Lives”, Competitive Enterprise Institute (2017)



But Trump’s EoD was not greeted with universal acclaim.


By 2019, Gideon Rachman, was warning in a Financial Times article titled “The Trump Era Could Last 30 years” that “Reaganite” deregulation had caused the 2008 Financial Crisis and, “…that populist and nationalist parties around the world are already taking their cue from Mr Trump suggests that the cycle of emulation is already well under way.”


But fear and loathing of Trump’s EoD had begun earlier.


“The Bush years were characterized by a deregulatory binge that saw deep cuts to virtually all aspects of government” said a 2018 article in The Daily Banter titled “Trump’s Deregulatory Binge Makes the Bush Years Look Like Stalinist Russia”. In EoD lore, George W. Bush was a big-time deregulator (we will look at those claims later). But the article said Trump promised “something much, much worse.”



That same year, in the New York Magazine article “Trump Has Created Dangers We Haven’t Even Imagined Yet”, Trump’s deregulatory excesses were again said to exceed those even of the Republican presidents of the old EoD, even of those of arch-deregulator Reagan himself. “The Trump administration’s mania for reducing federal power runs so deep that it can be difficult to tell where deregulatory fervor ends and incompetence begins.”



The economist Paul Krugman had already announced in 2017 in the New York Times that there was no evidence that Trump’s “economic wonder drugs” of tax-cutting and deregulation could possibly do any good. “So why does a whole political party continue to insist that they are the answer to all problems?” he asked plaintively.



Also in 2017, the article “The Dangers of Deregulation Under Trump and Pence” published in the official organ of the National Lawyers Guild described Trump’s deregulation as “neoliberalism”. (We look in detail at the meaning and etymology of that word in book 1 of this series.) The Guild article described neoliberalism as the belief in an “…economic market based on maximized competition, free trade, elimination of tariffs, privatization of industries, and extreme deregulation.”



A ratio of 2 : 1 certainly seemed pretty “extreme”, to some people. “Deregulatory mania!!!” they cried. “Deregulatory binge!!!” The maniacal Trump’s 2-for-1 binge was roundly hated by media, academia, and trial lawyers to name but a few. But it sounded good to a lot of people on the right side of the political spectrum. And by 2019, it looked to some of them that Trump’s new EoD was a bigger success even than had been hoped.


Writing in the Washington Post, Naomi Rao, administrator of the Office of Information and Regulatory Affairs in the Office of Management and Budget, announced that in 2018 that, “Over the past two years, federal agencies have reduced regulatory costs by $23 billion and eliminated hundreds of burdensome regulations, creating opportunities for economic growth and development.”



Trump’s deregulations were recorded daily at “Tracking Deregulation in The Trump Era” on the Brookings Institution website. As of January 1, 2020, the site listed 207 Trumpian deregulations. The acts of deregulation ranged from repealing:


“Title IX Guidances on Transgender Student Rights; Education DoEd’ 10/19/2017”


to getting rid of


“Waters of the U.S. Rule (WOTUS) Environmental; EPA, DoD; 12/30/2019”.




But the Brookings Institution website did not compare those deregulations to the number of new federal regulations created during that same time period. What was the Trump’s ratio of repeals to new regulations? Had he really fulfilled his “2 : 1” promise?


The Washington Examiner reported in 2019, “...when Donald Trump in 2016 pledged to kill two Obama-era regulations for every new one, crowds went wild… And now as he opens his reelection campaign, Russ Vought, acting budget office director, has delivered the results sure to win even more rally cheers. ‘We’ve hit 13 to 1,’…”



But not everyone agreed either about the ratio or that what was going on was a good thing.


“... [Trump’s] henchmen have enacted a whole series of game changing initiatives in the area of federal regulation,” said one 2019 article. And they did not mean the word “henchmen” in a nice way. The title of the article was, “Trump Is Deregulating the Nation Toward Disaster”. In the Washington Post that year an article titled, “The White House Touts Trump’s Deregulation. It’s Actually Been a Bust”, called the EoD “an outright fraud” and claimed that government bureaucracy had increased under Trump. We will see that confusion and disagreement about how much, if any, real deregulation had happened in Trump’s EoD were nothing new. Far from it. Such controversy had characterized the original EoD, too.




So What Was the Ratio of Repeal in the Original EoD?

Discussions about Trump’s EoD ratio raise a good question for us in our search for the first EoD: If Trump’s EoD ratio was 2 : 1, what was the Repeal : Regulation ratio in the original Era of Deregulation? I.e. How many regulations were repealed per new regulation for the original EoD to qualify it as an era of deregulation?

1 : 1?

2 : 1? 

3 : 1?

10 : 1? 


If as many as ten regulations were repealed per new regulation in the EoD, that would explain why writers described it as a massive change in the way that the U.S. government worked, a sweeping removal of so much regulation that, for a time, America was plunged back into Laissez-faire “Wild West” of the “Robber Barons”, as we will see.


Regarding the Repeal : Regulation ratio:

Back in 2010, at the beginning of the Obama years, a law was proposed in Congress which mandated a 1:1 ratio of new regulations to repeals of old ones. I.e. the creation of one new regulation would require the repeal of one old regulation. It was called “Pay as you Go”. However, mandating a 1:1 deregulation-to-new-regulation ratio would not technically constitute an Era of Deregulation though, since it would not have resulted in net deregulation. But it’s hypothetical anyway, since the bill did not become law. However, soon a federal order was created which mandated an across-the-board Era of Deregulation, requiring all federal government agencies to repeal large numbers of federal rules and regulations. So was 2010 the beginning of the original EoD?


No, of course not (we will return to the Pay-as-You go and the proposed 2010 EoD later). Almost all writers set the beginning the original Era of Deregulation at a much earlier time. And indeed, talk of an era of deregulation began to appear in the media and even in the writings of federal judges long before 2010, as we will see.


Was there a certain ratio of Repeal : New Regulation in the original, classic EoD? Or does the term “The Era of Deregulation” just mean a timespan when a great many important regulations were repealed, i.e. a time when, even though there was not an official ratio, there was a significant net loss of regulation? If so, what were those big important deregulations, and did their repeal really result in a net lightening of the regulatory burden on Americans? For we can be absolutely certain that, by looking at federal records, there never was a time period in Post WWII U.S. history when the federal government stopped creating new regulations entirely, even for a month or a week.



How Many Regulations were created during the original EoD and when, and how many were repealed?

There are several useful methods for evaluating the extent of U.S. regulations... several metrics for gauging government regulatory activity indicate an increase since 1975. This includes the number of pages in the Federal Register and in the Code of Federal Regulations (CFR)...  While the number of pages is not a perfect proxy for the extent of regulation, it provides a straightforward indicator of the restraints facing U.S. consumers and businesses... In 2016, there were approximately 45,000 more pages in the Federal Register than 40 years prior, an increase of about 90 percent...

“The Growth Potential of Deregulation”, issued by the Office of the President of the United States, October 2, 2017


Sometimes writings about the EoD seem to raise questions but provide little information to answer them. A great many new regulations were created in every year of post-1910 U.S. history. So the federal government never stopped creating lots of new regulations, even during the “Era of Deregulation”. But, as the epigraph says, “...the number of pages is not a perfect proxy for the extent of regulation...” Then what is? Where is the answer to a question such as, ‘How many regulations did the federal government create in this or that period of time?’


Unfortunately, such questions have no simple answers; there are many different ways to measure amounts of regulation (and that will turn out to be an understatement). But how can we find the EoD by finding the relative amount of deregulation among the decades of increased regulation if we cannot measure amounts of regulation?


Maybe before trying to get a handle on how many regulations were passed in the EoD, we should look at what writers say about the when the EoD happened. Exactly what period of time are the people who propagate the Era of Deregulation meme talking about? When do they say that the pre-Trump ‘Classical Era of Deregulation’ began? And how long did it last?


It would also be important to know which of our industries and other systems were deregulated in the EoD. And what were the effects of the original EoD on Americans? Knowing which of our systems of interaction were deregulated and what the effects of deregulation were would help us to find the real EoD. As for effects of the EoD, many people blamed the EoD for the Financial Crisis of 2008 and the subsequent Great Recession. If they were right, hadn’t Trump’s EoD 2.0 probably contributed somewhat to the economic crisis of 2020? These would seem to be important questions. What are the answers?



So When Exactly Did the EoD Happen?

The by-then-disgraced Democrat politician Eliot Spitzer said in a speech at MIT in 2011 that the EoD was an age of “anti-government venom” which had lasted for the previous 30 years.

Peter Dizikes, “In MIT Talk, Eliot Spitzer Defends Role of Government in Regulating Markets, Claims Economy Still ‘On the Precipice’ Of Deep Problems.” MIT News Office (2011)


A 2008 Washington Post article titled “Wave Goodbye to the Invisible Hand” said that, “…the past 25 years, the United States has put its faith in open, unregulated and lightly taxed markets” but that era had come to an end.



In 2009, the watchdogs at consumerwatchdog.com said that, “For a generation, regulation has been a dirty word in politics unless it had the prefix ‘de-’ attached to it...”

Consumer Watchdog (2009) https://www.consumerwatchdog.org/blog/era-deregulation-finally-over


So all these writers said that the post-2007 “Financial Crisis” was bringing an end to the EoD, and they roughly agreed on a duration of 25-30 years (i.e. a generation) for it. And previously, we quoted Steven Shaviro saying in 2009, “Hayek provided the rationale for the massive deregulation, and empowerment of the financial sector, of the last thirty years...”


So these authorities placed the dawn of the Era of Deregulation sometime around the inauguration of President Ronald Reagan in 1981. And that was still being stated as fact by the media in 2021.


In that year, an article in a British publication telling its readers that Americans had too much individualism used as evidence for that claim the existence of a forty year EoD which began with the presidency of Reagan. The writer quoted Ronald Reagan saying, “The nine most terrifying words in the English language are: ‘I’m from the government and I’m here to help.” Then the authors wrote that those words were “…the opening salvo to a 40-year assault on public-sector institutions carried out under the banner of liberty and supposed self-reliance. Reagan gutted administrative agencies... elected leaders pared back agencies’ powers and accepted the sentiment that the default government action was inaction.”


Scott Galloway "Recasting American Individualism and Institutions: America’s Conceptions of Freedom and Government Have Become Distorted, to Revitalise the Country, They Need to Be Revised" The Economist (2021)



However, not everyone agreed that Reagan’s presidency launched the real EoD. For example, Matt Welch, in a 2018 article in Reason article which was reprinted in the LA Times, responded to Democrat critics of Trump's new EoD by asserting out that the original Era of Deregulation was begun not by Reagan Conservatives in the 1980s but by Jimmy Carter Democrats in the 1970s "...at the dawn of the deregulation era..."



And there were other claims about what the correct dates for the EoD were.



Six Possible Timespans for the Original Era of Deregulation (At Least)

For most of U.S. history, the federal government exercised little regulatory control of American businesses. The Interstate Commerce clause of the Constitution was interpreted as precluding any regulation of said businesses, but only of real interstate commerce. So, outside of some regulation of banking following the Civil War—which had badly messed up the financial systems—the first Interstate Commerce Act of 1887 and the Sherman Act of 1890 were the federal government regulators’ first baby-steps toward broad regulation of American businesses. These acts happened at the dawn of the Progressive Era which, along with the subsequent New Deal and the following massive wave of government regulation, eventually brought not only almost all businesses and business transactions under the control of federal regulators, but most of our other systems of human interaction as well, as we will see.


But when did the Era of Deregulation begin reversing that trend of growing federal regulation?


As of 2020, the Wikipedia article on the subject of Deregulation said that it was, “the repeal of governmental regulation of the economy”, and that the EoD began in the U.S. in 1970:

Deregulation 1970-2000 The first comprehensive proposal to deregulate a major industry in the United States, transportation, originated in the Richard Nixon Administration and was forwarded to Congress in late 1971... After Nixon left office, the Gerald Ford presidency, with the allied interests, secured passage of the first significant change in regulatory policy in a pro-competitive direction...



So both Wikipedia and the libertarian Reason magazine said that the EoD started in the 1970s. But maybe it was really slightly earlier, in 1969. Some people thought so.



Nixon 1969 - 1974

The 2008 article “It’s the Deregulation, Stupid” in the left-leaning Mother Jones magazine agreed that, “Democrats from Carter to Clinton helped roll back the government’s regulatory power,” but said the EoD actually started before Carter. “Deregulation has been the mantra on both sides of the aisle since the late 1960s.”



The Nixon administration is sometimes used as a starting point for the EoD. But to many historically knowledgeable readers, this would seem like a pretty hard sell, given that Nixon was accounted by many to have been a big-time big-government regulator. His was the “Imperial Presidency”. He decreed wage and price controls, proposed a plan for population control in the U.S., and lots more seemingly extreme regulatory initiatives, including many which might look more at home in the history of Communist China or the USSR than in the United States. Nixon was the president who permanently took the dollar off the gold standard and made it a purely fiat currency, vastly increasing the power of the Fed and the Treasury Department. A seminal article in the Los Angeles Times in 2004, which played a role in the story of the EoD meme, favorably compared Nixon to FDR, when writing about laudable big government regulation initiatives which happened, “...from the New Deal programs of the 1930s through President Nixon’s push for national health insurance and expanded unemployment benefits.”

But not much if any big deregulation seems to have happened during the Nixon era, as we will see.


So if it was not Nixon who inaugurated the original EoD, maybe it was indeed President Jimmy Carter?



Carter 1977

An article in the Los Angeles Times in 2004 (which played a seminal role in the story of the EoD Meme) favorably compared Nixon to FDR, when writing about laudable big government regulatory initiatives “...from the New Deal programs of the 1930s through President Nixon’s push for national health insurance and expanded unemployment benefits.”




An early (1987) CQ Researcher article about the “Age of Deregulation” said that it was “…swept in on a wave of political sentiment in the late 1970s and early 1980s...”



And there was Carter himself who, like Trump would, had indeed upon his inauguration officially declared and era of deregulation.


...there is a limit to the role and the function of government. Government cannot solve our problems, it can’t set our goals, it cannot define our vision. Government cannot eliminate poverty or provide a bountiful economy or reduce inflation or save our cities or cure illiteracy or provide energy... We’ve already begun a series of reorganization plans which will be completed over a period of 3 years. We have also proposed abolishing almost 500 Federal advisory and other commissions and boards. But I know that the American people are still sick and tired of Federal paperwork and red tape. Bit by bit we are chopping down the thicket of unnecessary Federal regulations by which Government too often interferes in our personal lives and our personal business.

President Jimmy Carter, State of the Union Address (1978) https://www.presidency.ucsb.edu/documents/the-state-the-union-address-delivered-before-joint-session-the-congress-1


Carter was a Democrat and was only President for four years, so it might seem that not a whole lot of real deregulation was probably done in his term. He may have declared a Carter Three Year EoD, but actual federal deregulation in the Carter administration turns out to be hard to find. (But it will not be hard to find a lot of regulation.)


Carter announced getting rid of the wage-price and allocation control that Nixon had instituted, but only on oil. And to offset that one act of deregulation of oil, Carter created a whole new kind of tax on oil. (And although Carter announced it, it was Reagan who actually removed the price and allocation controls on oil.) Carter is given some credit for “deregulating the airlines”, but this was a giant exaggeration if there was any truth in it at all, as we will see. And Carter used antitrust regulation to break up AT&T, but as we will again see, antitrust regulation is really regulation, not deregulation.


All in all, the reports of the death of a great many regulations at the hands of Jimmy Carter seem to be greatly exaggerated. It will turn out though that Carter really did deregulate beer to some extent—creating the foundations for the craft beer industry (it may not have been a coincidence that among the first Americans to profit was Carter’s brother, the maker of “Billy Beer”, founded the 1970s’ — and it will turn out that there is another side to the story of beer deregulation). That was probably Carter’s only lasting, impactful deregulation, because the craft beer industry still existed at the time of this writing. Carter’s other few deregulations have since been repealed and the regulations reinstated, a thing which happens often.


But Jimmy Carter in his four years did manage to come up with many big regulatory government initiatives, including a sweeping new National Energy Act, using the Council on Wage and Price Stability to control wages and prices, an early government intervention in American health care by instituting a universal National Health Insurance (NHI) system, and Carter ordered the FTC to use antitrust regulation to attack cereal companies (yes Cheerios, Froot Loops, Count Chocula) charging that there were “too many brands” of ready-to-eat breakfast cereals. And Carter single-handedly limited the speed of all the roads in the whole nation to 55 miles per hour in one stroke, prompting a song by Van Halen. These were, in spite of Carter’s promises, not exactly the acts of a deregulator.


So it seems that Carter’s time in office was no Era of Deregulation. There’s no way that anything remotely like net deregulation occurred in those four years. The opposite happened. So let’s keep looking. There are more candidates for the beginning of the EoD.



Carter-Reagan 1977-1989

The era of deregulation… has enabled us to vastly expand our economic boundaries. Republicans like to point to the failures of the Carter Administration and then claim that Ronald Reagan brought us into the present era. Alas, while I prefer Reagan to Carter ... many of the important initiatives that enabled those boundaries to expand came from Carter’s presidency.

William L. Anderson, “Rethinking Carter”, Von Mises Institute (2000)



Eighteen years after that was written, writers were still crediting Presidents Carter and Reagan for being, as the Forbes article “Documenting Deregulation” put it, “…important players in the era of deregulation in the 1970s and 1980s...”



But writers giving credit (or blame) to Carter for starting in motion the deregulation which Reagan would put in high gear are a small minority. As we said, Carter was a Democrat, the party not often associated with decreasing government regulation, and for much of his four-year term he was preoccupied with the Iran Hostage Crisis, a situation which neither regulation nor deregulation could resolve. But it is worth noting that Alfred E. Kahn, considered by many to have been a champion of deregulation and whose work and career we will refer to later, was a Carter appointee. But Carter himself was no deregulator. In reality, Carter began his presidency announcing an Era of Deregulation, and then spent the rest of his single term delivering the opposite.


Reagan 1981 - 1989 

Reagan transformed generations of criticism against the abuses of “big business,” which had produced regulatory reforms, His administration’s deregulation policies led to the savings and loan disasters of the late 1980s. The administration of George H. W. Bush continued these policies...

Norman Markowitz, “Time to End Deregulation” Ohio State University (2002)



An article published by the History Department of Ohio State University announcing “Time to End Deregulation” was not reluctant to give Reagan the sole blame for starting the EoD. He ushered in “…a generation of criticism against “big government.” And “His administration’s deregulation policies led to the savings and loan disasters of the late 1980s. The administration of George H. W. Bush continued these policies...”

Norman Markowitz, “Time to End Deregulation” Origins: Current Events in Historical Perspective-- Ohio State University (2002) https://origins.osu.edu/history-news/time-end-deregulation



And the economist Paul Krugman titled his 2009 New York Times article about the EoD and the Financial Crisis, “Reagan Did It”.



While giving the ideological credit to Milton Friedman (as others had credited Hayek) another 2008 New York blamed the EoD and Financial Crisis on Reagan who had, “…entered the White House, elevating Mr. Friedman’s laissez-faire ideals into a veritable set of commandments. Taxes were cut, regulations slashed…”

Peter S. Goodman, “A Fresh Look at the Apostle of Free Markets”, New York Times (2008)



While many writers say the Reagan presidency began the Era of Deregulation, other writers say the years of the Reagan presidency were the EoD. But not so fast: Some writers said that Reagan’s election 1980 may have been the end of an EoD:

“...the deregulation movement was a special case-a one-shot response to the peculiar macroeconomic and political conditions of the late 1970s... [1980] saw the end rather than the beginning of de jure deregulation…” wrote Sam Peltzman in “The Economic Theory of Regulation after a Decade of Deregulation”, University of Chicago (1989) 



Deregulation ended when Reagan was elected? Finding the timing of the EoD seems to be getting weird. But if it happened it must have been at some time; the quotes about it came from the left, the right, and in between. Maybe Bill Clinton did it? Some people said so.



Clinton 1993 - 2001 

Bill Black, in a 2017 article blaming the “Low Rate of Unionization” on deregulation, asserted that, “the Clintons and the Gores and the Larry Summers of the world, promised us that their deregulation, that their hostility to unions, was going to lead to dramatic increases in productivity…”



A 2009 Time Magazine article titled “25 People to Blame for the Financial Crisis: Blameworthy Bill Clinton” said that “…Clinton’s tenure was characterized by economic prosperity and financial deregulation, which in many ways set the stage for the excesses of recent years.” http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877322,00.html


Clinton? Deregulator? Charges of deregulation against William Jefferson Clinton are mostly based on his repeal of Glass-Steagall (too much more about that later) an apparent act of deregulation which was considered by many to be the cornerstone of the Era of Deregulation. There are many, many problems with this thought, including that the act which seemed to have repealed Glass-Steagall was passed by Congressional Republicans and Clinton, he was later to say, did not want to sign it. But at least some EoD theorists seem to have considered Clinton and the “New Democrats” to have been big-time deregulators. More so even than Reagan. However, the idea that Clinton was a deregulator would seem to many people to be preposterous. Not only was he a Democrat, but he was far from reluctant to create new regulations by issuing Executive Orders and in every other possible way.


A 1998 New York Times article described how Clinton was going to use executive orders to single-handedly create vast new swathes of federal regulation, “…Mr. Clinton plans to issue a series of executive orders to demonstrate that he can still be effective. ‘Stroke of the pen… Law of the land. Kind of cool.’’



In further acts of big regulation: Clinton famously gave his wife the job of coming up with a plan to nationalize the whole U.S. healthcare system, while he himself was busy with other massive new government regulation programs, including The Digital Millennium Copyright Act, many efforts toward economic globalization, and the beginning of the massive empowerment of government to control the environment, to name but a few. That Bill Clinton’s years in office saw the creation of huge amounts of new regulation is beyond dispute. But as we will see it is hard to find any real deregulation in his time in office. Except, of course, for the infamous repeal of Glass-Steagall. But that repeal will turn out to be problematic, at best, to say the least.



G.W. Bush 2001 - 2009

Although we saw above that some writers implicated George H. W. Bush, as Reagan’s successor, in the EoD, many more blamed G.W. Bush for it. For example, the Time magazine article on who was to blame for the financial crisis made the younger Bush the most “blameworthy” of all presidents saying, “From the start, Bush embraced a governing philosophy of deregulation...”



So did Obama:

...instead of establishing a 21st century regulatory framework, we [in the Bush Administration] simply dismantled the old one... In doing so we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.



And again:

When it comes to the economy – when it comes to the central issue of this election – the plain truth is that John McCain has stood with this president [Bush] every step of the way. Voting for the Bush tax cuts for the wealthy that he once opposed. Voting for the Bush budgets that spent us into debt. Calling for less regulation 21 times just this year.



Above we quoted the author of the website Government is Good writing that, “‘Deregulation’ was the mantra of President George W. Bush...” Barack Obama frequently referred to the eight years which preceded his first presidential campaign and election — i.e. the Bush administration — as being the era of deregulation, when the whole “regulatory framework” of the federal government was “dismantled”. No wonder Obama himself had to create so many thousands of new regulations after he was elected, he was virtually starting over from scratch! It seems unlikely though that the years of the G.W Bush administration—2001 to 2009—could really be the whole of the Era of Deregulation, because that would leave out the Reagan years, the infamous repeal of Glass-Steagall, and many other events traditionally associated with the EoD.



Conclusions about the Timing of the EoD

The point of all this is that, despite the EoD being considered a real and really important historical event, there seems to be no agreement on when it was. Not even close. The Era of Deregulation may have begun in the Nixon administration, when Ronald Reagan became president, or maybe as late as 2001 when George W. Bush took office. Or it may have begun when President Jimmy Carter took office. It may have lasted as long as four decades (Nixon through G.W. Bush, but perhaps excluding the Ford and Carter years, or not) or as few as eight years (i.e. the two G.W. Bush terms in office, according to Obama et al). The most common timespans are 25 or 30 years preceding the 2008 financial crisis, or the 40 years from Nixon to the election of Obama (as Wikipedia had it). If the Era of Deregulation really lasted a whole forty years, and you add in the Trump Era of Deregulation, it might seem surprising that as of this writing we have any government regulation left. But we do.



Our Search for the Era Continues (How can we give up now?)

If the writers about the EoD do not agree on when it happened, nothing is stopping us from looking for it ourselves. It should not be too hard to find. It was that time when vast swaths of our important federal regulations were repealed and relatively few new ones were being added. Then we when find it we can answer questions about the ratio of repeals to new regulations, and resolve many other EoD-related issues.


So how do we find the repeals which comprise the EoD? The federal government must have kept a record of them. You would think.



Chapter 2 Laws and Repeals: What are they really?

How to repeal a law? Pass another law.

The number of regulations issued each year includes both new regulations as well as deregulatory actions. Under the APA [Administrative Procedure Act], a “rulemaking” is defined as “the agency process for formulating, amending, or repealing a rule,” which means that agencies must undertake a regulatory action whenever they are issuing a new rule, changing an existing rule, or eliminating a rule.

Maeve P. Carey, “Counting Regulations: An Overview of Rulemaking, Types of Federal Regulations, and Pages in the Federal Register”, Federal Research Service (2016) 



The government does indeed keep records of repeals of laws, but those records can be confusing. Because, for one thing, the repeal of a law was usually a law. Legislatures usually repealed laws by passing a new law to sort of overwrite the old one, without erasing it. Forming a sort of stack of regulations. A famous example is the repeal of the federal prohibition of alcoholic beverages. Probably the most famous act of deregulation in American history.


The 18th Amendment to the U.S. Constitution, taking effect in 1920, made those drinks illegal. But the law could not be repealed by striking it out or erasing it. Another Amendment was required to make drinking alcohol legal again. The famous Repeal of Prohibition did not of course happen in the Era of Deregulation which we are interested in. By the time of our EoD, legalities were getting more complicated than they were back in 1920. Nowadays, regulations are sometimes created, then repealed, then reinstated. This actually happens quite a bit—we will look at some examples later. And this obviously can make finding actual repeals of laws pretty difficult. If you do find a repeal of a law, how do you know whether or not it was reinstated later by another law? And there are other reasons why it’s hard to find real, permanent repeals.



The 18th Amendment to the Constitution, ratified in 1919, alcoholic beverages made illegal

Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all the territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.


The 21st Amendment, ratified in 1933, alcoholic beverages made legal again

Section 1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed.

Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.


So that repeal was relatively straightforward.


But almost no federal legislation was really straightforward or simple. In reality, the prohibition of alcoholic beverages, established by the 18th Amendment, had been put into effect by the Volstead Act and numerous other laws at the federal and other levels of government. The 18th Amendment just made the Volstead Act and the other prohibitory laws legal, it seems. (More about this somewhat confusing state of affairs later.)


In 1933, the 21st Amendment ended prohibition and voided the Volstead Act. However, 1933 was also the era of the New Deal wave of massive federal regulation, and the federal government did not really abandon its control of alcoholic beverages. Not by a long shot. In 1935 federal regulators created and manned the Federal Alcohol Administration, which still exists, and federal regulation of alcohol increased greatly thereafter and came to include the Alcohol and Tobacco Tax and Trade Bureau, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, among many others. More about that later, also. The repeal of Prohibition may have been an act of deregulation, but it was used to create thousands of new regulations.



Many Ways to Regulate

In 2020, many Americans seemed to be under the impression that they got new federal regulations when laws were passed by elected representatives in Congress, and then the bills became “Acts of Law” when the President signed them. But this scenario describes the creation of only one kind of federal regulation, and a relatively small kind. In 2020, there were many other kinds of federal regulation. The few hundred new laws passed by Congress each year—as consequential and often massive as they were —were only the tip of the huge federal regulatory iceberg.


How “huge” were those Congressional laws? We will look in some depth at the story of the passage, repeal, re-passage, and re-repeal of the law called Glass-Steagall. As we will see, Glass-Steagall was (allegedly) repealed by Congress, by passing a new law on top of it (a law called Gramm-Leach-Bliley), but then later Glass-Steagall was re-installed in a law called Dodd-Frank. (Although it will turn out that none of this is actually true.) The massive Dodd-Frank alone amounted over 27,000 pages of regulation (although, as with so many things about federal regulation, it is hard to count, because it keeps changing, as we will see). Dodd-Frank is longer than 17 copies of War and Peace. Unrepealing Glass-Steagall was only one relatively tiny thing Dodd-Frank did (or seemed to do). Mostly, Dodd-Frank consisted of a gigantic amount of new federal regulation.


If we still want to know what the real Ratio of Deregulation to Regulation was in the classical EoD (or in Trump’s EoD 2.0 for that matter), it would seem that we have no choice but to try to better understand exactly what a law is and exactly what a repeal is. Explanations for those things can be found, but they aren’t pretty.



What was the ratio of laws passed to laws repealed?’

There have been 88,899 federal rules and regulations since 1995 through December 2016... but “only” 4,312 laws...

Clyde Wayne Crews Jr. “How Many Rules and Regulations Do Federal Agencies Issue?” Forbes (Aug 15, 2017)



As we said, before we can really answer important questions about the EoD, we need to make clear what federal regulations, laws, and repeals really are. One problem with answering the question about the ratio of repeals to new regulations was summarized by Adam Nyhan (then an attorney at Opticliff Law in Portland ME, https://opticliff.com/ , in 2020 at Perkins Thompson, also in Maine https://www.perkinsthompson.com/ ) in a relatively concise little comment to a 2014 article on Quora, which asks the deceptively simple question, “What is the ratio of laws created to laws repealed?” https://www.quora.com/What-is-the-ratio-of-laws-created-to-laws-repealed


Lawyer Nyhan said that ‘passing a law’ and ‘repealing a law’ do not mean what people think. “When Congress passes a law, sometimes it is adding a brand new section or sub-section to a Title that never had the section before, but more often it was simply amending a piece of text that already existed.” And a new law typically amends, adds on, and even deletes dozens of things at one time. A real “bill” is a long list of changes to a law.


Lawyer Nyhan gave some examples of what the subsections look like on paper, and then asked, “Can you see why counting the number of ‘laws passed’ is a meaningless exercise?” He was right. But if we can’t count laws, how can we count the ratio of laws to repeals?


One more relevant bit of thought from lawyer Nyhan’s answer in Quora was about the “weight” of government regulation on Americans, and the issue of whether America was, in 2014, suffering the effects of an earlier Era of Deregulation. Lawyer Nyhan said: “There is a widespread belief in America that we live under ‘too many laws,’” as if you could weigh our regulatory burden by counting laws. It does not work that way,” he said.


That was an understatement, as we will see. But while it will turns out to be without doubt true that the regulatory burden on Americans in 2020 could not be measured by counting, is it also true that we cannot say that we had “too many laws” because we cannot count them? And so no amount of laws could be too many? James Madison was of a different mind.



We Can’t Have Too Many Laws?

It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood...

James Madison, The Federalist #62 (1788)


The federal government created “88,899 federal rules and regulations since 1995 through December 2016... [and] 4,312 laws...” That’s pretty “voluminous”. Had the American citizens—who were obliged to obey all of those regulations—read them all? Was it humanly possible? One law, as we said, was 27,000 pages long, and it wasn’t necessarily the biggest one.


Try this homework assignment on the amount of regulation that burdened Americans in 2020:

This evening, before you go to bed, try reading all the laws passed by Congress, and when you are done, also read all the rules and regulations in the Federal Register. But before you begin, keep in mind that by the end of 2017 the Federal Register alone was 186,374 pages long. (Thousands of pages per year are added the Federal Register was 71,224 pages long in 1957, before the Era of Deregulation).



And the regulations won’t be light reading. Much of the Federal Register is written in such a way as to be essentially incomprehensible by most Americas (in spite of the numerous ‘plain language orders’ issued by various presidents as regulations, discussed in book 3 of this series).


But the Federal Register did not include all the federal regulations, nowhere near all of them in fact. Probably not even half of them.


Anyway, even if it existed, we cannot find that time when repeals outnumbered new regulations if neither repeals nor regulations can actually be numbered.


Then what can we find?



What’s the Point?

Forget counting laws; the Congressional Research Service cannot even count the current number of federal crimes. The American Bar Association said that there were more than 3,300 separate criminal offenses on the books in 1998. Over 40 percent of these laws have been enacted just in the previous 30 years. These crimes were, as of 2010, scattered in the over 27,000 pages of the 50 titles of the United States Code, according to the book One Nation Under Arrest: How Crazy Laws, Rogue Prosecutors, and Activist Judges Threaten Your Liberty edited by Paul Rosenzweig and Brian Walsh.


In 2020, as we will see below, Supreme Court Justices themselves did not claim to know—even within a thousand or ten thousand--how many federal crimes there were, let alone what they criminalized.


The point is that if we had too many laws to read, or even to count, and if reading them we could not understand them, then the federal regulation system seemed to have become in some senses unknowable by the people.


But by 2020, federal regulation was apparently not just unknowable, it was unknowable in more ways than uncountable and unreadable.


The unknowability of U.S. government regulation was the result of more than just the vast number or the unintelligibility of the laws. In 2020, most Americans thought that government regulations were laws passed by Congress. In reality, such laws—numerous as they were—comprised only a tiny proportion of the regulation of America, much of which, as we will see, was “Dark Matter” regulation, created and intentionally obscured by the unaccountable Deep State.


So, in the 21st Century, it seemed that the regulation of America was literally unknowable by the American people. It was what Madison feared and warned could happen, if and when “the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood…” But if it had happened why had it happened? Was it an 'accident'? Was it just that a process got out of control?


No, it wasn’t that. The process we are talking about—government regulation--is Control. People—government regulators—did it, consciously and intentionally, for, as we will see, reasons.


The questions answered in this book are about the “Era of Deregulation”. But in answering those questions we will find the answers to deeper questions (and we will also find deeper questions, which we answer the other books of this series and the next.)



Common Sense

So what was the reality of the system of government regulation which America had in 2020? It wasn’t what we were told it was by the media, academia, and the government regulators themselves. It wasn’t what it was supposed to be, i.e. what was promised by authors of the Federalist papers and the attendees of the Constitutional Convention. It was something different.


In this series of books we notice several times that there exist systems which we all know very well, which we know how to use and encounter every day, for example: Intelligence; language; life itself; even money. Those familiar things can be very difficult, even impossible, to define unambiguously and adequately. We will see that, as of 2020, the rule of America may have been one of those things. We all encountered it—it ruled us—and we were told by the media, academia, and the government what it was. But it wasn’t really what we were told. It was no longer the system which the Constitution was the design for.


As of 2020, America was being ruled, the body of government regulations existed (if was unknowable), and government regulation was real. But what it was exactly it was not as clear as we might have thought. But how are we supposed to know if and when there was an Era of Deregulation if regulation is not what we have been told? If it’s something different. How can we know how many regulations were repealed if repeals are regulation and regulation is not what we think it is?


We can’t. So this book is something of a joke. It tries to answer questions that are hypothetic because they are about a system which does not exist any longer, which is not at all what most Americans think it to be, a system which has been replaced by something else. But to get to the punchline you will have to read some more.



Let’s Repeal All Bank Laws Like It’s 1999!?

If we can’t find the EoD by reading the laws, or by counting them and then measuring the amount of repeal compared to the amount of new regulation, then maybe we can hunt for the EoD by looking for and at the big repeals that happened in the time period when writers say the EoD occurred.


The second (after Prohibition) most famous repeal of a federal regulation was probably the repeal of the law known as Glass-Stegall. And it happened within the time period which most writers claim was the EoD. That repeal was accomplished in the Gramm-Leach-Bliley Act, signed by President Bill Clinton in 1999. The repeal of Glass-Steagall looms large in the mainstream historical narrative about the Era of Deregulation itself, and also in the lore surrounding the 2008 Financial Crisis, the Great Recession, the wave of Dodd-Frank Era regulation, and even Trump’s EoD the 2020 financial crisis.



Chapter 3 Glass-Steagall. What is it?

This article is about four specific provisions of the Banking Act of 1933, which is also called the Glass–Steagall Act. For the earlier piece of economic legislation, see Glass–Steagall Act of 1932.

Wikipedia, Glass–Steagall legislation



Now we begin a long story which, if you choose to read it all (we will give you opportunities to skip ahead when you can’t stand anymore), will perhaps be the worst story you ever read. The story of Glass-Steagall.


Even finding the true beginnings of Glass-Steagall can be confusing. If you search the internet for it, some sources say that Glass-Steagall was part of the 1933 Banking Act, a bill passed in the New Deal to prevent bank failures such as had been happening at the time. Other sources seem to say that Glass-Steagall was the 1933 Banking Act.


In reality (or what passes for reality in discussions of federal legislation) Glass-Steagall was apparently actually enacted in 1932 and titled “An Act to Improve the Facilities of the Federal Reserve System for the Service of Commerce, Industry, & Agriculture, to Provide Means for Meeting the Needs of Member Banks in Exceptional Circumstances, & for Other Purposes”. It empowered the Fed to take more control of the banking system.


What is now called the Banking Act of 1933 was really called, in 1933, the Emergency Banking Act. That was because it was supposedly a temporary step for a one-time exigency, intended to restore public confidence in the banking system, which, as we said, had been suffering failures (in spite of the banking system having been taken over by the federal government by its enacting the Federal Reserve System in 1913, to prevent future bank failures).


The Emergency Banking Act did things like declaring a four-day national “bank holiday”, a sort of monetary cooling-off period, not a celebration. As its name implies, the Emergency Banking Act was intended to be a sort of band-aid for the economic crisis, eventually providing evidence for Milton Friedman’s famous maxim that there is nothing more permanent than a temporary government program, as we spin the never-ending tale of Glass-Steagall, which eventually will involve the 2008 Financial Crisis, the Emergency Economic Stabilization Act of 2008 (including TARP), 2010 Dodd-Frank, the “Stimulus” acts and the “Quantitative Easing” of 2012-2015, and the massive fiscal and Fed actions in the 2020 Lockdown Crisis.


Actually, before Glass-Steagall of 1932 and the Banking Act of 1933 (which came to called “Glass-Steagall”, sometimes), Congress had already passed anti-Depression acts to fix the banks, including the Reconstruction Finance Corporation Act, which was approved in Herbert Hoover's administration before the New Deal, and which provided aid for financial institutions in danger of shutting down due to the effects of the Depression (it created the Reconstruction Finance Corporation which was intended to be in effect for at most 10 years, to combat the crisis, but was still in existence twenty five years later). And the Federal Home Loan Bank Act of 1932 which had been passed to strengthen the banking system and the Fed. However, these are not considered to be parts of the famous Banking Act of 1933, it doesn’t seem. Glass-Steagall is though.


As it is understood in 2020, the expressed intent of Glass-Steagall was to separate banks into two kinds: investment banks, and the kind of banks which took deposits and made home loans.


That seems pretty simple, but it did not turn out to be so.


Looking at all the Glass-Steagall-related financial regulation we have mentioned so far, you might wonder, ‘What does Glass-Steagall have to with deregulation?’ That Glass-Steagall and its repeal are the most famous example of deregulation says a lot about whether or not there really was any deregulation in the Era of Deregulation and about the true state of government regulation in that time period. Because, for one thing, it seems that Glass-Steagall is still in existence.



The True, Stupid, Boring, Never-ending Story of Glass-Steagall Begins

Remember what lawyer Nyhan said about how hard it was to tell big, important laws from lesser ones, repeals of laws from new laws, parts of laws from whole laws, and so on. Glass-Steagall, while a big, important law itself, was, as we said, apparently a part of the bigger Banking Act of 1933 (or the Banking Act of 1933 was a part of Glass-Steagall, or whatever). And the Banking Act of 1933 was part of a much, much bigger thing: A whole era of massive tidal wave of federal regulation called “The New Deal”.


The big idea in the New Deal was that just about every system of human interaction in America would work better if the federal government controlled it. Actually this idea really was born in the earlier “Progressive Era”, and big federal control of the financial system got off to a massive start in 1913 with the creation of the Federal Reserve System, which the 1933 Banking Act would greatly increase and further empower) but it really went ballistic in the New Deal. New Dealers decided that government control of the economy in general could be much improved by more government control of banking. Lots more.


New Deal federal regulators decided that one big way to make banking better was to put an end to bank failures. This would be very beneficial because it seemed that when a bank failure happened it caused more bank failures, and then larger financial crises, and stock market crashes, and recessions, and depressions. Bank “panics” had a domino effect. Stop bank failures and you can stop depressions, that was their thinking. And preventing depressions sounded like a great idea in 1933, after the Crash of 1929 and during the “Great Depression”.



A few notes about “bank failures”:

1. Panic! Runs on banks!! It’s not a “Wonderful Life” after all!!! Kill yourself!!!! Obviously, banks could not keep enough cash on hand to pay depositors if all those depositors got scared and wanted their money now. Banks made money by lending money for things like buying houses. If they had lent the money, obviously they didn’t have it on hand.


2. The banking system was a network. Banks borrowed from and lent to other banks. This was not a small thing; banks constantly lent to and borrowed from other banks. The lending didn’t even stop after banking hours. The Fed had special Overnight Bank Funding Rate (OBFR). In 2020, the Fed was a super-bank which controlled all of the big banks U.S. in the banking system and many of the smaller ones.


3. Historically, bank failures were a bigger problem in the U.S. than elsewhere. In the post-WWI era, America was just coming out of being what might today be called a ‘developing nation’ status. “As many scholars have recognized for many years, U.S. banks were unusually vulnerable to systemic banking crises compared to banks in other countries... The United States was especially unique in its vulnerability to panics in the years between the Civil War and World War I.” Charles W. Calomiris, “Banking Fragility, United States, 1790–2009” Globalization of Finance: An Historical View (2013)


A short list of some Bank Panics, market crashes, and their recessions in the US.:  https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States 

1815 Post-war inflation panic, depression

1819 panic, bank failures, recession

1837 recession with bank failures, followed by a five-year depression

1857 bank failures, recession

1873 recession with bank failures, followed by a four-year depression

1893 recession with bank failures

1907 recession with bank failures

1910 Panic and 2 year recession following breakup of the Standard Oil

1920 Post-WWI Depression

1929 stock market crash, bank failures, followed by the “Great Depression

1973 recession, stock market crash led to a two-year stagflation recession

1986 Savings and loan crisis

2000 Market Collapse due to Dot Com bubble followed by brief recession

2008 “Financial Crisis” bank failures and “Great Recession” from 2007-2009

2020 government lockdown financial crisis and recession



The Fed “Rules” or the Fed Rules, or no Rules? 

...it is wholly legitimate, and entirely prudent, to question the infallibility of the Federal Reserve in calibrating the money supply to the needs of the economy. No other government institution had more influence over the creation of money and credit in the lead-up to the devastating 2008 global meltdown…

Judy Shelton “The Case for Monetary Regime Change” Wall Street Journal (2019)


The Federal Reserve System was technically only a quasi-part of the Federal government, while the Congress, Treasury Department, and other regulators were parts of the federal government proper. In the late 1920s, it was believed that the control of financial and economic systems by the central bank and federal government regulators had put an end to bank “panics” and other financial system breakdowns, including lengthy deep recessions. This turned out not to be the case.


About fifteen years after the Fed took control of the U.S. banking system to prevent bank failures, recessions, and depressions, the nation suffered what was at that time probably the worst episode of bank failing and economic depression in American history. Nor was that financial and economic disaster the last one. Financial crises and bad recessions kept happening, and the proposed fix was always adding more government control to the American financial systems and economic systems. This has continued to the time of this writing.


Every new emergency was the occasion for more regulation. It never seemed to occur to anyone that maybe regulation was the problem, and deregulation was worth a try. Except of course in the Era of Deregulation, if that ever really happened.



The Fix for Failed Regulation: More Regulation

...you understand the game behind the Curtain too well not to perceive the old trick of turning every contingency into a resource for accumulating force in the Government.

James Madison letter to Thomas Jefferson (1794)


So the Fed existed in 1929, but it did not quite prevent bank failures in the Great Depression (in 1930, 744 U.S. banks failed; then over 9,000 banks failed during the rest of the 1930s). In fact, many modern mainstream economists, including at the Fed, concluded that the Fed caused the Great Depression. Nor did the Fed put an end to bank failures after the Great Depression either, viz., the “financial crisis” of 2008. After each failure, crisis, and calamity, the remedy was more federal regulation and a more powerful Fed. Followed by worse bank failures and recessions.


When the Federal Reserve System was put into effect in 1913, it was intended to prevent bank failures and depressions and also tasked with keeping inflation under control. In 1914, inflation in the U.S. was 1.01%. By 1920, seven years after the Fed was founded, inflation was 15.61%. What $100 cost in 1914 money would have cost you over $2,500 in 2019 money. So if by “control inflation” was meant “greatly increase inflation” then the Fed did its job. And in fact, increasing inflation is indeed a real job of the Fed, in spite of what many people seem to believe.


Although it might seem wrong to Americans whose savings are eaten away by inflation, the Fed had indeed done its real job, which was to cause inflation. Inflation of the money was very beneficial to government in several ways. For one, it allowed the government to pay back its debts with inflated money which was worth less than the money it had borrowed.


Another benefit of inflation from the perspective of the federal government was that, by the 21st Century, inflation had made using cash for large transactions physically difficult and unwieldy. But the U.S. Department of Treasury refused to print bills of larger denominations than $100 even though inflation had turned $100 bills into what had once been $10 bills. The federal government, and in particular the FinCen federal financial police, did not like cash. Cash was too anonymous. Just as government regulators had forced communications companies to build their systems so as to allow federal government agents to listen to any phone call made by an American, so spying on credit cards and other electronic payments allowed government to know what a citizen had spent money and on and how much. Inflation reduced the ability of Americans to use cash and that served the purpose of the government regulators, if not of the American people. The treasury could have easily printed $500 bills (the Euro was introduced with a $500 Euro note) and $1000 bills to offset the effects of inflation on the currency, but they declined.



Banks, Bans, and Federal Insurance

As we said, Glass-Steagall was created in 1933 to prevent bank failures, and, essentially, its means of doing that were two:

1. Insure depositors’ money.

2. Force banks to stop “engaged principally” in “non-banking activities”, such as selling securities or insurance.


Matthew Sherman, “A Short History of Financial Deregulation in the United States”, Center for Economic and Policy Research (2009)


As we said above, Glass-Steagall was repealed in 1999.



Repeal: Real or Fake?

The astute reader may have noticed that as late as 2020 the FDIC still existed and wonder why, if Glass-Steagall was repealed in 1999, at least part if it was in effect in 2020. Was Glass-Steagall repealed in the Era of Deregulation, or not? It’s complicated. Really, really complicated.


As we have said, in the lore of the Era of Deregulation, the repeal of Glass-Steagall looms very large. In 2009, the media began blaming the repeal for the 2008 Financial Crisis. And in 2020, the repeal of Glass-Steagall was still blamed by many writers for a lot of things, such as being the trigger for the whole Era of Deregulation. But among the many problems with blaming the repeal of Glass-Steagall for anything is that it didn’t really happen.


...the GLBA [Gramm-Leach-Bliley Act] did not repeal the Glass–Steagall Act. …although it is true that the GLBA allowed some firms to engage in activities from which they had been previously restricted, all of these activities are still regulated.

Norbert Michel, “The Glass–Steagall Act: Unraveling the Myth”, Heritage (2016)



“... all of these activities are still regulated”? And the FDIC was still there 20 years after it was repealed in the EoD? So GLBA didn’t really repeal anything?


So it would seem.


To repeat what we said above, Glass-Steagall did mainly two things:

1. It insured bank customers’ deposits.

2. It restricted what kinds of activities banks could do.


Apparently essentially nothing of Glass-Steagall was really repealed (although as lawyer Nyhan might remind us, it’s really, really hard to tell for sure). It appears that in 1999 the GLBA did not repeal the Glass-Steagall restrictions on banks because they had already been repealed.


That’s right. The Glass-Steagall restrictions had already been repealed, by the Fed! Thirteen years before Clinton and Congress “repealed” Glass-Steagall in 1999, the Federal Reserve, in 1986, had already begun making big changes to Glass-Steagall just by creating new “Administrative State” rules. (We will soon see what exactly those are). So a non-government, somewhat privately owned entity (exactly who owns the Fed and how is not entirely public information; shareholders seem to include big “member” banks such as JP Morgan, Goldman Sachs, and others) had the power to repeal federal laws? Yes, by overwriting them. Which is how government repeals rules, as we know.


Much of what the Federal Reserve is and does is secret. So here is a new theory: Maybe that is what happened all those regulations which were repealed in the Era of Deregulation? The Fed overwrote them all without telling anyone? No. That is not what happened.



Regulation, then Deregulation, then Re-Regulation, then Re-Deregulation

In December of 1986, for the first time, the Federal Reserve reinterpreted the Glass-Steagall restrictions and ruled that a bank could derive up to 5 percent of gross revenues in investment banking business. This seemed to conflict with the letter of the law, but the Fed argued that since Glass-Steagall did not precisely define the meaning of “engaged principally,” the regulation was open to reinterpretation...


Above we referred to Matthew Sherman’s, “A Short History of Financial Deregulation in the United States”. It also describes how in 1986 the Fed “reinterpreted” Glass-Steagall to allow banks to engage in some investment banking activities. The Fed did this by saying that, “…since Glass-Steagall did not precisely define the meaning of ‘engaged principally,’ the regulation was open to reinterpretation...” So the Fed overwrote Glass-Steagall, repealing part of it.


But that was not the last time.


By 1996, the Fed had “reinterpreted” Glass-Steagall several times, eventually allowing banks to earn up to 25 percent of their revenues in investment banking, which was illegal, if Glass-Steagall was really a law, which supposedly it still was in 1996, before Clinton repealed it, some years after the Fed had already repealed it. But, anyway, both the Fed’s and the GLBA’s “repeals” of Glass-Steagall were later going to be unrepealed in 2010 by Dodd-Frank, which reinstated Glass-Steagall. So the “repealed” Glass-Steagall rules were indeed actually still in effect in 2016 when Norbert Michel correctly wrote in the paper quoted above saying, “...all of these activities are still regulated.” In other words, in spite of the fact that purveyors of the EoD meme use Glass-Steagall as their biggest example, apparently nothing was really permanently repealed.


We will see this over and over as we seek evidence of the repeals which supposedly comprised the EoD. But unfortunately we are not done with the absurd story of Glass-Steagall.



Glass-Steagall and the 2008 Banking System Crisis: Barney Frank Ends the EoD

It is more than a little convenient for America’s political class to have the crisis blamed on deregulation and the resulting excesses of bankers. Not only does that neatly pass the buck it also creates a justification for more regulation.

Niall Ferguson, The Great Degeneration (2013)


As the years passed and the 2008 Financial Crisis and Great Recession wound down into the slowest economic recovery in U.S. history, media reports increasingly blamed it all on deregulation in general and Glass-Steagall in particular.


Ten years ago to the day, the government reversed one of the key elements of the Depression-era banking laws…” remembered the New York Times in a 2009 article, but, “…the end of Glass-Steagall has been blamed by some for many of the problems that led to last fall’s financial crisis.”




 “...the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall…” complained U.S. News and World Report by 2012 in an article titled “Repeal of Glass-Steagall Caused the Financial Crisis”. “Without a return to something like Glass-Steagall, another greater catastrophe is just a matter of time.” https://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis


At the beginning of the Financial Crisis, government had already started blaming it on deregulation and calling for more regulation. “Frank [Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee] argued that the sentiment of de-regulation… was over” reported CFO Magazine. “Now, he explained, added regulation is necessary...” http://ww2.cfo.com/risk-compliance/2008/03/barney-frank-create-a-risk-post/


When that “added regulation” came, it would be a monster.


But let us pause here in the story, even back up a bit, and ask a perhaps obvious question: If we imagine that Glass-Steagall was really repealed by GLBA (even though apparently it wasn’t) and that the restrictions on banks were removed (even though it was done by the Fed not by GLBA) and most of Glass-Stegall—the FDIC for example—was not “repealed”, then how in the heck did the removal of some Glass-Steagall regulation of banking really cause the 2008 Financial Crisis?


The answer is that the Glass-Steagall restrictions on banking activities could not have really caused the 2008 Financial Crisis, even if they had all really been removed. And almost everyone in the know about such things knew that very well.


The repeal of portions of the Glass-Steagall Act in 1999–often cited by people who know nothing about that law–has no relevance whatsoever to the financial crisis... None of the investment banks that got into financial trouble… were affected in any way by the repeal of Glass-Steagall.

Peter J. Wallison, “Deregulation Not to Blame for Financial Woes” American Enterprise Institute (September 30, 2008) http://www.aei.org/publication/deregulation-not-to-blame-for-financial-woes/


But it wasn’t just right-leaning publications which noticed, early on, that Glass-Steagall could not have caused the financial crisis. By 2015, even former Obama Treasury Secretary Tim Geithner, in an NPR article, was saying “…the focus on Glass-Steagall is misguided… other factors were more important in causing the 2008 crisis.” https://www.npr.org/sections/thetwo-way/2015/10/14/448685233/fact-check-did-glass-steagall-cause-the-2008-financial-crisis


In one of the most influential books on finance ever written— A Random Walk Down Wall Street—economist Burton Malkiel got in what should have been the last word on what caused the mortgage bubble which triggered the 2008 financial crisis, i.e. not only was it not deregulation and the repeal of Glass-Steagall which had caused the bad mortgage loans, the true cause was government regulation. In 2012, Malkiel pointed out that most of “…the bad [mortgage] loans… were bought by government agencies or required by government regulations…” His judgment was, “…that it was not simply predatory lenders but the government itself that caused many mortgage loans to be made…”


It's hard to see how net deregulation in the years preceding the 2008 crisis could have caused it. Because in the years between 1997 and 2008 the number of financial restrictions in the Code of Federal Regulations increased, by over 17%. https://www.mercatus.org/publications/regulation/did-deregulation-cause-financial-crisis-examining-common-justification-dodd


In fact, many writers on the subjectNiall Ferguson in The Great Degeneration, John Allison in The Financial Crisis and the Free Market Cure, and othersblamed the "Financial Crisis" on increased complexity of added regulations. And with good reasons, as we will see.


In the 2105 book Monetary Central Planning and the State Richard Ebeling reported that in the five years leading up to the 2008 mortgage crash, the Federal Reserve flooded the financial markets with a huge amount of money, probably increasing the total amount by over 50 percent. And key interest rates, when adjusted for inflation, hovered around zero or even negative, arguably leading to over-lending. And, “At the same time, government-created home-insurance agencies like Fannie Mae and Freddie Mac were guaranteeing a growing number of these wobbly mortgages, with the assurance that the ‘full faith and credit’ of Uncle Sam stood behind them.” By 2008, when the federal government formally took complete control of Fannie and Freddie, the two held the guarantees for half of the $ 10 trillion American housing market.


The Community Reinvestment Act (CRA) was passed by Congress in 1977 to force banks to lend more in minority neighborhoods. The media blamed the bad loans which triggered the 2008 crisis on banks, but not only were government regulations such as the 1977 law the real cause, but by 2020 both the federal government (the Comptroller of the Currency) and the Federal Reserve were in the process of piling on more new regulations to “strengthen” the CRA to force financial institutions to make more and more bad loans. https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-63.html


So if the federal government regulators really controlled the mortgage, and had for years engaged in numerous interventionist practices to distort the system, when the housing bubble burst, who really owned it?


If, in 2020, you searched the internet using the phrase “Did the repeal of Glass-Steagall cause the 2008 financial crisis” you would have seen that almost all of the answers by historians and economists—even by government historians and economists—and even by a life-long Democrat operative such as Tim Geithner commenting on the left-leaning NPR—admitted that the 2008 financial crisis would have happened even if Glass-Steagall had not been repealed and that Glass-Steagall’s imaginary “repeal” did not and could not have caused the 2008 Financial Crisis.


Not only is the capitalist system not responsible for the latest economic crisis, but all attempts to severely hamstring or regulate the market economy only succeed in undermining the greatest engine of economic progress and prosperity known to mankind.

Richard Ebeling, Monetary Central Planning and the State (2015)


So, since Glass-Steagall had not caused the financial crisis, government regulators decided to reinstate Glass-Steagall to prevent financial crises. So to do that they passed the monstrosity called Dodd-Frank to make sure that no financial crises would happen again. (Or at least not until 2020 when the next financial crisis would happen.) Even though such regulation by government had not stopped such crises from happening in the past—after all, the federal government had been regulating banks since the Civil War—and it was clear that Glass-Steagall had nothing whatsoever to do with the financial crisis of 2008.


Now things really get interesting, if you find hundreds of thousands of pages of media fake news and new federal regulations to be interesting, and some people do.



2010: Dodd-Frank, the Repeal of the un-repeal of Glass-Steagall, and lots more

The U.S. Congress was famous for not bothering to read the regulations they created. Two years after Dodd-Frank was passed , The Economist reported that, “Hardly anyone has actually read Dodd-Frank, besides the Chinese government and our correspondent in New York...” and called Dodd-Frank, “a law that is partly unintelligible and partly unknowable”. http://www.economist.com/node/21547789



Because the 1999 repeal of Glass-Steagall had actually repealed regulations which the Fed had already repealed in 1986-96, it might seem that all Congress had to do to repeal the repeal of Glass-Steagall was to replace the original 1933 rules, put them back in effect, maybe by making the vague language (which had provided the loophole the Fed used to repeal Glass-Steagall before everyone else did) more explicit and clearer. But, of course, we know that is not what happened. What happened was one of the biggest and most complex mountains of legislation ever created on planet Earth. Dodd-Frank.


One thing in Dodd-Frank was the Consumer Financial Protection Bureau (CFPB). And it was a very big thing. “...lenders are awash in new regulations, and growing armies of rule-interpreters and enforcers…”said the Wall Street Journal. “The 2010 Dodd-Frank law... is one of the most complex pieces of legislation ever.” Kirsten Grind and Emily Glazer, “Struggles Between Bankers and Regulators”, Wall Street Journal (2016)


For one thing, Dodd-Frank created the Consumer Financial Protection Bureau. According to its website, the Consumer Financial Protection Bureau had in 2016 over 16,000 employees. It had an annual budget of over $600 million. That was about $370,000 per employee. What did they do?


“According to former Director Richard Cordray, the Bureau’s priorities are mortgages, credit cards and student loans.”



Spending over half a billion dollars per year to regulate these three systems might seem like a lot, especially since all of these systems were already regulated by numerous other federal agencies and entities, e.g. mortgages alone were regulated by the Federal Housing Finance Agency (FHFA), as established by the Housing and Economic Recovery Act of 2008 (HERA) and the Treasury Department, and by two federal characters called Fannie Mae and Freddie Mac, to name but a few.



Who Fannie and Freddie Were

As we said, Niall Ferguson, in his 2013 book The Great Degeneration, correctly assigned the blame for the financial crisis on U.S. federal government regulators. “The financial crisis that began in 2007 had its origins precisely in over-complex regulation...” he wrote; specifically, “The mortgage market was highly distorted by the ‘government-sponsored entities’ Fannie Mae and Freddie Mac.”


Fannie Mae (originally Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) were converted from Federal agencies to privately owned corporations in 1968 (to take debt off the government books) and 1989. (In 2020 you could buy their common stock, ticker symbols FNMA and FMCC.) As the U.S.’s largest lenders, their policies and regulations greatly impacted the private sector parts of the system of financing housing. In other words, Fannie and Freddie — in spite of just being sort of private corporations — already regulated much of the mortgage industry which the CFPB was created to regulate, and as of 2020 they still did.


The Federal Housing Finance Agency essentially nationalized Fannie Mae and Freddie Mac after the 2007 housing finance crisis. https://www.fhfa.gov/Conservatorship/Pages/History-of-Fannie-Mae--Freddie-Conservatorships.aspx


Then in 2018, the Senate proposed turning Fannie Mae and Freddie Mac into truly private companies. https://www.americanbanker.com/news/cheat-sheet-how-the-senate-is-going-its-own-way-on-housing-finance-reform


This was quickly countered by a move by the Treasury Department to use Fannie Mae and Freddie Mac to increase Federal regulation of the housing market.



Fannie Mae and Freddie Mac and the Treasury Department continued to regulate the home mortgages which the newer CPFB spent much of its $600 million per year to regulate.


So in spite of all this existing government regulation of mortgages (there was much more actually, for example huge Housing and Economic Recovery Act passed by Congress in 2008), Barney Frank, Christopher Dodd, and the Democrats in Congress decided that hundreds of millions of dollars more annually were needed to regulate mortgages in 2010, in the form of the Consumer Financial Protection Bureau (CFPB), created by Dodd-Frank, to unrepeal the repeal of Glass-Steagall. (It should be noted that Dodd-Frank, which would have such a massive and unrepealable effect on the American economy and financial system, was passed on a strictly partisan vote, with every Democrat voting for it. Both Dodd and Frank were Democrats.)


But if this seems literally insane, don’t worry about it. Just relax, because there is nothing that you can or will ever be able to do about it. You can’t even vote to remove from office the people who created these regulations—most of those people were Deep Administrative State bureaucrats who were never elected in the first place and so will never be up for re-election. One political party, acting alone, created an immense amount of government control over all subsequent generations of Americans, regulations which will never be repealed because, as we will see, such repeals never really happen anymore. Even if people run for office promising to do those repeals and win the elections, the repeals still never happen. The CFPB will never be repealed. Hell will be frozen at absolute zero long before that happens. But there’s more to the CFPB.


The CFPB is among the most “independent” of all the many giant federal regulatory Administrative State agencies. It is not answerable to Congress or the President or any other elected officials, let alone to citizens. The CFPB was designed by Senator Elizabeth Warren, who envisioned herself as its first director and who tried very hard to be appointed as such, and who in 2020 was one of its four directors.


The power of the director of the CFPB is in many ways literally unlimited. He or she does not have to answer to any limiting authority of any elected official. The CPFB receives its funding without any congressional oversight or limitation. One U.S. Senator described the director of the CPFB as “…essentially an unelected, unaccountable czar of an agency that can exercise enormous power over the economy.”



Ben Carson, in a Washington Times article titled “The perfect example of government overreach: the CFPB”, called the CPFB one of those “…bureaucratic machines is that once started they know no limits in usurping Americans’ liberty.” The CPFB, he wrote, “…has gone looking for problems to solve that don’t exist... Democrats in Congress still insisted on creating a new government agency with many overlapping responsibilities to those regulators already in existence...”




Complexification and the True Length of Dodd-Frank

As we said above, The Economist in 2012 described Dodd-Frank as, “...a law that is partly unintelligible and partly unknowable...” It might recall to mind James Madison’s warning, “It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood...”


‘Voluminous’? Check. Dodd-Frank regulations are tens of thousands of pages long and, as of 2020, growing.


‘Unintelligible?’ Check. Try reading some of it this evening.


Remember that The Economist also mentioned that while the American public had never read Dodd-Frank some Chinese government officials had. The article also said of Dodd-Frank, “Far from preventing abuses, complexity creates loopholes that the shrewd can abuse with impunity.” Presumably including some shrewd and incredibly diligent Chinese communists looking for ways to exploit the law. We might recall the Chinese philosopher we quoted at the beginning of this book, “The more prohibitions that are imposed on people, the poorer the people become. The more laws and regulations that exist, the more thieves and brigands appear.”


Because complicatedness.


Complexity is an important concept in this series of books. We make a distinction between complexity and complicatedness. Adding more rules to some kinds of systems makes them more complicated but not necessarily more complex. It may be counter-intuitive, but we claim that in general, self-organizing systems tend to work better as they become more complex (by the addition of more parts and rules). But most hierarchical, controlled systems (such as governments for example) get bigger — as more parts and rules are added — they become less efficient and more likely to break down, like a machine becomes more prone to breakdown as more 'moving parts' are added. Hierarchies of control — such as governments — are like machines in that way. While networks can become more efficient and robust as they grow larger.


We touch on this idea in each of the books in the series, then we try--when we look at the two kinds of chaos and at the idea of P.W. Anderson from solid matter physics that "More is Different" and many other such ideas—in the second series to see how they apply to the way that our systems of human interaction work.


Do U.S. government regulators increasingly make their regulations more complicated and write them in more abstruse language, which is essentially impossible for most Americans to understand, to intentionally allow for “loopholes that the shrewd can abuse with impunity”, and to make themselves less accountable? Is the “rule of law” a reality in America if the American people cannot really know what the law is? If most regulations are created by unelected bureaucrats who are unaccountable to the citizens, and even to Congress and the President, and who are almost impossible to remove from office for any reason?


An “independent” federal agency, such as the CFPB, takes your money as taxes, tells you what to do, and there is, in practical terms, nothing that you, as an American citizen, can really do to change that, ever. You may say, “But I can vote for people who promise that, if elected, they will do something about it. They will pass laws to repeal Dodd-Frank and eliminate the CPFB.” Such people did run for office, and they promised that, and they were elected. Now we will see what really happened then.



2017 - The “Repeal” of Dodd-Frank

To repeal the un-repeal of Glass-Steagall, the federal regulators would have to repeal Dodd-Frank. In the media, from CNN to the Wall Street Journal, stories reported the passage by Congress of the legislation which repealed Dodd-Frank.


“House votes to kill Dodd-Frank. Now what?”

The Republican controlled Congress set out to gut “….Dodd-Frank financial regulations that were put in place during the Obama administration”, said CNN in the article “House votes to kill Dodd-Frank. Now What?”. The repeal of Dodd-Frank was, “…the ‘crown jewel’ of the GOP-led regulatory reform effort.” I.e. Trump’s EoD.


On May 22, 2018 House of Representatives approved “…the most significant bipartisan revamp of financial rules since Republicans took control of government last year...” the Wall Street Journal announced upon passage of the bill to repeal Dodd-Frank “…setting off a wave of deregulatory actions by federal agencies…”



“Congress agreed on Tuesday to free thousands of small and medium-sized banks from strict rules that had been enacted as part of the 2010 Dodd-Frank law…” The New York Times covered the story in the article “Congress Approves First Big Dodd-Frank Rollback”. “…a measure they [Republicans] said would help unshackle banks—and the economy—from regulatory burdens.”



“House votes to kill Dodd-Frank. Now what?” The correct answer turned out to be, “Nothing.” Dodd-Frank was not repealed. But “Nothing” is not quite true. Dodd-Frank was actually greatly increased.


Yes, Republicans did run for office, many—including Trump—promising to repeal Dodd-Frank. And Republicans gained a majority in Congress and also won the White House, so nothing was stopping them from repealing Dodd-Frank. But the news stories of the repeal were not exactly the whole truth, it turned out. The Republicans didn’t really repeal Dodd-Frank at all. The media reports of the repeal of Dodd-Frank were extremely misleading, as we will see after we look more at what Dodd-Frank really was and did, and then at the repeal that never really happened.


To recap our odious, absurd story so far:

Glass-Stegall was passed in 1933 as part of a big load of New Deal banking control regulations.

It was repealed in 1999 in Gramm-Leach-Biley (except that it wasn’t).

Glass-Steagall was reinstated in 2010, by Dodd-Frank.

Dodd-Frank was repealed in 2017-18, by Trump and the Republican Congress (except that it wasn’t either).


Dodd-Frank did a lot more than just reinstate Glass-Steagall, of course. For example, it created the CPFB. And it created some of the new “too big to fail” policies. And it created lots more new regulation, vast amounts of it (it was impossible to really tell how much). So the ostensible repeal of Dodd-Frank was more than just re-repeal of Glass-Steagall, it would seem. But was it even that?



Too Big to Fail, for example

...after more than four years of debate, the problem of ‘too big to fail’ banks has not been solved. Indeed, despite the passage of legislation covering literally thousands of pages, it has got markedly worse.

Niall Ferguson, The Great Degeneration (2013)


In 2020, many Americans disliked the idea that big banks were considered “too big to fail”. If a bank was too big to fail, that meant that when it got itself into financial trouble it would demand tax-payer-funded bail-outs from the federal government because, well, it was too big to fail. But that was not at all how too-big-to-fail really worked.


First of all, by 2020, it was not just big banks, or even banks, which could be too big to fail; almost any financial institution could be declared by federal regulators to be “too big to fail”. As the Wall Street Journal said in the 2019 article “Limiting Too Big to Fail”,Democrats wrote the law so broadly that almost any financial firm — asset managers, mutual funds, insurers — could be tagged too big to fail.” The article complained that a problem with the, “…Dodd-Frank Act is that it prioritized bureaucratic discretion over clear and consistent rules. Congress should rewrite the law...”



And it was not the institutions themselves that claimed or asked to be designated “too big to fail”. In fact, they mostly tried as hard as they could to avoid being designated “too big to fail”. But why would they do that? It would seem that being guaranteed not to fail would be a good thing. But it wasn’t. And we will explain why.


But first, if you have not already done so, note the date of the “Limiting Too Big to Fail” article we quoted in the epigraph. It was “2019”.


How was it that the Wall Street Journal, in 2019, was recommending that Congress rewrite a ‘too big to fail’ part of Dodd-Frank when the Wall Street Journal (and the rest of the media) reported in 2018 that Dodd-Frank was repealed??!!!


Before we answer that (an answer which will turn out — shock! — to be one more part of the horror story of the birth, death, and zombie-like resurrection of—you guessed it—Glass-Steagall) let’s answer the one about why if you were a bank or other financial institution in 2018 you did not want to be designated “too big to fail”.


The prospect of maybe someday being bailed out by the government with money from taxpayers was not enticing enough to offset the terrifying side of being “too big to fail”. It was a trade-off. Damage was certain to be done to you—in the immediate future—as soon as you were officially designated too big to fail. But the possible reward was in the distant future, if it was to come at all. (After all, maybe you would never get into the position of coming close to failing.) And damage would certainly be done to you by federal regulators right away, as soon as you were declared too big to fail, because Too Big to Fail was a kind of poison pill, which gave government regulators immense powers to control you, as laid out in the thousands of pages of Dodd-Frank. Being too big to fail meant that you are going to be a lot more regulated. And regulation was the poison in the poison pill.


In other words, financial businesses would decline the enticing promise of future bailouts if it meant being more controlled by government regulators, because the former was a possibility, but the latter was a certain nightmare. Because the goal of federal regulators in creating “too big to fail” was, all along, to get more control over financial businesses. As the Wall Street Journal article said, “This was intentional. They wanted more political control over financial markets.”


“The too-big-to-fail label imposes costly bank-style capital, liquidity and other regulation,” said the WSJ article. But the article was mostly about the possibility that Trump and Republicans might rewrite a part of Dodd-Frank in 2019 (Hey, wasn’t that repealed back in 2017!?), specifically the Financial Stability Oversight Council (FSOC) part. That part created nine regulatory agency heads with immense regulatory power to control American financial businesses. But the article also points out that many people were protesting the possible rewrite of Dodd-Frank. The article concludes, “Critics are howling that this [attempt by the Trump administration to rewrite Dodd-Frank] is...”


Is what? What were they “howling” that the terrible Trump was doing?


The critics were “howling” in protest that rewriting part of Dodd-Frank was… Deregulation!


“Critics are howling that this is deregulation,” said the WSJ.


We don’t want any more of that deregulation. Not after the Era of Deregulation caused the Financial Crisis and all those other disasters. Even though it seems that finding a record of deregulation-caused disasters, or even just of deregulation, is surprisingly hard. In fact, will soon start to look impossible.



Chapter 4 How Many Banks Should the U.S. Have? (Government Regulators Know the Answer)

Imagine that you have a bank. You are the sole proprietor and owner. Called My First Bank and Trust.


You are faced often—probably daily—with decisions which will affect the success or failure of your business in the future. One of the biggest and most frequent and difficult decisions is about your growth, the future size of your bank.


Should you try to grow—by investing capital in new buildings, more advertising, hiring more people and so on, or by merging with or acquiring other banks—or instead to shrink, by divesting yourself of subsidiaries, closing branches, laying off employees, or by even by breaking yourself up into parts. The decision of which is the right course for you could make or break you. It might seem that your decision should be based on things like future economic conditions in your region, what your competitors might be planning, the shrinking or growing of your market, what it would you cost to borrow the money needed to grow, and so on. Whether to grow bigger or smaller, to centralize or break yourself up, or divest or add by buying or merging, will almost always be a difficult decision. And the success or failure of your business may hinge on what you decide.


But before you decide how big or small your bank should be, let’s digress and look at some other systems thought concepts that might affect your real future.



The Debt Jubilee and the Separation Principle

If we want a strong recovery after the coronavirus is contained, we will need mass debt forgiveness. James K. Galbraith is a leading proponent of such a jubilee.

Eric Levitz, “We’ll Need Mass Debt Forgiveness to Recover from the Coronavirus” New Yorker Magazine (2020)



Even before the novel coronavirus appeared, many American families were falling behind on student loans, auto loans, credit cards and other payments… In the past, the politically powerful financial sector has blocked a write-down. Until now, the basic ethic of most of us has been that debts must be repaid. But it is time to recognize that most debts now cannot be paid.

Michael Hudson, “A Debt Jubilee Is the Only Way to Avoid A Depression” Washington Post (2020)



In 2020, economists such as Michael Hudson, professor of economics at the University of Missouri, and other writers on the subject said that so much debt had been accumulated by businesses, individuals, and of the governments of the U.S. that it could never be paid back. So the solution was to resurrect the ancient Mesopotamian practice of a ‘Debt Jubilee’. The government would simply abolish all debts, including its own.


“…many American families were falling behind on student loans, auto loans, credit cards and other payments…” Michael Hudson wrote in a 2020 article “A Debt Jubilee Is the Only Way to Avoid A Depression”. Although he admitted that the idea that debts must be repaid had “until now” been a “basic ethic”, the time had come to get past that because debts had become too big to ever be paid.



He was not alone. The New Yorker magazine article reported that James K. Galbraith, a prominent advocate of a debt jubilee, believed that, “…we will need mass debt forgiveness” to recover after the Covid-19 pandemic.


Of course, if and when the U.S. government were to declare a Debt Jubilee, that would probably be a bad time to own bank. If all those people you lent money are not going to pay you back, you are going to be in trouble. But what does the Debt Jubilee have to do with the Separation Principle?


The concept which we, in these books, call the ‘separation principle’ was well understood by James Madison and others at the Constitutional Convention and was the reason for many of the decisions made there about the organization of the national government they were inventing. The separation principle is more than just the doctrine of the “Separation of Powers,” and was an idea at the foundation of liberty as Americans understood it. And it was also key to spontaneous organization: the way that self-organizing systems control themselves.


In a single republic, all the power surrendered by the people is submitted to the administration of a single government; and the usurpations are guarded against by a division of the government into distinct and separate departments. In the compound republic of America, the power surrendered by the people is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments. Hence a double security arises to the rights of the people. The different governments will control each other, at the same time that each will be controlled by itself.

James Madison, “The Structure of the Government Must Furnish the Proper Checks and Balances Between the Different Departments” Federalist #51 (1788)


Generally speaking, centralized monolithic systems do not self-organize. Madison also saw that the division of the American people into many ethnic, religious, and regional subgroups would be further a bulwark against the danger of oppression of individuals and minorities by a majority. Separation into decentralized parts was a good thing, good enough to protect the liberty of Americans, it was believed. This was one of the arguments for guaranteeing religious division by making a state religion illegal. Not only was the separation of church and state a good thing, but so was the existence of many separate religions.


Madison also had a premonition about some of the demands of the left, in 2020, seemed to be proposing as somewhat new solutions to new problems, such as:


• redistribution of wealth to bring about “income equality”


government using fiat money to monetize debt and for other nefarious purposes


• using printed money as bailouts to cancel the debts of corporations


• even a ‘debt jubilee’ to abolish all the debts of everyone


233 years before the events of 2020, Madison saw all of the things on the list coming, and hoped that the separation principle would keep them from becoming widespread or even universal:


A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union than a particular member of it; in the same proportion as such a malady is more likely to taint a particular county or district, than an entire State.

James Madison, Federalist #10 (1787)


Add hundreds of thousands of voluminous and unintelligible laws to the list any by 2020 every terrible thing which Madison had hoped to prevent was being enacted in gigantic amounts by the regulators who ran the U.S. government.



What to do about My First Bank and Trust

Getting back to your decision about whether to shrink or grow the size of your bank, the reality in the 21st Century U.S. was that your decision would probably have been based mostly on one question: How could you best avoid more control inflicted upon your bank in the future by the vast army of government regulators armed with hundreds of thousands of financial regulations? Because that stuff was poison.


If getting bigger meant that more government controllers would take more control of your bank (presuming that the anti-trust regulators would even give you permission to get bigger), you may have had no real choice but to stay small or get smaller. The reality was that in 2020 probably your biggest single business expense—bigger than rent, payroll, advertising, etcetera—was government control, the cost of “compliance”.


And banking is a competitive business. If you chose wrong—and you failed to avoid that high cost of extreme government regulation—and your competitors chose right and were able to avoid that cost, then they would win, and you would lose. That was why in 2020 most financial businesses were doing whatever they could to avoid the “too big to fail” poison.


Few Americans in 2020 had even a vague idea of how vast was the amount of government regulation of financial businesses and how powerful were the government controllers. One reason was that the media were not inclined to report stories about the downside of government overregulation—to them, overregulation simply did not exist. It was inconceivable that there could be too much regulation. Too much was never enough.


Much of the federal control of the financial system was intentionally kept as secret as possible, such as the Know Your Customer Department (KYC) in banks, which existed as an arm of the federal government FinCen with the purpose of spying on all citizens and reporting their financial transactions to federal law enforcement officers. The huge system of “FinCen” federal financial law enforcement and federal regulatory activities which targeted all the customers of financial institutions was a system which the federal government preferred that its subjects—the American people—not know much about. We discuss this more about that later.



More Power for the Consumer Financial Protection Bureau (CPFB)

How many banks should the U.S. have had in 2019, and how big should those banks have been? Government regulators said they knew the correct answers.


In 2019, Sen. Elizabeth Warren, D-MA (mom of the CPFB) introduced regulation to give the Consumer Financial Protection Bureau the power to prevent any mergers between any companies which offered any kinds of financial products or services to their consumers. This would have immensely increased the already immense power of the CPFB, as we will see when we discuss the antitrust powers of government regulators.



In 2020, the number of banks which America should have—and how big or small each should be—was determined not by the people who run banks, or by the banks’ customers, or by the economic conditions, or by supply and demand, but mostly by government regulators.


CPFB Director and Financial System Overlord Elizabeth Warren decided that the number of banks in the U.S. in 2020 was wrong. There were not enough, she said. What was the remedy? More government regulation. So Sen. Warren wrote the “Bank Merger Review Modernization Act”, which gave the super-powerful and unaccountable CPFB, and so Elizabeth Warren herself, the power to mandate more and smaller banks.



Too Many Banks or Too Big to Fail? Or What?

Senator Warren and her Representative co-regulator Jesús “Chuy” García (Dem., Illinois) said that that the number of banks in the U.S. had declined from over 12,000 in 1990 to less than 5,000 in 2020, and that was not enough. So government regulators needed to have more power to control and increase the number of banks so they could decree the right amount.


Were Warren’s new bank regulatory powers really needed in 2020? Quite a bit of regulation already in effect. Her law would be one more added to a long, long list of federal regulations going back to the Banking Act of 1933 (which included Glass-Steagall, of course) and the Bank Holding Company Act of 1956, the Bank Merger Act of 1960, and many, many more (you couldn’t really count them all, of course). All this control gave government the power to regulate bank mergers before Senator Warrens’ new bill gave CPFB regulators the power to do that, too. And the “private” Federal Reserve also had the power deny mergers by member banks. The federal Comptroller of the Currency, among its many other regulatory powers, also granted or withheld permission for bank branch applications and bank mergers. When it came to control and regulation, it seems that the policy of the federal government was: Too much is never even close to being enough.


But was it true, in the first place, that there really were not enough banks in the U.S. in 2020? If you were one of the people who lived in America at that time you may not have noticed a shortage. No one did, it seems, except federal regulators.


According to a Wall Street Journal article on Warren’s Bank Merger Review Modernization Act, Canada has 37 domestic commercial banks, which was about one bank per million people in 2020. The U.S. had more than 4,500 banks. That’s 14 banks per million people. So If the U.S. had the same number of banks per person as did our neighbor to the north, we would have had only 327 U.S. banks, instead of 4,500. And yet Elizabeth Warren, using her regulatory superpowers was able to realize that the U.S. did not have enough banks.



Of course, it is possible that Elizabeth Warren did not really know, or did not really care, whether there were too many or too few banks in the U.S. She may have had more important things to think about. It is possible that she just wanted her CPFB to have the power to control all mergers of all financial institutions (most of which are not even banks). She may have really liked the idea of having control of any and all mergers in which either of the merging companies sold any kind of financial service. That was a huge number of companies, all of which would have to ask Elizabeth Warren’s permission to merge or to acquire each other. That was a lot of political power, to give to one politician and to add to an agency which was totally unaccountable.


One more thing regarding the size and number of banks: It was claimed by some writers that the cause of the 2008 Financial Crisis was banking; banks were uncontrolled and had merged into banks that were too big, it was said. So how did the federal government controllers “fix” the 2008 Financial Crisis? One of the main ways was to force big banks to merge into bigger banks. If indeed the number of banks in the U.S. had fallen from 12,000 in 1990 to 5,000 in 2020. why did so many banks go missing in those years? Because the Fed and federal government regulators themselves put a lot of the smaller banks out of business in the “Financial Crisis” of 2008-2010. It was a common occurrence for the FDIC to come in and seize control of small banks that could not afford the new compliance standards created by Dodd/Frank. Over 2,000 local and community banks were dissolved or taken over by larger banks in the financial crisis and the Dodd-Frank era.


So whether the problem was too many banks or too few, or banks that were “too big to fail” or, when they failed, or were not big enough, or whatever, one thing was certain: Federal regulators knew exactly what should happen and exactly how to fix all problems (including the problems caused by regulators). That solution was always the same: More government regulation.


In fact, it is probable that more and smaller banks really is better. Renowned Banking and Finance professor Richard Andreas Werner made a strong case for that idea in an hour-long (and highly enlightening) titled “How Banks Work & Dictate the Economy” in a YouTube interview by former Fed official Danielle de Martino Booth.



But the problem is with why a system of more and smaller banks works better than a system of a few big banks. And although the answer is complex (and is in a way the subject of both series of books) the short answer is: Because less top-down government control. A large, diffuse, self-organizing network of banks will be stronger, more resilient and more efficient, than a system of a few big banks subject to top-down control by government regulators, such as Elizabeth Warren, who want total government control of all banks, whether they are few or many in number.



Back to the Repeal of Dodd-Frank

Now, finally, the explanation of why the WSJ could report that a part of Dodd-Frank was being rewritten in 2019 when the WSJ had reported that Dodd-Frank was repealed two years earlier. The explanation is, of course, that Dodd-Frank was never repealed. This is the reason why, for example, the huge, unaccountable CPFB was still very much alive and growing in 2019, when Senator Warren wrote a law to vastly increase its powers. And why the FSOC, created and empowered by Dodd-Frank, was still alive and designating financial businesses as too big to fail so that it could regulate them more than ever. And why the absurd, unending story of Glass-Steagall trudges crazily on. We compared Glass-Steagall to a zombie, but that is wrong because you can kill zombies by blowing their heads off, but apparently nothing can really finally kill Glass-Steagall.



Dodd-Frankenstein, Back from the Dead 

As we said above, on May 22, 2018, media news stories reported that the repeal of Dodd-Frank was completed. But a closer look at some of the stories raises questions. The New York Times story “Congress Approves First Big Dodd-Frank Rollback”, after calling the repeal a victory for Trump, “who has promised to ‘do a big number on Dodd-Frank,’” added that, “The bill stops far short of unwinding the toughened regulatory regime put in place to prevent the nation’s biggest banks from engaging in risky behavior.”



The Wall Street Journal’s coverage of the repeal reported that the House voted to, “…approve the most significant bipartisan revamp of financial rules since Republicans took control of government.” But later in the story it said, “... Nothing in the bill changes regulators’ broad authority to apply strict rules to firms they view as risky.”



The Libertarian magazine Reason also reported on the big repeal of Dodd-Frank regulations, but added, “Other major parts of the Dodd-Frank law remain unchanged…” including the CPFB price controls which had made many free checking accounts illegal, and lots of other regulations.




...The bill stops far short of unwinding the toughened regulatory regime...

...The bill chips away at several parts of the Dodd-Frank Act... Other major parts of the Dodd-Frank law remain unchanged...

...The legislation leaves untouched most of Dodd-Frank’s major planks...


That is what the stories reported, if you read past the headlines which said the law was “REPEALED!” In fact, there was no repeal. And that was indeed reported, in a tiny number of media outlets that were read by a tiny number of people. Such as the Brooking Institution website, which published a story called “No, Dodd-Frank Was Neither Repealed nor Gutted. Here’s What Really Happened”.


“This new law [the repeal of Dodd-Frank] neither repeals nor replaces Dodd-Frank as House Speaker Ryan claimed nor does it ‘gut Dodd-Frank’... [instead this] legislation likely means: Dodd-Frank is here to stay...”

Aaron Klein, “No, Dodd-Frank Was Neither Repealed Nor Gutted. Here’s What Really Happened”, Brookings Institution (2018)




What Really Happened

As the Brookings Institution story said, the failure/refusal to actually repeal Dodd-Frank meant that it was permanent now.


The repeal of Dodd-Frank never happened and was never going to. Although Republicans controlled both houses of Congress and the Presidency, and they were supposedly on a deregulatory binge, and they had promised to repeal Dodd-Frank, they chose not to do any such thing. And the mainstream media chose to report that it had been repealed.


If, in 2020, you as a citizen of the United States did not like Dodd-Frank or the CPFB or Too Big to Fail, what could you really do about it? The true answer was: Nothing. You had no power to affect those things in any way. Zero.


Although lawyer Nyhan might remind us that it is impossible to tell for sure, it certainly seems that little or nothing substantial of Dodd-Frank was really repealed (could call the Chinese guy who allegedly read it and ask him if any of it was repealed, but, of course, that is a sick joke). And whatever was repealed—if anything—was going be reinstated someday, and probably sooner rather than later. And a lot more brand new regulations were going to be piled on to Dodd-Frank. That is a fact.


In mid-2020, we did a quick search engine experiment using Google.


The words Dodd-Frank was repealed got about 800,000 hits using Google. The first page of hits included stories from the New York Times, NBC News, and CNBC.


The words Dodd-Frank was not repealed also got about 800,000 hits. But the vast majority of those were actually about the repeal of Dodd-Frank, not the fact that it had not been repealed.


When you Googled the words in quotation marks to get exact matches, then "Dodd-Frank was repealed" got 680 hits, again including links to some big media outlets.


When you Googled the words "Dodd-Frank was not repealed" in quotes, you got one hit. One. It was not from a mainstream media outlet. It was a reply to a reply to a Twitter tweet.


The reply said,

"Trump got rid of Frank Dodd which protected against another banking crisis, and, it has protections for Seniors, which gave them protection against retirement scams. That's all gone now."


The reply to it said, "No he didn't. Dodd-Frank was not repealed."



That was the total media coverage on "Dodd-Frank was not repealed".


So after three years of mainstream media headlines and stories about the repeal of Dodd-Frank (Googling that phrase produced 734,000 hits), exactly one person on the whole internet had said the exact truth, the actual words, "Dodd-Frank was not repealed."


And, as we said, vast amounts of new regulation really were added. That was true. (In 2020, Googling the phrase regulations added to Dodd-frank produced 15,600,000 hits.)


So the actual truth about "the repeal of Dodd-Frank" does give us some evidence of the truth or falsity of claims about whether a reported "Era of Deregulation" really happened, but not the kind of evidence which EoD fans might prefer.


Anyway, the unrepealed survival of Dodd-Frank meant that the un-endable story of Glass-Steagall continued and would, apparently, go on forever and ever, until the heat-death of the universe, or the end of time itself. That time when (if we can use the word “when” to refer to a time after time itself) all that will remain of existence is the timeless void, and Glass-Stegall. Because, in spite of what the media, the historians, the government, and Dem politicians claimed, repealing can’t kill it! Nothing can!! Ever!!!


In August 2020, a headline on Bernie Sanders' campaign site (he was still technically a candidate for President then) announced that we should REINSTATE GLASS-STEAGALL. "Bernie supports reinstating the Glass-Steagall Act, which creates a wall between commercial banking and investment banking...", because, "...In 2018 Dodd-Frank was repealed..." https://feelthebern.org/bernie-sanders-on-financial-regulation/



Piling On, 2019

We mentioned that whatever really was repealed of Dodd-Frank (in anything) would be reinstated. We will see later that this is common; in fact, it is pretty much the rule for anything which is repealed, or seems to be. And after the brief media coverage of the “repeal” of Dodd-Frank subsided, it did not take long for calls to appear in the media to actually begin giving more federal regulators more and greater regulatory powers than ever, via unrepealed Dodd-Frank and its immortal demon child, Glass-Stegall.


Among all the other regulatory mechanisms it created, we saw that Dodd-Frank gave birth to the dreaded Financial Stability Oversight Council (FSOC), a panel of the heads of the government’s larger financial regulatory agencies. But that was far short of the amount of control regulators needed, Americans were told in 2019. The federal government needed not only more power and control but more “macroprudiential” power. Way more “macroprudiential” power. The thousands of surviving and alive-and-well pages of Dodd-Frank were not enough. More were needed. And, of course, no matter how much more was added, that still would never be enough. Ever.


In 2019, the Wall Street Journal bemoaned the fact that “...the FSOC’s authority was deliberately limited to oversight (its middle name), not regulation.” So government regulators should add to Dodd-Frank to give government regulators more regulatory powers. But keep in mind that, “Even if the FSOC were granted these powers, that still might not be enough.” Too much government regulation is never enough, and it can never be repealed either, apparently.




How the Story Never Ends, 2020

Remember how Dodd-Frank fixed bank lending so that a crisis as bad as 2008 could never happen again? Twelve years later a crisis that bad happened again. And so in 2020 the Wall Street Journal was calling for more government regulation to fix it.


The article “The Mortgage Market Never Got Fixed After 2008. Now It’s Breaking Again” does not even mention Dodd-Frank or the rest of the massive government regulation which was passed to fix mortgages and the rest of the financial system after 2008. (Perhaps because Dodd-Frank was repealed? Ha ha just kidding.) It said that a mortgage crisis was happening because “the mortgage market is particularly exposed” to the Coronavirus.



So what was the solution for the new 2020 mortgage/virus crisis? More government regulation? Yes, more government regulation. This time to change the “infrastructure” of the home mortgage system (as if it had not already been completely reconstructed by federal regulators, probably more than once). I.e. the basic structure of the private sector mortgage system (or what was left of it after government regulators had replaced most of it with government control) need to be restructured. What did not need to be restructured, let alone repealed, was the government regulatory structure, of hundreds of thousands of pages of regulations, thousands of regulators, and dozens of regulatory agencies. That could not have been the problem, the media and the government “policy makers” said. What was needed was more government regulation. So Dodd-Frank 2.0, presumably. This time it would fix the problem and there would be no more mortgage crises. Ever. Promise.


As we said, the article never even mentioned Dodd-Frank. But WSJ readers remembered. Comment from a subscriber Karen Weissinger: We were told in 2008 that the Frank/Dodd bill would take of care of this... We were assured more laws and regulations would solve the mortgage crisis and we would not see this crisis again.



She was wrong of course. It was 2010, not 2008, when she was told the Dodd-Frank would prevent more financial crises. But her question implies another: If the readers realized that if government regulation of ‘The Mortgage Market After 2008’ had not prevented another crisis, then more regulation might not work, why did that never seem to occur to the writers of the articles? Or to the government regulators?



In Summary

Above we said, “...people promised that, if elected, they would repeal Dodd-Frank and the CFPB. And they were elected. We will see what happened then.”


In 2020, some Americans apparently still believed that if they elected the “right people”, people who promised to repeal regulations, to roll back big government, to deregulate, then that would happen. But it was not really true. The people in power had the power to prevent deregulation from ever really happening, and they used that power.


As a 2020 internet meme put it:

What do cows say? “Moo.”

What do dogs say? “Woof.”

What do cats say? “Meow.”

What do sheeple say? “We can fix government if we just elect the right people.”



Meanwhile, Back at Dodd-Frank

Among the weirdest factoids about Dodd-Frank is that it was so huge that in late July of 2020, ten years after it had been passed (and three years after it had been fake-repealed by Trump and the Republicans), it had still not been completely implemented by government regulators. Heath Tabbert, Chairman of the federal Commodity Futures Trading Commission (CFTC), was still busily putting parts of Dodd-Frank into effect. Heath Tabbert was a Trump appointee. You know, the Trump who promised to repeal Dodd-Frank? His appointee was still installing it in 2020.




Too Much Regulation for You?

We believe the effect of regulation on the economy is underappreciated, maybe because it is boring

Jim Bianco, “Trump’s Secret Weapon: Deregulation”, (Barron’s 2017)



It may seem that we are now no closer to finding the real Era of Deregulation than we were when we started. And in a way that is true, because:


SPOILER ALERT In case you didn’t read the Introduction, don’t read the next 2 paragraphs unless you want to know how our search for the EoD will end:


There was no such thing as an “Era of Deregulation” in the U.S. after the New Deal era. It was and is a myth. We will never find it, because it never happened. As they say, you can’t prove a negative, so we cannot say that it is impossible that there was an EoD. The real EoD could be back there hiding under a rock in 1986 or something, or as “Stealth Deregulation” (yes, the lovers of the EoD myth do claim, as we will see, that there was such a thing, as we will see). So we can’t say it is literally impossible that there was an EoD.


But now comes the positive evidence that the EoD never really did happen in the U.S. To show how and why the Era of Deregulation is a myth will require going into some detail about the kind and amount of regulation that did happen instead, and what the system of federal regulation really is. It won’t be proof; it will be a discussion of many aspects of federal government regulation, what it was and is and what it wasn’t and isn’t; what really happened and what really didn’t. We will cover “Stealth Deregulation”, the Deep/Administrative/Swamp State, and lots more.


But the story of regulation is not pretty; it will be ugly and maybe even scary or nauseating. And long. Horribly long. We try to leave no regulatory stone unturned, and there are a lot of regulatory stones, and they are heavy. Very, very heavy. And boring. Jim Bianco wasn’t kidding.


If you already know all about the system of federal regulation or. for whatever reason, are not interested in our journey through it, feel free to skip it. Skip ahead to Final Answer, and then to the backstory of the EoD, the story of how and why the myth was created. Although it too might be scary and nauseating.


So if you chose not to skip ahead and are still here, let us proceed, for the time being still taking as at least a rhetorical possibility the idea that the EoD was, as so many writers in 2021 continued to claim, a real time in U.S. 20th Century history.



Chapter 5 — A Story of Federal Government Regulation


The 8+ Voices that Government Speaks to Us In

...regulations are the real voice of government, the way it most directly affects the lives of Americans.

Leon Neyfakh, “Why the Government Can’t Write in Plain English”, Boston Globe (2012)


To find the Era of Deregulation or to conclude with certainty that no such thing happened, we must understand what deregulation is. To understand what deregulation is, we must understand what regulation is. We have discussed that a bit already, but without producing any real answers. It’s a hard thing to do.


Regulations, and their repeals, are real things, obviously. Regulations are the way that government speaks to us and tells us what we must do and are not allowed to do. Federal regulations are not just the laws passed by Congress—in fact, those acts are a small and shrinking proportion of vast totality of federal regulation.



Some of the Major Kinds of Federal Regulations:

1. Acts of Congress signed into law by Presidents

2. Executive Orders issued by Presidents

3. Rulings by Courts

4. Taxation is regulation

5. Regulations issued by the Administrative State

6. Regulatory “Dark Matter” - new regulations issued as pure decree. If regulation is how the government talks to us, Dark Matter regulation is gov talking under its breath. (But you still better listen.)

7. Private Political Operatives acting as Government Officials - The Federal Gruberment, a shadowgov of political activists using government as a ventriloquist uses a dummy.

8. Antitrust


Kinds of Federal Regulation: #1 Acts of Congress signed into law by Presidents

In the 21st Century, most Americans were aware in a general way of how laws were passed by Congress. There were lots of such laws and lots of new ones were created every year. Americans with cable TV could even watch the theater of it on C-SPAN, and many elected representatives sent out information about all the wonderful regulatory things they were doing for their state’s or district’s constituents. But in reality, this kind of Congressional regulation, though indeed growing, was becoming ever less significant in size relative to the other kinds of regulation, some of which seemed to be growing exponentially, to say the least.



Kinds of Federal Regulation #2 Presidential Executive Orders

The executive [branch] often issues binding directives… The executive’s edicts, moreover, purport to bind subjects not merely in the sense of reaching a settled decision about them, but in the deeper sense of legally obliging, constraining, or interfering with them.

Philip Hamburger, Is Administrative Law Unlawful? (2014)


The law is anything I write on a piece of paper.

Saddam Hussein


As of 2020, many Presidential Executive Orders had major regulatory impact, but many of the orders were vague instructions—general announcements that something was to be different from then on—issued like memos to the public or to the thousands of bureaucrats and regulators who populated the federal regulatory bodies. The non-regulatory kind of executive order did not provide penalties if the order was ignored, which often happened.


In the context of deregulation, Presidents could issue Executive Orders to repeal the Executive Orders issued by previous presidents. Indeed Trump famously introduced his EoD 2.0 by ostensibly canceling some of the executive orders which had been issued by Obama. And in his turn Obama’s VP when he was elected president rescinded many of Trump’s Executive Orders in his — Bidens’ — own record-breaking Executive Order binge in 2021. (And we will see that there is also another way that presidential Executive Orders can be repealed.)



Total number of Executive Orders issued by some famous presidents:

George Washington: 8

Thomas Jefferson 4

James Madison 1

Franklin Roosevelt 3,721


During his administration, James Madison was able to oversee a big chunk of the great American movement West, fight a war against one of the world’s two superpowers and the greatest navy in the world, and do lots more, by issuing a total of one Executive Order. To fight the Germans and Japanese and install the New Deal, FDR had to issue almost 4,000 times that many. Big variation. But the variation in the number of Executive Orders which Presidents issued somewhat stabilized after WWII. Beginning with Eisenhower, U.S. Presidents issued very roughly about one Executive Order per week. But that amount would probably have made James Madison either break down in tears or get a musket and start shooting up the place.


However, for the purposes of our discussion of the EoD, we will see that the changes in the number of Executive Orders issued by post-New Deal presidents did not seem to coincide at all with any “Era of Deregulation”. In other words, it seems that there was never any cessation or repeal of Executive Orders which might have amounted to an EoD. But let’s check to make sure.


We should first note that the total-of-Orders-issued-per-president is somewhat misleading. FDR was president for almost four terms while Kennedy (214 Executive Orders) was president for less than one full term. So to get an idea of how many Executive Orders were issued by the presidents who may have presided during EoD, we should look at Executive Orders issued per year not per presidency.


But when we do that we see little difference among presidents who are said to have presided over periods of deregulation and those who were not considered to be deregulators. (Data comes from https://www.dailydot.com/layer8/number-of-executive-orders-per-president/ .)


President Reagan issued more Executive Orders per year (48) than either Clinton (46) or Obama (35). But fewer than Trump issued in 2017, i.e. 55 (although in 2019 Trump issued only 43, and 2018 only 37, and a few of Trump’s Executive Orders were indeed deregulatory, e.g. Executive Order 13789 Identifying and Reducing Tax Regulatory Burdens, but the vast majority were not repeals. https://en.wikipedia.org/wiki/List_of_executive_actions_by_Donald_Trump ).


Reagan did issue fewer Executive Orders per year than his predecessor Carter (80), and fewer than the Republican Ford (69) and fewer than his fellow “deregulator” Nixon (62) who issued almost exactly the same number of Executive Orders per year as his “big-government” Democrat predecessor, Lyndon Johnson (63). So at first glance there seems to be little or no correlation between the number of Executive Orders issued by Presidents considered to be big Regulators with those considered to be Deregulators. And no sign of any ‘Era of Executive Order Deregulation’.



No Impact or Big Impact

Two extreme examples of an executive order are Franklin Roosevelt’s Executive Order 6102 “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States” and Executive Order 9066, which delegated military authority to remove any or all people in a military zone (used to target Japanese-Americans and German-Americans in certain regions).

Wikipedia https://en.wikipedia.org/wiki/Executive_order


As we said, some Executive Orders are simple public announcements often to be ignored by almost everyone. But many of the thousands of Executive Orders issued by U.S. presidents have added much to the weight of federal regulation upon Americans. Not many Executive Orders were intended to result in deregulation, and, as we will see, very few did.



Deregulation by Repealing Executive Orders

Congress has ample opportunity to pass “resolutions of disapproval” of controversial rules under the Congressional Review Act. An unavoidable caveat is that it’s only been used successfully once...

Clyde Crews, “Obama’s Legacy: 2016 Ends with A Record-Shattering Regulatory Rulebook” Forbes (2016)



A president can invalidate Executive Orders, as we said, but so can Congress. It can pass “Resolutions of Disapproval” which can prevent Executive Orders from taking effect, in effect repealing them. However, resolutions of disapproval are very rare, so they were never a mechanism used to create any Era of Deregulation by wiping out droves of Executive Orders.


The article by Clyde Wayne Crews Jr (of the Competitive Enterprise Institute) detailed how in 2016 Obama crushed the all-time record for adding to the Federal Register by piling on 15,705 pages in just one year. Technically, Congress had the power to reject some of those edicts, and some Republicans in the next year wanted to, but, for whatever reason, that did not happen.


We will look later at some of the presidential Executive Orders which were intended to result in deregulation. But first, more kinds of federal regulation.



Kinds of Federal Regulation #3 Rulings by Federal Courts

When the legislative and executive powers are united in one person, or in the same body of legislators, there can be no liberty... Again, there is no liberty, if the power of judging is not separated from the legislative and executive powers. Were it joined with the legislative, the life and liberty would be exposed to arbitrary control, for the judge would then be the legislator.

Charles de Secondat, Baron de Montesquieu, The Spirit of Laws (1748)


In 2020, rulings by federal courts could, in effect, create regulations or repeal them. But at that time no writer on the subject of the Era of Deregulation seemed to claim that deregulation by federal courts was the modus for the EoD. It was much more common for federal court rulings to create regulations (by “judicial activism” “legislating from the bench”) than to repeal them, and to greatly broaden the powers of the federal government than to constrain it.


A judicial ruling can create what is in effect a law by setting a precedent. (We discuss this further in our discussions of The Rules of Law and of Contractualism (not to be confused with Contractarianism in other publications). The power of precedent in the American/British system of law arises in part from the system of English Common Law, which is more important in the system of the latter nation than the former.


So Common law is in a way the opposite of, or at least an alternative to, Statutory law (sometimes called Civil law in this context). In a system of Statutory law, e.g. the U.S. government as designed in the Constitution, the law is written law, originating in the legislature. But in Common law, the laws emerge spontaneously from the people and their interactions and common law is not written as statutory law.


So Statutory law is the output of a top-down system of control; the laws are control created by the legislators. But Common law is more self-organizing, the laws emerge from the people spontaneously, like new rules of English grammar emerge from usage (as we discuss in book 3), and are not handed down by government regulators. But Common laws does have its controllers: Judges. As we said above, when a judge makes a ruling in a particular case, he can set a precedent which is essentially a new law.



The Supreme Court Legislators

Most people will say that the Constitution begins, “We the people of the United States…” But that is just the preamble, of course. The beginning of the law is:


Article 1

Section 1. All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.


Only the Senate and the House of Representatives can legally create national laws (which laws are above any and all other legislation, such as the laws created by state legislatures). The first three words of the law of our nation could not be more clear: “All legislative Powers…”.All...” Not “some”. All.


The authors of the Constitution chose to begin the law of the land with those words. In 2020, at the time this book is being written, it is illegal in the U.S. for any other federal body or system than the Senate or the House of Representatives of the U.S. Congress to create laws (unless an Amendment to the Constitution has been passed to repeal alter Article 1, Section 1 of the Constitution, and it does not seem that any has).


Of course, in practice, that’s a joke. Federal government regulators long ago chose to ignore the Constitution because it was in the way of what they wanted, which was more power and control. In reality, by 2020, the U.S. had at least two systems for creating numerous laws for controlling citizens, in addition to Congress. The Federal Courts were one, but weren’t supposed to be, as we will see.


Two extra-Congressional Federal Legislative Branches circa 2020:

• Judges issuing rulings which are essentially laws

• Government regulators in executive branch agencies, and even in quasi-gov entities, who make up Administrative laws as they go along.



Establishing a Federal Court

Article 2, Section 1, Clause 8:

Before he enter on the Execution of his Office, he shall take the following Oath or Affirmation:—“I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”

The U.S. Constitution


...in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution...

Jefferson’s Draft of the Constitution (1798)


In the late 19th Century. the political Progressives emerged. Their idea was that they could improve the operation of all of our systems of human interaction by controlling them. And the Constitution went from being the source and foundation of law to being a stumbling block, an impediment to the rule of Controllists. Then came the New Deal, which doubled down on the “Progressive” idea, again and again and again. Taking an oath to uphold the Constitution was a formality; most of the people who took the ‘oath’ fully intended to do the opposite, to destroy the Constitution, as can be judged by their actions if not their words.


Article III

Section 1

The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.


So the federal judiciary was established in Sections 1 and 2 (as we will see) of Article III of the Constitution.


Sometimes people write that the politicizing of the Supreme Court began with FDR’s plan to pack it with leftist justices. Others say that before the Borking of Bork the confirmations of justices by the Senate were even-handed and not partisan. But not so..


The Supreme Court almost immediately became a tool used by politicians to increase government power (as Adams and Hamilton may have intended in the first place, when the Constitution was written). First by Adams himself, to establish the Marshall Court. Then by the enemies of the Federalist heritage, the Democrats. For example, from the 1830s Jackson era to the Civil War era, all the Supreme Court justices appointed were Democrats.


The U.S. Supreme Court was established by the founders as a small system of six judges who rode three circuits on horseback to hear a very limited kind of cases. The words “…in such inferior Courts as the Congress may from time to time ordain and establish…” sound almost dismissive, like the federal courts were not much more than an afterthought. Maybe that was because statutory law, created by the people’s representatives, would be the government worked to “speak to the people”, and English-style common law, where judges were very important, was almost non-existent. But the framers did go into some detail to limit what kinds of cases the federal courts should hear (all other cases were to be adjudicated in the state or local courts).


The federal courts were supposed to judge issues having to do with the federal government itself, its interactions with the states, and the states’ interactions with each other, and with foreign countries. And not much else. Certainly nothing like the situation in 2020—when federal judges manage and even micromanage the functioning of many if not most American systems of interaction.


Article III

Section 2

1: The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority…

[explicitly ]

—to all Cases affecting Ambassadors, other public Ministers and Consuls;

—to all Cases of admiralty and maritime Jurisdiction;

—to Controversies to which the United States shall be a Party;

—to Controversies between two or more States;

—between a State and Citizens of another State;

—between Citizens of different States,

— between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.


2: In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction. In all the other Cases before mentioned, the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.


Those were the only kinds of cases the federal courts were supposed to hear, and we may guess that the framers of the Constitution explicitly listed and limited the kinds of cases for a reason.


But the federal judiciary’s, size and its power—especially its power to legislate from the bench—ballooned, turning federal judges into a sort of Super-Legislature of federal regulators who, in the practice of aggressive and activist law-making, seemed in 2020 to feel themselves little bound by the actual Constitution at all anymore. The Supreme Court’s real job—its superpower--seemed to be to find ways around the real intent of the Constitution, to rationalize ever-increasing government control of almost everything, often by creating new ‘civil rights, from the whole cloth, whenever necessary to achieve the political goals of subgroups of the population.



The Era of Deregulation on Trial (It loses)

According to the White House statement, the president is making good on his promise to end excessive federal regulations and bring economic freedom and prosperity to all Americans. With 390 deregulatory actions across two dozen agencies...

Alan McDonnell, “Trump Credits Deregulation as Driver of Economic Success” Epoch Times (December 2019)



Remember Trump’s Era of Deregulation? And how it repealed 13 federal regulations for every new one? And how the Brookings Institution counted 207 Trumpian deregulations as of the start of 2020? Or was it really 390? Who’s counting?


No one was accurately counting deregulations, of course, since counting deregulations is as impossible as counting regulations. Anyway, even if you could count deregulations when they happened it didn’t matter because they could disappear almost as fast they appeared. Federal judges acting as regulators could re-regulate by canceling deregulations, thereby derailing any attempted Era of Deregulation. And they did.


Despite his administration’s efforts to pare back federal regulations on business, in cases that have been challenged in court, Trump has fared quite poorly, the record of his first two years in office shows... More than 90 percent of the Trump administration’s deregulatory efforts have been blocked in court...

According to a 2019 story entitled “The Trump Administration Has Lost More Than 90 Percent of Its Court Battles Over Deregulation”, Trump’s EoD fared “quite poorly” in the first two years of his administration, as “the Trump administration’s deregulatory efforts have been blocked in court.”



As of 2020, the NYU Institute for Public Integrity kept a record of the court reversals, at https://www.cnbc.com/2019/01/24/trump-has-lost-more-than-90-percent-of-deregulation-court-battles.html .

On New Year’s Day 2020, their scorekeeping had it 64 to 4:

— 4 “Successful - An outcome is considered successful for the Trump administration”

— 64 “Unsuccessful - An outcome is considered unsuccessful for the Trump administration”


Trump’s Era of Deregulation, to the extent that it happened at all, was, as of 2020, vaporized by the superpower of federal judges/legislators to unrepeal repeals. So it’s beginning to look like in reality that the same thing happened to Trump’s EoD 2.0 as happened to the original EoD: It never happened.



More Kinds of Regulation, or SKIP It

As we said, if we are to exhaust all the ways to find the Era of Deregulation, then we need to know what deregulation really is, and do to know that, we need to know what regulation really is. And that is not as simple a thing to know as you may have been told in school in classes on “Government” or “U.S. History”. Quite the opposite: the system of U.S. Government regulation is vast, vastly complicated, and murky. Very murky. (And probably on purpose.)


If you find the subject just too boring (or if you already know all about it), feel free to skip our discussion of the remaining kind of government regulation: Jump to “The EoD Deniers”.



Kinds of Federal Regulation: #4 Taxation as Regulation

Technically, all direct taxation is regulation of course. Laws are passed and rules are created by taxing authorities as laws, and those laws and rules are the basis for taxation. You can’t have taxes without passing laws. But in 2020, taxation worked to regulate the behavior of citizens in many more ways than just to compel them to turn over money to tax collectors.



The Power to Tax; the Power to Destroy

...the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create….

Supreme Court Justice John Marshall, McCulloch v. Maryland (1819)


Government’s power to tax is the power to regulate. If the government taxed income it could also give tax breaks to some people and organizations and not to others. So if some charitable donations were “tax-deductible” and some were not, this gave government regulators the power to decide what was and what was not a “real” charity. Since most charitable organizations got all their income from donations, the taxation power of the IRS and other regulators gave them in many cases the power of life or death over a particular charitable organization.


The Supreme Court got it right when they said in 1819 that the power to tax is the power to destroy. The power to tax is, for example, the power to give one person, such as say Lois Lerner, the power to restrict the growth and operations of, or even to destroy, whole categories of non-government organizations. Often that power is for sale as Regulatory Capture. And that power is used for political purposes, typically in modern history to empower the left and destroy its enemies.


But there was more to that. In the 21st Century, leftist media such as the Washington Post, New York Times, and NPR more and more vociferously called for government to take away tax deductions for donations to non-government charitable organizations. This would wipe out the private charitable organizations and greatly increase the amount of money flowing into government wealth distribution agencies, and increase the power of those agencies and the regulators who controlled them.


Most people tend to think of taxation as the simple, uniform collection of money by governments for the purpose of getting revenue. But it almost never has been limited to that in reality. The secondary purpose of taxation is to regulate, to reward, to punish, or even to destroy, and most taxes are applied in non-uniform, unfair, and unnecessarily complicated ways, often placing huge and onerous cost burdens of collecting complicated taxes on individuals and companies as an unfunded mandate.


(In other books in this series, we look more into the power to tax as the power to destroy, and how that power has been used by the U.S. government regulators to control the organization of businesses in America.)



How much did it cost America to do its taxes? For 2019, the private tax collection business H&R Block reported that it made over $3 billion. And H&R Block was only one of tens of thousands of tax collection businesses in U.S. And income tax was only one of tens of thousands of taxes mandated by the many thousands of government taxing jurisdictions in the U.S. And the cost of the legally required record keeping—record keeping required only because of taxation—was difficult to estimate, or even to imagine. How many hundreds of millions of hours per year were Americans forced by government regulators to spend trying to understand and comply with the tax laws and keep records necessary only because they were required by tax collectors? Hours which could have been spent doing something productive or worthwhile.



The Power to Tax is about more than Money

The McCulloch v. Maryland ruling of the Supreme Court, quoted above, helped create the principle of judicial review itself; that is, the Supreme Court’s power to rule on the rules of America. So it was a big milestone in the history of the Courts’ power to regulate from the bench. Though the ruling had huge indirect consequences, its direct intention was to deny to the state governments the power to tax the federal government. Because “The power to tax is the power to destroy” and the federal government did not want to give the power to destroy it to the states. Taxation is about much more than just taking money, it is about control.



Dear Cryptocurrency Users: “We are coming for you.”

outlawing bitcoin is a good probability

Ray Dalio multi-billionaire head of Bridgewater Associates, quoted in “The Government ‘Outlawing Bitcoin Is a Good Probability’” CNBC (2021)



In 2019 a Forbes article titled “IRS Sending Warning Letters to More Than 10,000 Taxpayers About Cryptocurrency Reporting” IRS Commissioner Chuck Rettig was quoted saying, “The IRS is expanding our efforts involving virtual currency...”


With more taxation of cryptocurrency users, would more government control of cryptocurrency itself come? To tax the users, the government regulators would of course need more control over and surveillance of the cryptocurrency systems in order to prevent tax evasion. (Similarly, once the 2018 Wayfair ruling reversed the U.S. Supreme Court’s own previous rulings and made the internet a platform for taxation, more government control of the internet under the pretext of forestalling tax evasion became inevitable.) 


The quoted Forbes article cautioned, “Depending on the version of the letter you receive, your next steps may vary. But if you’re one of the more than 10,000 taxpayers expected to receive a letter… don’t ignore the IRS.” Good advice. The wording of the IRS letter was probably inconsequential. Cryptocurrency-owning Americans would all probably got the real message from U.S. government regulators: Make no mistake, we control all money and we control you.


In the September 2020 article "IRS Wants to Be Able to Trace ‘Untraceable’ Digital Currencies", NextGov reported that IRS enforcement agents, "... need next-level capabilities to trace cryptocurrency transaction inputs and outputs to specific users and pinpoint details about the exchanges."



The article linked to the U.S. Government site sam.gov where the IRS publicly sought contractors who would produce "cryptocurrency tools and support” that the IRS enforcement agents could use to trace cryptocurrency transactions to the people involved in them.

Did the people with Bitcoin really think that in 2020 the U.S. government regulators were going to let any Americans own something the government could not track and control?


Asian governments were already coming down hard on crypto money. In March 2021, Reuters reported that India was introducing legislation “…to criminalize possession, issuance, mining, trading and transferring crypto-assets.” People found to be in possession of cryptocurrency would be fined. And at the same time, China’s Inner Mongolia region, where almost 10% of the world’s Bitcoin mining was done, announced a shutdown of all mining by April, to get into compliance with energy consumption targets mandated by Beijing. The same day, the South Korean National Tax Service announced that it had seized $32.3 million in funds from 2,416 individuals whom it accused of concealing business income, real estate transfer payments, inheritance, and gifts using Bitcoin and other crypto monies, and the agency promised to be “relentless” in control of digital currency use. That same month, Reuters reported that the government of India was proposing a law banning Bitcoin.  https://www.reuters.com/article/uk-india-cryptocurrency-ban/india-to-propose-cryptocurrency-ban-penalising-miners-traders-source-idUSKBN2B60QP


Then in June 2021, Financial Times reported in an article titled “Global Banking Regulator Urges Toughest Capital Rules for Crypto: Basel Committee Report Comes as Authorities Step Up Plans to Regulate Fast-Emerging Sector” that, “Global regulators are calling for cryptocurrencies to carry the toughest bank capital rules of any asset…”


Would U.S. government regulators be left out of the worldwide rush to totally control $Crypto? Need you ask?


In May 2021, Gary Silverman and James Politi had already written another article for the Financial Times titled “US Regulators Signal Bigger Role in Cryptocurrencies Market” with the subhead, “New OCC Head Says Agencies Should Set A Regulatory Perimeter’ for Digital Coins”. Biden’s new Comptroller of the Currency announced plans to coordinate government control of cryptocurrency “across the agencies” of the federal government. The announcement came at the first official meeting of what the article called an “inter-agency crypto ‘sprint’ team”. A sort of super-start track team, racing toward new records of levels of regulation, a regulatory power-house joining three federal mega-regulators: Office of the Comptroller of the Currency; the Federal Reserve; and the Federal Deposit Insurance Corporation.



And prior to that announcement, the government regulators at the Federal Reserve had revealed plans to implement a U.S. government digital currency and, presumably, as the U.S. government had done in the past, making competing private currencies illegal; that is, if the Chinese had not already by that time succeeded in turning their top-down controlled government-created digital currency into a global money, as they were planning to do.


Once again the Financial Times was on top of the story. “Regulators and central banks are fighting for control of the monetary system as cryptocurrencies become an increasing challenge to fiat currencies… threatening to blunt the levers policymakers rely on to control the running of their economies. ‘It is no surprise that governments are not inclined to give up their monetary monopolies,’ said Marion Laboure, an analyst at Deutsche Bank.”


The title of that story was “The End of Privacy? Central Banks Plan to Launch Digital Coins.”



So government regulators were killing at least two birds with one stone:

     Decreasing privacy (remember that time when government regulators used protecting “privacy” as their excuse, er reason for creating more regulation?)

     Snuffing out less-traceable private-sector competitors to the government money monopolies


Win win. For the government regulators. For the freedom of the people of the world, well… Who was even seriously pretending anymore that people’s freedom was anything other than a target for elimination, because it was still sometimes getting in the way of the government regulators’ insatiable desire for ever more control?



Who Were the Enemies of the IRS?

The immense size and power of the IRS were not used just to take Americans’ money. Many presidents used the power to tax to destroy people for political purposes and for general power and control. Franklin Delano Roosevelt quite publicly and blatantly—making no bones about what he was up to—used the IRS to attack his political opponents including but not limited to:

Chicago Tribune publisher Robert McCormick,

Philadelphia Inquirer publisher, Moses Annenberg,

—United Mine Workers leader John Lewis,

—Louisiana Sen. Huey Long of Louisiana,

—Rep. Hamilton Fish of New York,

—and Andrew Mellon.


In the case of Mellon, Roosevelt first tried to get a grand jury to indict Mellon for tax fraud. Mellon had been Secretary of Treasury in the previous three (Republican) administrations, and there was no question but that the motivations of FDR were political. The grand jury refused to indict Mellon (a rare thing, given the immense power of federal prosecutors, as we will see). So FDR ordered the IRS to charge Mellon with tax evasion, with no reason to believe that the former Secretary of Treasury had actually committed tax evasion. The IRS prosecuted Mellon in a trial that lasted over 14 months. It only ended when Mellon died.



President Richard Nixon, if a bit less heavy-handedly, used the IRS against the people on his “enemies list”. Lois Lerner and President Barack Obama allegedly used the IRS to punish and deplatform non-leftist political organizations. The list of times the IRS has punished Americans for their political activities could go on and on. Many amazingly brazen abuses by the IRS are cataloged in A Law unto Itself: Power, Politics, and the IRS by former New York Times reporter David Burnham, but probably far from all of them. The power to take money was only the beginning of the power of taxation.



Kinds of Federal Regulation: #5 Administrative State


Two Bookshelves of Federal Regulations

Congress passes and the president signs a few dozen laws every year. Meanwhile, federal departments and agencies issue well over 3,000 rules and regulations of varying significance. A weekday never passes without new regulation...

Clyde Crews, “Mapping Washington’s Lawlessness 2016 - A Preliminary Inventory of ‘Regulatory Dark Matter’“, ISSUE ANALYSIS 2015 NO. 6, Competitive Enterprise Institute (2015)



Ever tempted to exert more power with less effort, rulers are rarely content to govern merely through the law.

Philip Hamburger, The Administrative Threat (2017)  


In and after the mid-20th Century, the number of laws created by the elected regulators in Congress was shrinking in size. Was that deregulation? Not exactly. Because, as we said above, the number was only shrinking relatively, i.e. relative to the total amount of regulation being created by federal regulators as a whole. The total amount of laws passed by Congress was growing, a lot.

We can’t count regulations, but we can get a rough measure of the amount of regulation created by Congress as statutes, as compared to the amount created by other government regulators. As of 1993, for example, the statutes created by Congress (the United States Code) filled a bookshelf six feet long. But a shelf needed for that plus the other kind (the Code of Federal Regulations) had to be twenty feet long.

David Schoenbrod, Power Without Responsibility: How Congress Abuses the People through Delegation (1993)


And the proportion of all regulations to Congress’s laws was even greater by 2020. Much greater.


The Institute for Justice (IJ) brief quoted in the epigraph below said, “…in 2016, unelected bureaucrats in the executive branch issued 18 times more regulations than Congress - and those regulations cost $1.9 trillion or more.”



News from the Swamp: Don’t try that Zombie Wine or Bacon Cocktail

it is a federal crime to sell wine with “Zombie” in the brand name… Unelected bureaucrats are responsible for countless ridiculous criminal laws... It’s supposed to be the legislative branch’s job to make laws and the executive branch’s job to enforce them. Instead, Congress ... delegates its powers to avoid accountability.

“IJ Brief Urges U.S. Supreme Court to Check the Administrative State”, Liberty & Law - Institute for Justice (2018)


There’s a federal prohibition on walking a dog on a leash longer than six feet on federal property. It is a jailable offense.

John Stossel Bad Law (2020) https://www.creators.com/read/john-stossel/02/20/bad-law


In 2020, federal rules created by the unelected, unaccountable Administrative State vastly outnumbered and outweighed Acts of Congress, Presidential Executive Orders, and federal court rulings put together. The thousands of federal Boards, Councils, Commissions, Departments, Offices, Agencies, Bureaus, and so on — many of which were vastly larger than the largest private-sector companies — as well as all the quasi-governmental bodies, which is a vast number, as we will soon see, were parts of the federal Administrative State system. Most of them had the power to create regulations and many had their own armed police forces (even quasi-gov agencies did—the US Post Office had two different armed police agencies to enforce its regulations). Administrative State regulations, once created, were really the law of the land, and to fail to obey them was punishable by fine and imprisonment.

About Government Executive, Government Executive https://www.govexec.com/about/


And not only were the federal police who enforced the hundreds of thousands of federal regulations armed, they were well armed. In 2017 a Forbes article titled “Why Are Federal Bureaucrats Buying Guns and Ammo? $158 Million Spent by Non-Military Agencies” reported that the IRS had recently spent $1.2 million on new ammunition. And that was in addition to the was $11 million of taxpayers’ money that the agency had used to buy guns, ammunition, and military-style equipment between 2006-2014.

Adam Andrzejewski, “Why Are Federal Bureaucrats Buying Guns and Ammo? $158 Million Spent by Non-Military Agencies” Forbes (2017)


$1.2 million must have bought a lot of bullets in 2017. Who were all those bullets intended to be aimed at when they were loaded into $11 million dollars’ worth of guns and other armament? Not foreign enemies. The mission of the IRS had nothing to do with the armed defense of the U.S. So who were the guns intended to shoot? “$158 million Spent by Non-Military Agencies” was the cost of bullets meant to be used to shoot Americans. Regarding tax issues. At $1 per bullet, the IRS could shoot more than 1 million Americans, per year. Although it would take some time, over the years, the IRS agents would run out of taxpayers to shoot before they ran out of ammo. In 2020, the domestic federal agencies of the U.S. government had enough bullets to kill every man, woman, and child in America, many times over.


What laws and regulations were all those weapons intended to enforce? Calling your wine “Zombie wine”. Taking a rake from New York to New Jersey in the bed of your pickup was a federal crime. And a lot, lot more. Many hundreds of thousands more.


In Oklahoma City a bartender put bacon in vodka. It was a hit with customers. Armed government officers arrested him for “infusing vodka” and he did time in jail for his crime.

Bill Schammert, “Bacon Booze”, Fox25 TV News (2016) https://okcfox.com/news/local/bacon-booze-local-bar-bartender-in-trouble-for-infusing-vodka


These things sound like jokes. But they only sound like jokes. Government regulators are not only serious about imprisoning you, they have the guns and bullets to make you dead should you decline to go along.



The explosion of the “Administrative State”: Deep and Wide  

Today, we are ruled more and more by excessive regulation and executive fiat. Worse, we’ve done little to prevent our system of separated powers from yielding itself to the sweeping authority of federal agencies, or what many call the administrative state. We cannot blame political ideology. Under Democrats and Republicans, the administrative state has only expanded.

Senator Chuck Grassley, speech (2018)


The Constitution’s Appointments Clause requires that federal agencies’ binding rules must be approved by “officers of the United States”… from 2001 to 2017, nearly three-quarters of the rules reviewed never received the constitutionally-required signoffs. Career bureaucrats who issue and enforce regulations have become a functionally-independent, extra-constitutional fourth branch of government.

Jerry Shenk, “Regulatory Taxation Burdens Us All”, Daily Local (2019)



The Founders understood that there are two fundamental ways in which government can exercise its authority. The first is a system of arbitrary rule, where the government decides how to act on an ad hoc basis, leaving decisions up to the whim of whatever official or officials happen to be in charge; the second way is to implement a system grounded in the rule of law…

Ronald J. Pestritto, “The Birth of the Administrative State: Where It Came from and What It Means for Limited Government” Heritage Foundation (2007)


Nip the shoots of arbitrary power in the bud, is the only maxim which can ever preserve the liberties of any people.

John Adams, Novanglus Essays, No. 3 (1775)


By 2020, the “rule of law” had long since ended in America. Rule by the Unelected Regulator/Ruler State was the de facto reality and had been for many decades. The Unelected Regulator/Ruler State got a big boost in 1946 when Congress passed the Administrative Procedure Act. It allowed unelected regulators to create what were, in effect, laws. But not even the vast number of edicts created by unelected regulators, nor its proportion to statutes created by elected regulators, told the whole story of the growth of the Administrative State. Not even close.


The number of regulations issued each year includes both new regulations as well as deregulatory actions. Under the APA [Administrative Procedure Act], a “rulemaking” is defined as “the agency process for formulating, amending, or repealing a rule,” which means that agencies must undertake a regulatory action whenever they are issuing a new rule, changing an existing rule, or eliminating a rule.

Maeve P. Carey, “Counting Regulations: An Overview of Rulemaking, Types of Federal Regulations, and Pages in the Federal Register” Federal Research Service (2016)  https://fas.org/sgp/crs/misc/R43056.pdf


Unelected federal regulators long ago stopped obeying the rule that “agencies must undertake a regulatory action whenever they are issuing a new rule, changing an existing rule, or eliminating a rule” and started simply issuing edicts as commands with no oversight or external restraint of any kind.



Kinds of federal Regulation: #6 Regulatory Dark Matter

A May 1, 2019 article “Treasury Sets Expectations for Sanctions Compliance Programs” in the Wall Street Journal was basically an announcement of a new federal law. The wording was very careful. It said that the new “policy” was “…issued by the Treasury’s Office of Foreign Assets Control,” and it “signals” that, “the agency wants companies to have an active sanctions compliance program, rather than a written policy alone.”


Mengqi Sun, “Treasury Sets Expectations for Sanctions Compliance Programs” Wall Street Journal (5/1/2019)



What do the words mean? Is the new “policy” really a sort of suggestion? What do you think will happen to you if yours is a targeted company and you don’t obey the new by OFAC regulations er we mean “signal”? Your ass is grass and the federal regulators are the lawn mower? Something like that?


Quoting the article again, “OFAC also wants businesses to routinely assess their operations, including their supply chain and counterparties, for potential vulnerabilities, and set up internal controls, active auditing and testing, and frequent training.” Just a suggestion, of course, which you had better obey, unless you want action against you by federal regulators, who have the power to arrest you, fine you, and destroy your business. (And in 2020, when federal regulators came after you, it was often the case that at your trial the same federal regulators who had charged you would also be your judge and jury, would even decide on your parole when you were convicted, and if you appealed their verdict, because of “judicial deference”, the same federal regulators would be the judges at your appeal, as we will soon see.)


All this new law (because it did indeed have all the force of law) was created by the regulators without any action by an elected official, or even without the regulators going through the process of creating an official regulation. The new law was simply issued as an edict.


“...routinely assess their operations, including their supply chain and counterparties, for potential vulnerabilities, and set up internal controls, active auditing and testing, and frequent training.”


That sounds like the kind of thing that might have cut into some of your free time, if you were a business owner or manager. Or more probably force you to hire people just to obey the new federal mandate. And not just once, because “routinely”. Any chance that this regulation, an unfunded mandate, would add to the costs of operation for the businesses it targeted, and that cost would be passed on to customers? Not to mention the cost of the settlements themselves, “...OFAC already has begun to incorporate components of the framework in its recent settlement agreements, including the agency’s settlements of $611 million with three UniCredit Group banks last month.”


So some new edicts had already netted federal regulators over half a billion dollars. Cha-ching! Customers could add that to the price of doing business with UniCredit Group. (And, as we will see, chances are the money collected by federal regulators as the fine would be funneled to a leftist political action group.)


Then the very next day the Justice Department issued another set of new laws-- er they mean, “framework of compliance programs”. Mengqi Sun, “Treasury Sets Expectations for Sanctions Compliance Programs” Wall Street Journal (5-2-19)




Dark Matter ...never intended or even imagined by Congress...

For regulatory and enforcement agencies such as the FDA, EPA and SEC, enforcement discretion is a tool... Because waivers and enforcement discretion often are not specifically authorized by the underlying statute, they can offer agencies an opportunity to expand their power or to gain leverage over regulated entities that was never intended or even imagined by Congress

Henry I. Miller, John Cohrssen, “Regulatory Dark Matter” Hoover Institute (2018)



While agency development and use of guidance documents can be a mind-numbing subject, it is very important. Guidance—the full spectrum of agency policy statements and interpretive rules, including agency memoranda, circulars, bulletins, frequently-asked questions and so forthis a vast but often mysterious part of the administrative law universe, what some experts call “regulatory dark matter.”  

Paul Noe, “Shining the Light on Regulatory Dark Matter: Due Process and Management for Agency Guidance Documents, American Forest and Paper Association (2018)



Legislative Dark Matter never intended or even imagined by Congress? That’s saying a lot. It’s hard to imagine any degree or amount of government control never imagined by Congress. When it came to imagining new and more control over Americans, Congress had a huge imagination.


Much of the reason for the existence of Regulatory Dark Matter was that the federal government did not want to obey its own regulations. You can hardly blame it, given how voluminous and confusing those regulations were. If the regulators had to really follow all their rules, they probably would never have gotten any regulating done. The reality was that if you possessed the power wielded by a federal regulator in 2020, very little if anything prevented you from just making up the rules as you went along and targeting pretty much anyone you chose, while letting your “friends” slide, as we will see they did on a massive scale when we look at Selective Enforcement.


Because if you were a federal regulator and you wanted to do that, who was going to stop you? The people? Hahaha no. Maybe other federal regulators. There were the only people who had the power.


The fact that there were so many federal regulations that they got in the way of federal regulation may sound crazy. But it really was a thing. In 2014, Philip K. Howard wrote a book called The Rule of Nobody about the problem. In it he gave examples (although only a few, really) of situations where government regulations prevented government officials from solving problems. With the number of regulations in America (i.e. not just federal but also state and local) numbering in the literally millions, it was bound to happen sometime.


“We’re bogged down in bureaucracy, pushed around by lawsuits, and unable to steer out of economic and cultural storms. But what’s the alternative?” The Rule of Nobody asked. A book about a problem should offer a solution. What was Howard’s solution to the problem of the U.S. having so much regulation that regulators couldn’t regulate? You guessed it: More regulation. Ever more government control of Americans seemed literally to be the only thing that some people could imagine.


American government is failing not because officials who deal with the public have too much power, but because they have too little.

Philip K. Howard, The Rule of Nobody: Saving America from Dead Laws and Broken Government (2014)



What Regulatory Dark Matter Is (Federal Rule by Command)  

Remember the story A Christmas Carol, by Charles Dickens. In the story, Marley is wrapped in heavy iron chains with cashboxes and things hanging from them. He says to Scrooge, “These are the chains I forged in life”. He says that Scrooge’s chains—though invisible to him—are even longer and heavier than Marley’s.


Recall again Madison’s fear that Americans would come to be bound by laws which cannot be known or understood. Invisible laws, sort of. So that is what Dark Matter regulations were like: Invisible chains that American citizens wore during their lifetimes; but not forged by the citizens, nor even by elected representatives. Federal regulators could and would arrest you, fine you or, put you in prison for violating Dark Matter regulations, even if you had never read them, never heard of them, and could not have understood them if you had read them.


A favorite Beltway trick is for agencies to exceed their authority and avoid formal rule-making by issuing mere “guidance” and then forcing citizens to comply, regardless of the intent of lawmakers.

James Freeman, “Make Washington Small Again” Wall Street Journal (2019)  https://www.wsj.com/articles/make-washington-small-again-11555102531


While there are a few dozen laws enacted annually alongside thousands of agency rules, agencies have issued reams of guidance documents consisting of general statements of policy and interpretive rules, as well as memoranda, interpretive bulletins, and other issuances... over the years that can carry regulatory weight.

Clyde Wayne Crews, “A Partial Eclipse of the Administrative State Competitive Enterprise Institute (2018)



...”general statements of policy” Defined as “statements issued by an agency to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power, “... ‘Interpretative rules,’ now more commonly interpretive, are defined as “rules or statements issued by an agency to advise the public of the agency’s construction of the statutes and rules which it administers”

Attorney General’s Manual on the Administrative Procedure Act



Dark Matter regulations and commands may have been called “sub-regulatory guidance” or “interpretative/interpretive rules” or referred to by regulators using the oxymoronic term “mandatory requests”. What they amounted to was that the unelected federal regulators were no longer required even to go through the motions of issuing their edicts as formal regulations. Or even necessarily as regulations. Unelected, essentially un-fireable government and quasi-government regulators could simply issue commands to individuals, businesses, and whole classes and groups of citizens as commands by fiat. Like dictators do. “The law is anything I write on a piece of paper.”



Size of Dark Matter in the Regulatory Universe

The total amount of regulatory dark matter was incalculable, of course. If it was impossible to count the total number of relatively formal laws and regulations created by federal regulators, it was surely impossible to count or otherwise weigh Dark Matter regulation. We quoted the Clyde Crews story above, “...federal departments and agencies issue well over 3,000 rules and regulations...” The story goes on to say, “Beyond those rules, however, we lack a clear grasp on the amount and cost of the many thousands of executive branch and federal agency proclamations and issuances, including memos [The law is anything I write on a piece of paper”], guidance documents, bulletins, circulars, and announcements with practical regulatory effect.” So the 3,000 number then was only a sort of baseline.


As of March 2018 (according to a Forbes article published that month) “...agencies on the whole have issued over 13,000 guidance documents since 2008.” The House Committee on Oversight Reform published an appendix just listing the guidelines, not including the text, which was itself 3,574 pages long. But the 13,000 guidance documents were probably only a fraction of the total number of commands issued to individuals and businesses by unelected federal regulators, because many regulations were intentionally never made entirely public (especially those issued by law enforcement and aimed at enabling prosecution of victimless “crimes” such as money laundering, and those regulations and orders created by agencies such as the NSA which were intended to be secret from the private American citizens because the private American citizens were their target). The new laws weren’t even necessarily written down in places where the public could see them.


...the problems of Over-Criminalization of Conduct and Over-Federalization of Criminal Law are among the most serious problems facing Congress... a trend in the law is the drift away from the idea of blameworthiness as a first principle of American criminal justice.

Tim Lynch in Congressional testimony, One Nation Under Arrest: How Crazy Laws, Rogue Prosecutors, and Activist Judges Threaten Your Liberty edited by Paul Rosenzweig and Brian Walsh (2010)


Proportionally as well as in absolute terms, ever more of the regulations and commands created by federal regulators were of the Dark Matter kind, and they created new crimes, many tens of thousands of them. If you think that the old kinds of regulations were hard to find and count, the Dark Matter kind were doubly impossible to measure or even to see, let alone understand, even if you were allowed to see them.



The Rule of Everybody?

...traditional legislative and regulatory hard law processes are somewhat broken. The combination of regulatory accumulation, over-bureaucratization, and the influence of special interests has led to increasingly dysfunctional governing mechanisms.

Ryan Hagemann, Jennifer Huddleston Skees, Adam Thierer, “‘Soft Law’ Is Eating the World”, Mercatus Center - George Mason University (2018)



...we are witnessing the twilight of the traditional regulatory system and its gradual replacement by an amorphous and constantly-evolving set of informal “soft law” governance mechanisms.

Ryan Hagemann, Jennifer Skees, Adam D. Thierer, “Soft Law for Hard Problems: The Governance of Emerging Technologies in an Uncertain Future” Colorado Technology Law Journal (forthcoming)


Was the replacement of statutory “rule-of-law” regulation with control by amorphous and constantly-evolving ‘soft law governance mechanisms’ a euphemistic way of saying that the rule of law and representative government had been replaced by an entirely different kind of system?


If the authors of the epigraphs (and Philip K. Howard) were right, then maybe government regulation in the U.S. had become so vast that it had turned into a sort of meaningless morass that controlled everything and accomplished nothing (except, perhaps, to redistribute wealth and capital from the productive private sector to an unproductive elite, via government regulators, a possibility we discuss in book 4 KleptoState).


Or maybe, if the thinkers writing in the Colorado Technology Law Journal were right that “soft law” might be a good thing, then maybe something new—some new whole new kind of law—heretofore unseen among humanity --had emerged, spontaneously. Had evolved, like a new species of government control. Maybe we had so much regulation and so many of us were regulators that we had sort of become our own regulators. We had attained—not Howard’s “Rule of Nobody” but rather the Rule of Everybody.


The U.S. system of regulation is supposed to be government for the people and by the people. Maybe by 2020 we had so many rules and regulations that we had, if unexpectedly and unintentionally, achieved that goal. We were all controlled by everyone and so by ourselves.


No. Sorry.


What is wrong with that picture is that it would have required that government regulation had grown so vast that it canceled itself out. And that was not really true. Far from it. Government regulation was vast all right, but it was not without vast effects, which by no means canceled each other out, but rather aggregated, and grew heavier and heavier. The American people were not ungoverned, nor were they allowed to govern themselves. They were governed, controlled, and ruled by a system quite different than the one laid out in the U.S. Constitution. And it was not a system characterized by anything remotely like “deregulation”.


While there indeed were a huge and growing number of federal regulators, not everyone was one. Most Americans weren’t. Most Americans were the Ruled kind of American, not the Ruler kind. And fewer and fewer of the regulators seemed to believe in 2021 that the regulations applied to them.



Kinds of Federal Regulation: #7 Private Political Operatives acting as Government Officials - The Federal Gruberment

While not every American was a regulator in 2020, the U.S. government was giving regulatory powers to persons who weren’t official ‘civil servants’, let alone elected, or accountable in any way, or, it will seem, themselves subject to the edicts they created, as we will see.


This was a growing trend in government regulation, and not just at the federal but also at the state level. Privately funded organizations with political agendas placed operatives in governments as actual government officials. A kind of unofficial officials. These political operatives worked in government and were paid by the private organizations, such as the left-leaning World Resources Institute, and Democrat Michael Bloomberg’s private organization (which he called the “State Energy and Environmental Impact Center”) to enact the agendas of leftist political organizations as government regulation. Real actual official government regulation. The kind you can get put in prison for ignoring.


Meanwhile, as money to pay the salaries of these privately-owned government officials moved from leftist political organizations, it also went in the opposite direction, as money extracted as fines on businesses and individuals flowed from government directly into the coffers of leftist operations.


During the Obama administration, the Department of “Justice” (for so it was still called officially) gave to the corporations from which it extorted money an option for how the corporation paid the fines. The corporation could, instead of paying government, give money to “leftwing interest groups” which were “handpicked by the Obama administration”. According to Judicial Watch, “…the Office of the Assistant Attorney General (OAAG) and the Office of Legal Counsel (OLC) [ensured that] conservative groups did not receive any settlement cash.”

Judicial Watch (2017)



Obama’s Extortion Operation er “Justice” Department had a slush fund and “steered those funds to political allies on the left...” Justice Department public records “…show that when cash donations to liberal groups are combined with other donations in the form of loans the slush fund may have topped $3 billion.” Kevin Mooney, “Obama Justice Department’s $1 Billion ‘Slush Fund’ Boosted Liberal Groups” Daily Signal (2017)



We look at more examples of this and how this shadow government of leftist political organizations works in the other books in this series.


It would seem that surely we have said enough about the kinds of government regulation in this, our Story of Government Regulation, which was supposed to be “Brief”. But there is another sort of government regulation. A kind of meta-regulation.


Stalin is credited with saying that quantity has a quality of its own. As we noted above, in this series of books we discuss at length the idea that “More is different”, as the phrase was used in the famous paper by the physicist P.W. Anderson. It seems that greater regulatory power may spontaneously create greater regulatory power. Regulation can feed on—or feedback on—regulation. As the apparatus of government regulation grows, more opportunities for more kinds of regulatory power are created. Such regulatory powers, which are created by the massive amount of regulation itself, we will call Regulatory Force Multipliers.


The Obama administration went away of course, but extortion by the “Justice” Department did not end. In 2021, Obama’s Vice President became President, and the new boss of the Department of “Justice”. And (according to an article by Kanishka Singh, entitled "U.S. Justice Department Probes SpaceX After Hiring Discrimination Complaint" in Reuters) what happened next may not shock you, or not:


On January 25, 2021, Biden's fresh new Department of "Justice" threatened Elon Musk with prosecution for hiring too many Americans. That's right. Musk's SpaceX company was under investigation for its employment practices, and the attack was instigated as the result of a complaint made by a person who applied for a job at SpaceX, and the company, the DOJ, alleged, had "...failed to hire him for the position because he is not a U.S. citizen..." So, in 2021, favoring American citizens for American jobs was grounds for prosecution by the “United States” Department of “Justice”.


But, presumably, some “lobbying” money, which would find its way into in the pockets of Democrat politicians, would make the charges against SpaceX go away eventually. And if Musk declined to pay up, the resulting fines would eventually end up in the same pockets, with leftist Democrat lawyers making big money at every step of the prosecutorial process.





Regulatory Force Multipliers

The military concept of a “force multiplier” is that certain factors can give soldiers and weapons more effect than they would have without those factors. You don’t necessarily have to increase the force to increase the force it has. The amount of force can be increased by adding force multipliers. The federal government has ways to increase the force and impact of regulation besides just increasing the amount of regulation (although, of course, it does that too).



Force Multiplier #1: Selective Enforcement

No one knows how much the regulatory state “weighs,” or even the number of agencies at the center of our bureaucratic “big bang.” But for We the Regulated, ignorance of the law is no excuse.

Clyde Crews, “Mapping Washington’s Lawlessness 2016 - A Preliminary Inventory of ‘Regulatory Dark Matter’“ ISSUE ANALYSIS 2015 NO. 6, Competetive Enterprise Institute (2015)



The prosecutor has more control over life, liberty, and reputation than any other person in America… He can have citizens investigated…to the tune of public statements and veiled or unveiled intimations… The prosecutor can order arrests, present cases to the grand jury in secret session, and, on the basis of his one-sided presentation of the facts, can cause the citizen to be indicted and held for trial... the prosecutor can still make recommendations as to sentence… and after he is put away, as to whether he is a fit subject for parole.

Robert H. Jackson, Attorney General, in an address to Second Annual Conference of United States Attorneys (1940)


Beria... said, “Show me the man and I’ll find you the crime.” That really is something that has survived the Soviet Union and has arrived in the good old USA… This is not an exaggeration.

Harvey Silverglate, “The Criminalization of Almost Everything” Cato Institute (2010)



In case you do not know who Beria was:


“Lavrenti Pavlovich Beria... supervised the ruthless 1930s purges in the region and arrived in Moscow in 1938 as deputy to Nikolai Yezhov, ‘the blood-thirsty dwarf’, head of the Soviet secret police. He soon succeeded Yezhov, who was shot on Stalin’s orders, apparently at Beria’s prompting. Beria, who went on to run the Soviet network of slave-labour camps, was notorious for his sadistic enjoyment of torture and his taste for beating and raping women and violating young girls.”

History Today https://www.historytoday.com/archive/months-past/lavrenti-beria-executed


Lavrenti Beria’s lifelong motto: “I’m a Socialist and I’m here to help you.”


No, ha ha. It really was, “Show me the man and I’ll find you the crime,” like Harvey Silvergate said. Seriously. Beria was a classic government regulator. He understood that the force multiplier of selective enforcement greatly increases the power of government regulators. After a certain point, no more new regulations would be needed because government regulators could arrest anyone they wanted, although of course in America in 2020 more regulations always were created anyway.


Referring to the 1995 book Demosclerosis: The Silent Killer of American Government by Jonathan Rauch (1995) an article in USA Today in 2014 titled “We Don’t Need More Laws” noted that every America was already a felon, so why do we even need more laws? Then answered with “…nobody in Congress gets much in the way of votes by repealing laws. All the institutional pressures point the other way.” The more government regulators and regulations we have, the more government regulators and regulations we get. Regulatory Force Multiplication 101.

Glenn Harlan Reynolds, “We don’t need more laws” USA Today (2014)



So eventually almost everyone in America committed crimes whether they knew they were doing so or not, like the USA Today article said. And indeed this gave regulators a big, extra added power: If everyone was a criminal then prosecutors and other regulators with enforcement power could choose which Americans to prosecute and which to put above the law (such as the government regulators and the donors to political campaigns, and people who could afford to pay lobbyists to pay off politicians, and so on). And in the 21st Century the vast army of enforcers of government regulators used that power every day.


If everyone is a criminal, whom do you arrest? Whomever you want; take your pick.


So selective enforcement and prosecutorial discretion were possible for two reasons:

1. The staggeringly vast number of laws and “crimes” created by federal and state regulators, especially during and since the New Deal.


2. The fact that in the U.S., prosecutors were given an immense amount of power from the start, and over the years politicians and judges granted them more and more power. Prosecutors were in effect above the law, not subject to the laws they used to prosecute others.


In 2011, only 48% of Americans thought the government was doing a good job protecting "the right of everyone to equal protection under the law". By 2013 that fell to 43%. In 2015 it was 40%. By 2021 the percent of Americans who felt that government was applying the law equally to all Americans was only 27%.


And among people self-identifying as political Independents, in 2021 only 19% believed that equality under the law was the reality in the United States. And only 23% believed that "Freedom from punishment without trial" was a reality anymore. And of course, they were right. In 2021, government regulators had the power to ruin your life, to destroy you and your family too, probably, just by arresting you and throwing you into their system. Whether or not you had ever done anything wrong, even by their rules. And the government regulators used that power unfairly and applied it unequally, and everyone knew it. Government regulators and their cronies were above the law. The rest of us were just victims waiting to happen.

AP-University of Chicago Nationwide Poll “Civil Liberties and Security: 20 Years after 9/11” (2021) http://www.apnorc.org/civil-liberties-and-security-20-years-after-9-11



The Criminalization of All Americans Act (CAA)

In his book Three Felonies A Day: How the Feds Target the Innocent, Harvey Silverglate referred to the warning by federal prosecutor Robert H. Jackson which we quoted above noted that by 2009, the average American, “…wakes up in the morning, goes to work, comes home, takes care of personal and family obligations, and then goes to sleep, unaware that he or she likely committed several federal crimes that day.”


In 1798, the U. S. Constitution created a grand total of three federal crimes (piracy, treason, and counterfeiting). In 1790, Congress passed the Crimes Act, and brought the total number of federal crimes to twenty or so. By 2017, no one could count the federal laws anymore — there were too many to count — and they were voluminous enough to imprison essentially any American whom government regulators wanted to imprison, for whatever reason. There were hundreds of different armed federal police agencies to enforce all those hundreds of thousands of laws. “The Small Business Administration (SBA) spent tens of thousands of taxpayer dollars to load its gun locker with Glocks last year. The SBA wasn’t alone – the U.S. Fish and Wildlife Service modified their Glocks with silencers.Forbes, “Why Are Federal Bureaucrats Buying Guns and Ammo?.


Silencers? Really? To arrest somebody who caught fish over the limit? Beria would understand.


In 2019, C-Span broadcast an interview with Supreme Court Justice Neil Gorsuch to promote his new book A Republic, If You Can Keep It. Justice Gorsuch told an anecdote about how, out of curiosity, he once asked his law clerks to find out the total number of federal crimes that were on the books. They returned an answer of between 4,000 and 4,500 federal crimes in the statutes. But then Gorsuch asked them to find out how many punishable federal crimes had been created by the unelected federal regulators in the Administrative State. They came back with the answer that over 300,000 federal crimes had been created by the Administrative State by the late 1990s, at which time the people counting the laws had given up and stopped counting.

https://www.c-span.org/video/?463951-1/justice-gorsuch-discusses-a-republic-it  41:00


Presumably, after the 1990s, the number of federal crimes grew and the rate of growth also increased. (Unless, of course, most of those regulations were repealed in the G.W. Bush Era of Deregulation. But that is beginning to seem pretty unlikely.) The “300,000 and stopped counting” punch line of Gorsuch’s anecdote got a small laugh from the audience at his interview. But an American found guilty of committing one of the hundreds of thousands victimless federal “crimes” was probably less amused if he happened to be watching Gorsuch on a TV in a federal penitentiary.


It’s easy to see the harm in piracy, real acts of treason, and in counterfeiting. But few of the hundreds of thousands of subsequently created federal crimes had anything to do with anyone actually being harmed by someone else. The “harm” part came when a federal prosecutor singled you out as a criminal. Then you would learn the real meaning of the word “harm”. Quite possibly your life would be ruined just by being charged and then having to defend yourself.


Quoting further from the Cato article, “When laws grow so voluminous and vague that they oppress those who live under them, society can become as unlivable as if it were lawless. Subject to the arbitrary scrutiny of prosecutors overcome by ambition for their own 15 minutes of fame, ordinary citizens face the horrors of becoming criminal defendants.”


The reality of becoming the victim of government prosecution in the 21st Century was that just charging you was itself severe punishment. The ordeal you endured (living for months or years under the threat of being sentenced to a federal prison) and the expense (defending yourself could cost hundreds of thousands of dollars or even millions, if you had it) of federal persecution was bad enough, but the family and associates of the prosecuted person also often became targets of the prosecutors, who used threats of prosecution against family and associates to get confessions from the accused. After all, the prosecutor could always find “crimes” the family and associates were guilty of, too.


If you were charged with a federal crime, it probably came as a blow, but you might at first have taken comfort from the fact that you were innocent of any real wrongdoing. However, you would soon find out that such solace was falsely based, and that being innocent of harming anyone or of committing any real crime had nothing to do with what was going to happen to you.


As the Criminalization of All Americans Act went forward, the trend in new crimes was definitely toward the victimless kind, as we will see when we now look specifically at the federal Criminalization of Normal Financial Transactions (CNFT), for example. In such “crimes” it was not clear that anyone was actually harmed, even indirectly, not even several degrees-of-connection away from the “crime”. The fact that no one was harmed did not mean that you, when found guilty of the “crime”, would not be sent to prison.



“No harm done? You’re under arrest.” 

Crimes of financial transaction such as theft and fraud have been illegal ever since there were laws. Even counterfeiting—one of the original three federal crimes—is not only a sort of fraud against the government: If someone bought something from you by using fake money which you could not legally spend, then you were defrauded. You were harmed.


But this was not the case with most federal financial crimes invented the late 20th and early 21st Centuries, where no victim of any kind was necessary.


But what was maybe even crazier was that, as tens of thousands of new victimless crimes were created wholesale by U.S. government regulators, those same government regulators let the people who committed real crimes, with real victims, went free and unpunished. As real crimes ceased to be crimes:


In many cities in 2021, Shoplifting was de facto no longer a crime, and police refused to even come to the store when the victim called them. Thieves walked out of stores with arm loads of goods, and it was the store owner’s task to find some way to stop them, without himself being sued later for what actions he might take. Corporate headquarters commanded store employees not to interfere with thieves and fired workers who did not obey.


Very few burglaries were investigated by police, who, if they were being honest, simply told the victim that the stolen property would never be recovered and he or she should just call the insurance company, instead of hoping for any action by government.


Even though government regulators were secretly tracking cryptocurrency exchanges (as was revealed when the FBI quickly found the perpetrators of the Colonial Pipeline extortion in 2021 by tracing the Bitcoin transfers), up to that time criminals committing extortion by demanding ransom were not found, arrested, or convicted by the government regulators, who had had the ability to do so if they had wished, but were too busy prosecuting people who committed the new victimless "crimes".


Even murder was becoming a non-crime in the United States. A 2021 article in The Economist titled “Getting Away with Murder: In America, Killers are Nearly as Likely to Go Free as to be Caught” reported that the percentage of homicides being solved in the U.S. had been falling steadily, and at current rates the reality was that most American killers would soon literally be getting away with murder, along with all the other non-crimes. It was already true in St Louis, where only 47% of murderers were found. While in, “...Baltimore and Tampa, two out of every three murders fade into history without an arrest.”



But it was, without doubt, possible for the U.S. government to have solved those murders, if they had wanted to. In 2020, the Netherlands, Sweden and most of Britain police solved about 80% of murders. Japan, New Zealand and South Korea solved more than 90%. In fact, in 1965, before the deluge of government regulation and the creation of thousands of new victimless crimes, almost 90% of murders were solved in America. And the reason for U.S. government regulators not solving the murders was not that there were too many murders to solve. The number of murders in the U.S. topped out in the early 1990s at about 10,000 per year, and by 2020 only about 20% of that number were committed. While the numbers of murders decreased, the percentage of murders solved also decreased.


So the reality was that by 2021 U.S. government regulators for the most part simply declined to find and arrest murderers, preferring to arrest and imprison Americans for such "crimes" as taking their own money out of their own checking accounts, or selling stuff at flea markets, or possessing a pain medication, or, in one case that we discuss in a book, making bacon flavored martinis. Government regulators refused to arrest and prosecute most or all shoplifters, burglars, murderers, extortionists, car thieves, looters, rioters, and arsonists (at least if those latter three acts were committed by leftists in BLM or Antifa — in many U.S. cities, police stood by and watched as BLM and Antifa committed those non-crimes with impunity — in the numerous riots of 2020 and 2021 in Portland, OR, of the relatively few rioters arrested, more than 90% were freed and charges dropped almost immediately).



Selective Enforcement, and the Federal Bureau of Financial Transaction Prosecution

There seemed to be in 2020 no official agency called the “Federal Bureau of Financial Transaction Prosecution” per se. The power to prosecute Americans for normal, everyday financial transactions was spread out over numerous different agencies of the federal government. Financial Prosecution was a part of the Criminalize All Americans effort. It began in earnest in the Nixon Administration, with the Bank Secrecy Act (BSA). Nixon might have been accused of being a ‘deregulator’ but the BSA was no act of deregulation. Far from it.


In 2020, the force multiplier of selective enforcement was strong with the federal regulators who controlled the financial system. Vast numbers of federal regulations controlling financial transactions and a great many federal crimes were created to create this control. This was achieved in part by criminalizing normal personal and business financial transactions, such as person depositing in or withdrawing money from his or her own personal, with no accusation of even any intent of wrongdoing and no harm done to anyone. The other part was done by the ongoing creation of a large, mostly secret, government system to force ordinary Americans and financial institutions to inform on their fellow citizens to the federal enforcement officials, under the threat of federal prosecution, fine, and imprisonment. 


In 2020, commercial banks had their own, in-house KYC departments, just like they had Human Resources and Business Loan Departments. The cost of this was, of course, huge and it was passed on to customers in the form of higher fees. But that was not the reason the banks needed to keep the KYC departments as secret as possible. Federal regulators did not want ordinary citizens to know about Know Your Customer (KYC), because the target of the federal regulators was not the banks, it was ordinary citizens.



KYC (Know your Controllers)

In 2018, the Wall Street Journal story Rules Designed to Catch Terrorists Cost This Unsuspecting Customer Her Bank Account” told of a 75-year-old retired teacher named Mary Ann Liegey who one day was shocked to receive a letter from her Citi bank telling her that her $20 check to St. Mary’s Church had bounced. After finally getting through to someone in the Know Your Customer department of Citigroup, she found that the bank had frozen her checking and trust accounts.


The article quotes Mrs. Liegey saying, when she was told why her accounts were blocked, “I said, ‘Who is KYC?’ I had no idea what that meant.

Telis Demos and Michael Siconolfi, “Rules Designed to Catch Terrorists Cost This Unsuspecting Customer Her Bank Account” Wall Street Journal (2018)



Like the Bank Secrecy Act, Know Your Customer (KYC) was part of the federal regulatory apparatus which monitored and controlled all financial transactions of Americans. The banks had no more choice in the matter any more than did the customers being spied on. As the quoted WSJ article says, “.... recently, regulators have fined or cited a number of large banks for having insufficient procedures to monitor customers and transactions.


If you had bank accounts in 2020, the government agencies spying on you were not small and their regulations were vigorously enforced. Banks had whole KYC Departments, as we said. But, as with Ms. Liegey, your bank probably wasn’t telling you that. It was called the “Bank Secrecy” system, after all.



Bank Secrecy Act, Go Fish

The Bank Secrecy Act (BSA), which is also known as the Currency and Foreign Transactions Reporting Act, was passed by Congress in 1970; it requires U.S. financial institutions to collaborate with the U.S. government law enforcement to accumulate evidence to be used against unknowing U.S citizens in their prosecution.


The teller at your bank probably seems like a nice person. She is informing on you to federal law enforcement. She probably actually is a nice person. But if she fails to inform on you, she will be arrested and put in federal prison. So she really has little choice. And your teller is also prevented by federal law from telling you that she is informing on you to federal law enforcement. In government “bank secrecy” you were the target whom things were kept secret from. As the famous saying goes in crooked poker games, if you don’t know who the fish is, it’s you.


Of course, it might have seemed to you that she could not be “informing” on you regarding some “crime”, because if you had done nothing wrong, if you had not done anything to hurt anyone, then you had committed no crime and were subject to no prosecution. But nothing could have been further from the truth, of course.


The Bank Secrecy Act was federal regulation, but state and local enforcement officials also used such laws to go fishing for new “criminals”, i.e. people who actually had nothing to hurt anyone. And more regulations and laws were continuously being added to the 1970 BSA.


The 1996 Bank Secrecy law forced banks to file “suspicious activity reports” about their customers, while forbidding the banks from telling their customers that they have filed such reports. The government regulators then put the reports in a database and made it available to thousands of law enforcement entities all over the U.S. By 1997 the database was getting 4,600 requests a month from state and local authorities for information on citizens.



Know Your Trump Voter

In 2021, in a possibly criminal violation of the 4th amendment rights of millions of Americans, executives of the Bank of America allegedly gave private information about customers to federal government regulators without warrants, court orders, or any legal due process. Bank executives allegedly helped government regulators go on a huge fishing expedition, to sort through the bank’s records of the ordinary purchases of airline flights, hotel accommodations by millions of customers who were not suspects in any crime. The target of the BofA/FBI’s unwarranted searches: Trump supporters.





Expansion of the Power to Criminalize Financial Transactions

After the original Bank Secrecy Act passed (as the Foreign Bank Secrecy Act of 1970), the federal regulators steadily and greatly increased their power to criminalize all kinds of domestic financial transactions and to spy on all the Americans who made personal and business transactions. In 1986 criminalizing money laundering and structuring; in 1990 establishing FinCEN; in 1992 introducing Suspicious Activity Reports); and in 2001 the biggest add on to BSA powers with the USA Patriot Act.


And all the while, most Americans still were unaware that FinCEN and all the rest of the very well-armed federal law enforcement apparatus existed and was fishing for them.


Eventually federal regulators began requiring essentially all financial institutions—not just banks—to inform on their customers. And in 1990 government financial regulators took another big step in criminalizing personal and business financial transactions by telling all financial institutions that they had to report not just certain kinds but all transactions that could be thought of as “suspicious”. And “suspicious” could mean almost anything. And a “transaction” could be almost any kind of personal interaction. In the federal criminal statutes:

A “transaction” is defined in § 1956(c)(3) as a purchase, sale, loan, pledge, gift, transfer, delivery, other disposition, and with respect to a financial institution, a deposit, withdrawal, transfer between accounts, loan, exchange of currency, extension of credit, purchase or sale safe-deposit box, or any other payment, transfer or delivery...




Normal Financial Transactions as Newly Minted Crimes 

FinCEN´s value is hard to gauge without publication of evidence. It does not disclose how many ‘Suspicious Activity Reports’ result in investigations, indictments or convictions, and no studies exist to tally how many reports are filed on innocent people.

Wikipedia, Financial Crimes Enforcement Network



We already discussed federal regulation of banking a little bit. Remember Glass-Steagall? The financial regulation we look at now did indeed regulate banks, it did control and criminalize what banks and other financial businesses did, but it was ultimately intended to control and criminalize what the ordinary U.S. citizen did.


Some of the personal transactions which were crimes were:


Depositing your own money in your own checking account.


Writing a check to buy something which is completely legal to own, such as a car or a gold coin or chips in legal casino, i.e. something that you want to buy and that the seller wants to sell.


Withdrawing your personal savings from your personal savings account.


Also, many activities tangential to these transactions were also crimes. For example, if buying a gold coin was a crime, then sending an email regarding the transaction was another separate crime you could be charged with: “wire fraud”. Writing a letter about buying the coin was “mail fraud”. And if you sent, say, three emails, that there were three instead of just one was itself another whole different crime, a violation of federal RICO statutes. These crimes were not empty threats or rarely enforced; federal law enforcement officials put thousands of Americans in prison for committing these and other similar federal “crimes”.


According to Mike Chase in How to Become a Federal Criminal (2019), a prosecutor could charge you with as many crimes as he or she wants, and if he or she could get a jury to find you guilty on only one of the charges, then the judge could legally, “…sentence you up to the statutory maximum based on things you were never charged with, or even things a jury acquitted you of, so long as the judge decides you probably did them.”


Mike Chase was an attorney. He wrote about the enormous powers of federal prosecutors that “.... if they think you lied to them, they can charge you for that alone...” But that might not quite cover it. They don’t necessarily think you have been lying; they may just be looking for a way to charge you with more crimes.


Here’s what they can do: They can interview you for hours requiring you to answer a long list of questions about complex issues and events, and then they can repeat those interviews again, and again. Then they can carefully compare all the interview transcripts and if they find any discrepancy in your answers—perhaps as a result of an innocent mistake—they can charge you with lying to a federal official. (This is of course one reason rule why you never talk to the police without a lawyer—and why police and prosecutors give that advice to their own children—You Have the Right to Remain Innocent, James Duane)


In 2020, most people knew that the celebrity Martha Stewart had spent time in a federal prison after she was convicted of insider stock trading, or they thought they knew that. She did time in prison, true, but she was not convicted of insider stock trading. She was sentenced for “crimes” indirectly related to a victimless “crime” she was never even convicted of.


Stewart was found guilty in March 2004 of felony charges of conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators, and was sentenced in July 2004 to serve a five-month term in a federal correctional facility and a two-year probation...



How could she be convicted and punished for conspiring to commit the crime, or making false statements about her crime, or obstructing prosecutors who were trying to convict her for the crime, if she was not convicted of the crime? It happened all the time. It was the common practice. Few of the famous defendants whom ambitious prosecutors such as Rudy Guiliani, Eliot Spitzer, and so on were so eager to very publicly prosecute—such as Michael Milken, Leona Helmsley, Conrad Black, and many others—were ever really charged with or convicted of anything like what a rational, fair-minded person would have called a real crime.


The targets of federal enforcement for “crimes” of personal finance transaction were not only big-time operators, celebrities, or the Mafia, as we might imagine. The federal regulators often intentionally went after small businesses—such as dairies, coin stores, and dress shops. For example federal police specifically targeted those Americans who sold stuff at farmers’ markets.



“Structured” Seizing 

A family owned a wedding dress shop in Dallas, TX. The IRS said they owed taxes. The family was not charged with tax evasion; in fact, the IRS did not claim to have evidence that the family had failed to pay taxes due. The IRS based its claims that the family owed taxes because they had made bank deposits under $10,000”. But the family was not even charged with the infamous “structured deposits” “crime” either. They were not charged with any crime.


Mii’s Bridal & Tuxedo was a mom and pop business in Dallas for decades. Then one morning unmarked vehicles pulled up at the store and almost two dozen armed government agents piled out. Tony Thangsongcharoen, 68, and his wife, Somnuek Thangsongcharoen, 72, were permanently put out of business within hours, and were forced to watch their entire inventory and all the sewing machines and other equipment and supplies sold at auction as government agents sold “the family’s entire life savings for pennies on the dollar.

“The hastily-called sale held inside the store netted the IRS about $17,000 — not enough to cover the roughly $31,400 in tax debt alleged.”


Kevin Krause, “IRS shuts down mom and pop dressmaker, sells dresses within hours” Dallas News (2017)  https://www.dallasnews.com/news/crime/2017/07/08/mom-pop-fights-back-irs-taking-selling-entire-inventory


Not only were the family never charged with any crime, not even victim-free “crimes” such as “money laundering” or “structured deposits”, but with their inventory and equipment taken and sold by government regulators, the family had no way to pay the amount taxes of taxes which the government said they owed, an amount which the government agents had essentially made up out of the thin air.


On the day the government raided the wedding dress shop, thousands of U.S. citizens were serving long terms in federal prisons for buying coins or selling stuff at a farmer’s markets or taking their own money out of their own accounts. Or they had had their businesses seized or were bankrupted by federal seizings and legal costs, without even being charged with one of the phony financial transaction “crimes”. Americans were going to prison for not filling out a certain form about a financial transaction, even if the transaction was perfectly legal and there was no claim that any harm had been done to anyone. Just not filling out the form could put you in prison. Even if you didn’t know that the form was required.


What happened to the mom and pop wedding dress shop owners in Dallas in 2017 was neither an isolated case nor anything new.


Pete Sepp, president of the National Taxpayers Union, testified before a Congressional House Subcommittee in 2016 about how Thomas Treadway of Pipersville, Pennsylvania lost his trash-management business after an IRS audit claimed he owed $247,000 in taxes, penalties, and interest. That assessment was later thrown out entirely, but Treadway was so injured by “overly aggressive IRS collection tactics” (the IRS even seized his girlfriend’s $22,000 bank account) that he never recovered.


In 1990, Kay M. Council of High Point, NC described how her husband Alex, was driven to suicide by such IRS tactics over a disallowed a tax shelter. The IRS never contacted the Councils or their accountant about the deficiency until four years after the fact, by which time the tax bill, the IRS said, was nearly $300,000. Kay Council only won against the IRS in court after spending $70,000 in legal fees, which she was able to pay partially using the life insurance policy of her dead husband.


In 2016, the National Taxpayers Union reported that the IRS and U.S. Department of Justice had joined forces to press for asset forfeiture against small business owners dealing in cash. The report told of more than 600 cases where over $40 million was seized from “…individuals and families who have been forced to forfeit their assets even though they have not been proven guilty of any crimes.”




In the Criminalization of all Americans, personal financial transactions were made crimes, often in secret so that Americans would not even know that they were committing the “crimes”. While thousands of Americans were forced to inform on their fellow “criminals” to federal law enforcement officials. And much more like this happened, as we discuss in other books in this series. But still what we discuss in this book and others is barely the tip of the iceberg. Financial transactions were only one of the things which the government criminalized. The federal regulators had the power to criminalize just about anything, and they did. They had stopped even counting new federal crimes and not even a U.S. Supreme Court Justice knew what the crimes actually were.


They may have stopped counting new federal crimes, such as those which criminalized common and innocent financial transactions, but they did not stop adding new ones. After all, no amount of tax money taken from Americans, and no amount of freedom taken Americans was too great a cost to prevent the horrible act of “money laundering”.


But maybe the strangest part of all that was that by 2020 it was not clear that all that cost paid by Americans for anti-money laundering regulation was actually preventing much if any “money laundering”.



The Tide of Anti-Money Laundering

In 2020, Ronald Pol, a financial-crime expert, published a paper titled “Anti-money laundering: The world's least effective policy experiment?” He which described anti-money laundering as perhaps “…the world’s least effective policy experiment.” He estimated that compliance costs forced on banks and other financial businesses by the government regulators’ war on money laundering were more than 100 times greater than the amount of “laundered” money seized.



His paper cited numerous sources, including a 2017 study titled “Great Expectations but Little Evidence: Policing Money Laundering” in the International Journal of Sociology and Social Policy. And the 2013 book “The Blunders of Our Governments” by the British political scientists Anthony King and Ivor Crewe.




“Yet another bank is preparing to face the music over alleged failings in its efforts to curb flows of dirty money,” reported a story titled “The War Against Money-Laundering Is Being Lost: The Global System for Financial Crime Is Hugely Expensive and Largely Ineffective” in The Economist in 2021. The London bank NatWest, one of Britain’s largest lenders, was facing charges for not closely enough investigating one of its customers.




The article also noted that in January 2021, the U.S. bank Capital One had been fined $390 million. Such fines were not necessarily for money laundering itself, but for, say, not reporting some transactions which the government regulators said might have been “suspicious” but didn’t necessarily have anything to do with money laundering.


Fenergo, a compliance-software firm, reported that in 2020 global banks paid $10.4 billion in fines for “money-laundering violations”. That was an increase of more than 80% over 2019. And the fines were not necessarily for any real money laundering done by anyone, of course. They were mostly just for not completely complying with the thousands of complex and arbitrary regulations created on the fly by an army of unelected, unaccountable government regulators.


While, as The Economist article noted, “…countries from Afghanistan to Zambia have been arm-twisted, particularly by America, into passing laws…” those few people who were doing what might be called real money laundering pretty much went about their business unfazed. Only the banks and the ordinary people doing normal financial transactions suffered much from the extreme laws being forced on people all over the world by U.S. government regulators.


But if the big money-center banks were suffering, most Americans might not shed too many sympathetic tears. That was not the case though. The opposite was the case. The big banks were using their size and their close relationships with government regulators to take advantage of government money laundering regulations to put their small competitors out of business.


By 2021, The Economist article reported that requirements of government regulators had “…turned AML [anti-money laundering] compliance into a huge part of what banks do and created large new bureaucracies,” It was not unusual for banks, “…such as HSBC or JPMorgan Chase to have 3,000-5,000 specialists focused on fighting financial crime, and more than 20,000 overall in risk and compliance.” Small banks simply could not do that.


The big banks were often okay with government regulators adding more FinCen compliance obstacles. Each big bank could have hundreds of full-time employees to deal with the tens of thousands of FinCen regulations, and just pass the immense $millions of costs on to customers. But a small bank or S&L might not be able to afford to hire even one full-time “compliance” expert to navigate the morass of government regulations. And failing to do that navigation could result in huge fines and even prison.


In 2015, in the article Regulation Is Good for Goldman—Lloyd Blankfein and Elizabeth Warren Find Common Ground”, the Wall Street Journal had quoted the CEO of Goldman Sachs on how higher government regulatory costs were “crushing” his competition. “More intense regulatory and technology requirements have raised the barriers to entry higher than at any other time in modern history,” he was reported saying.


More regulation would allow Goldman Sachs to grab market share from smaller competitors who could not afford to comply with hundreds of thousands of regulations or to sufficiently “lobby” regulators. The CEO of Goldman Sachs said that “only a handful of players” would be left. According to the WSJ he said that Goldman Sachs was prepared to have this “relationship with our regulators” and the regulators were prepared to have “a deep relationship with Goldman for a long time”.


But if the government regulators’ vast war on the so-called crime of “money laundering” was costing so much and accomplishing so little (except for the accomplishment of raking in tens of $billions in fine revenue for the government regulators), then what was the solution?


More anti-money laundering regulations, more power and money given to government regulators, more costly banking for consumers, more arrests and threatened arrests of ordinary people doing ordinary things with their own money, forcing more bank employees to become government informers or else go to prison, and more invasion of the privacy of millions of Americans who were literally doing nothing wrong whatsoever. That’s what the government regulators called for.


The Economist article blamed the failure of money laundering regulation on, for one thing, “…a lack of collaboration…” Apparently bank employees were not being diligent enough in informing on their customers. Creating more new money laundering crimes would doubtless fix that.



Of Privacy Crimes and Privacy Criminals

Government regulators use your “privacy” as a rationale for thousands of new regulations to take away your freedoms. But who really are the people who invade your privacy to collect massive amounts of personal information about you, mostly without your knowledge? Who is the real threat to your "privacy"? Of course, you know the answer perfectly well.


The biggest malefactors in invading your privacy and spying on you are, of course, the government regulators themselves. The 3 Biggest differences between private sector Privacy Invaders and government Privacy Invaders:



• Private sector PIs take your data with the intention of selling you more stuff (or, on rare occasions, to make public what the government regulators have been doing to you in secret).

 • Government PIs take your data with the intention of putting you in a federal prison.



• Private sector PIs take a lot of your personal information.

• Government PIs take a lot more, because:



• Thousands of regulations constrain and restrict PS PIs regarding what kind of and how much of your personal information they take, and really, anyway, they just want to take data they can use to sell you stuff. If they are taking your data to commit crimes, such as theft, then why doesn’t the government punish them for those crimes, instead of creating thousands of new “privacy” crimes?

• In reality, no rules constrain or restrict what kind of and how much of your personal information government regulators take. They make the rules, and the government regulators, from the IRS to the FBI to the SEC to the NSA, are above the rules they make. By 2021, they had proven that only a fool would believe otherwise.


People like Edward Snowden are persecuted for making the truth public. In 2021, ProPublica was investigated by the Biden administration for sharing IRS secrets with the American people. Meanwhile, Lois Lerner and countless other government regulators collect their lavish salaries, pensions, and benefits and enjoy all the freedom in America without a worry in the world about even an outside chance that they will ever be held accountable for what they have done.


In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011...

Michael Bloomberg managed to do the same in recent years...

 Jesse Eisinger, Jeff Ernsthausen, Paul Kiel, "The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax" ProPublica (June 8, 2021)



“I share the concerns of every American for the sensitive and private nature and confidential nature of the information the IRS receives...”

Richard Rubin "IRS Is Investigating Release of Tax Information of Wealthy Americans: ProPublica published tax, income details of people including Jeff Bezos and Warren Buffett" Wall Street Journal (June 8, 2021)




Illegal Investing 

In 2020, financial regulations aimed at you and other individual Americans were growing and they could get expensive, if you were charged with one or more. Here are a couple of small examples:


• In 2020, the unelected government regulators at the SEC created a new rule, a new law, really of course. The title was “Policies and Procedures for Limiting Derivatives Users”. https://www.federalregister.gov/documents/2020/01/24/2020-00040/use-of-derivatives-by-registered-investment-companies-and-business-development-companies-required?mod=article_inline


The rule required you—if you wanted to buy some securities—to provide information about yourself such as your annual income, net worth, andinvestment experience. If you failed, for example, to be wealthy enough, you were not allowed to buy the same securities which rich, entitled individuals could buy, even if you had the money to buy them. So not only did the rule require that you turn over sensitive personal information, it denied you the right to buy equities which were legal for other individual citizens to buy, putting non-wealthy investors at a disadvantage to rich, government-favored people.


(In the famous 2021 GameStop short squeeze episode, retail investors were outraged when they were prevented from buying or selling their shares, as brokers moved to protect big hedge funds from losses. The small investors who blamed the brokers may not have known that they had never been playing on a level playing field. Government regulators had long given advantages to their favored super-rich elite investors.)



More regulation would allow Goldman Sachs to grab market share from smaller competitors who could not afford to comply with hundreds of thousands of regulations or to sufficiently “lobby” regulators. The CEO of Goldman Sachs said that “only a handful of players” would be left. According to the WSJ he said that Goldman Sachs was prepared to have this “relationship with our regulators” and the regulators were prepared to have “a deep relationship with Goldman for a long time”.


But if the government regulators’ vast war on the so-called crime of “money laundering” was costing so much and accomplishing so little (except for the accomplishment of raking in tens of $billions in fine revenue for the government regulators), then what was the solution?


More anti-money laundering regulations, more power and money given to government regulators, more costly banking for consumers, more arrests and threatened arrests of ordinary people doing ordinary things with their own money, forcing more bank employees to become government informers or else go to prison, and more invasion of the privacy of millions of Americans who were literally doing nothing wrong whatsoever. That’s what the government regulators called for.


The Economist article blamed the failure of money laundering regulation on, for one thing, “…a lack of collaboration…” Apparently bank employees were not being diligent enough in being collaborators and informing on their customers to the members of the police state. Creating more new money laundering crimes would doubtless fix that.



Of Privacy Crimes and Privacy Criminals

Government regulators use your “privacy” as a rationale for thousands of new regulations to take away your freedoms. But who really are the people who invade your privacy to collect massive amounts of personal information about you, mostly without your knowledge? Who is the real threat to your "privacy"? Of course, you know the answer perfectly well.


The biggest malefactors in invading your privacy and spying on you are, of course, the government regulators themselves. The 3 Biggest differences between private sector Privacy Invaders and government Privacy Invaders:



• Private sector P.I.'s take your data with the intention of selling you more stuff (or, on rare occasions, to make public what the government regulators have been doing to you in secret).

 • Government P.I.'s take your data with the intention of putting you in a federal prison.



• Private sector P.I.'s take a lot of your personal information.

• Government P.I.'s take a lot more, because:



• Thousands of regulations constrain and restrict private sector P.I.'s regarding what kind of and how much of your personal information they take, and really, anyway, they just want to take data they can use to sell you stuff. If they are taking your data to commit crimes, such as theft, then why doesn’t the government punish them for those crimes, instead of creating thousands of new “privacy” crimes?

• In reality, no rules constrain or restrict what kind of and how much of your personal information government regulators take. They make the rules, and the government regulators, from the IRS to the FBI to the SEC to the NSA, are above the rules they make. By 2021, they had proven that only a fool would believe otherwise.

 People like Edward Snowden are persecuted for making the truth public. In 2021, ProPublica was investigated by the Biden administration for sharing IRS secrets with the American people. Meanwhile, Lois Lerner and countless other government regulators collect their lavish salaries, pensions, and benefits and enjoy all the freedom in America without a worry in the world about even an outside chance that they will ever be held accountable for what they have done.

 In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011...

Michael Bloomberg managed to do the same in recent years...

 Jesse Eisinger, Jeff Ernsthausen, Paul Kiel, "The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax" ProPublica (June 8, 2021)



“I share the concerns of every American for the sensitive and private nature and confidential nature of the information the IRS receives...”

Richard Rubin "IRS Is Investigating Release of Tax Information of Wealthy Americans: ProPublica published tax, income details of people including Jeff Bezos and Warren Buffett" Wall Street Journal (June 8, 2021)




Illegal Investing 

In 2020, financial regulations aimed at you and other individual Americans were growing and they could get expensive, if you were charged with one or more of the "crimes". Here are a couple of small examples:


• In 2020, the unelected government regulators at the SEC created a new rule, a new law, really of course. The title was “Policies and Procedures for Limiting Derivatives Users”. https://www.federalregister.gov/documents/2020/01/24/2020-00040/use-of-derivatives-by-registered-investment-companies-and-business-development-companies-required?mod=article_inline


The rule required you—if you wanted to buy some securities—to provide information about yourself such as your annual income, net worth, andinvestment experience. If you failed, for example, to be wealthy enough, you were not allowed to buy the same securities which rich, entitled individuals could buy, even if you had the money to buy them. So not only did the rule require that you turn over sensitive personal information, it denied you the right to buy equities which were legal for other individual citizens to buy, putting non-wealthy investors at a disadvantage in relation to rich, government-favored people.


(In the famous 2021 GameStop short squeeze episode, retail investors were outraged when they were prevented from buying or selling their shares, as brokers moved to protect big hedge funds from losses. The small investors who blamed the brokers may not have known that they had never been playing on a level playing field. Government regulators had long given advantages to their favored super-rich elite investors.)

 • State governments also controlled the private investment decisions of individual citizens. For example, in Massachusetts, government financial regulators prevented the state’s citizens from investing in Apple’s IPO in 1980, saying that the computer company lacked “solid financial footings”, instead of letting individual investors decide for themselves whether or not that was the case. 


That one tiny bit of government regulation was pretty expensive to the person, in Lowell or Springfield or some other Massachusetts town, who was protected from investing $220 in shares of Apple by her government rulers. In 2018, an investment of $220 in 22 Apple shares made in 1980 was in 2018 worth $112,268.80, not including dividends.

“When Apple Went Public on This Date In 1980, Massachusetts Warned Investors to Stay Away” MarketWatch (2017)



The force multiplier of Selective Enforcement had another benefit for federal regulators. While some Americans were going to prison for crimes they had never suspected were crimes, other Americans needed have no fear of being arrested for real crimes, the kind with real victims. They were the people above the law.


Danielle DiMartino-Booth, who spent nine years (2006 – 2015) at the Federal Reserve Bank of Dallas and wrote the book Fed Up: An Insider's Take on Why the Federal Reserve Is Bad for America (2017), said that in 1987 Alan Greenspan used the NY Fed Markets Desk to inform crony Wall Street traders about coming Fed injections of liquidity before these moves happened or were made public.

Danielle DiMartino-Booth, Market Distruptors interview (2020) YouTube 5:13


In the general sense, ‘insider trading’ is when a person profits by using information about financial transactions which was not available to the public. Fourteen years after Greenspan started tipping off big Wall Street insiders about coming Fed moves, government regulators investigated Martha Stewart—as we mentioned above—for selling her shares in a company prior to a drop in the stock's value, possibly by using inside information. Allegedly, Stewart avoided a $45,673 loss. She went to prison, even though she was never found guilty of insider trading. Being tipped off by the Fed about "liquidity injections" of hundreds of $billions could make you tens or hundreds of $millions. And you had a “DO NOT GO TO JAIL” card, courtesy of the federal financial regulators. (The fourth book in this series discusses how such distributions of wealth were part of the real U.S. government system.)



Selective Enforcement and Bank Secrecy at Work?

As we will see, some federal regulators such as Congresspersons exempted themselves from prosecution for breaking laws they created and enforced against lesser Americans. Many other federal officials were also saved from being prosecuted for breaking the laws they punished others for breaking.


If you repeatedly rape a five-year old child, and you are not only guilty beyond doubt but you actually admit to doing it, what should your sentence be? One sentence of life in prison without parole for every time you raped the little girl? Would that be justice? Or maybe you should go free without spending a single day in prison, just pay $1,475 in court costs walk out the courtroom door. That is what happened to a police officer in America in 2019 according to a story titled, “Former Honolulu police officer gets probation in sex assault of 5-year-old girl” The same year that other people—the kind who weren’t government regulators--were being put in prison for depositing money in their checking accounts.



In book 3 we look in more detail at many instances of how government regulators used their power against ordinary-but-criminalized Americans. It seemed to happen in an increasingly lopsided way. Some kinds of people were hit hard and their lives were ruined; other kinds of people did a lot of genuine harm but were never punished at all, were not even charged with crimes. The massive number of federal financial police—including the IRS of course—charged thousands of people with an endless array of crimes, but only some kinds of people were charged, even though the prosecutors could charge anyone they felt like charging. In one case, a man charged with nothing other than “crimes” of financial transactions—no victims—was sentenced by federal regulators to 660 years in prison. Meanwhile, government officials, with few exceptions, seemed to be above the law, no matter what they did or whom they hurt.


The Department of Justice reported on fourteen DEA agents who were caught having sex parties, hiring prostitutes, and harassing locals but none were fired. As of 2015, years after the offenses were committed, all (except one retiree) were still working as agents or supervisors. Instead of being punished for committing crimes, or at least losing their jobs, eight of the agents received bonuses, awards, or other official favorable personnel actions, in spite of those being contrary to DEA policy.

Bonuses and Other Favorable Personnel Actions for Drug Enforcement Administration Employees Involved in Alleged Sexual Misconduct Incidents

Referenced in the OIG’s March 2015 Report”

U.S. Department of Justice Office of the Inspector General (2015)



In more law enforcement news:


Deputy Massacre

Suppose you were being paid to protect children, but when a murderer was killing them, instead of going in to help you hid. 


If your inaction — your not doing your duty — allegedly resulted in the murders of children, then you might be expected to be sued or arrested for criminal negligence, dereliction of duty, or child endangerment, or something. At the very least you would surely lose your job.


The story of a South Florida deputy who allegedly hid while school children were being massacred got national media attention in 2018. The final outcome of the case was not very widely reported. It appears that only did the deputy keep his government job, he was given essentially a two-year vacation at full pay, estimated at perhaps $300,000. ABC News (2020)



Following the infamous government-caused Flint Michigan drinking water disaster, fifteen state and local officials were accused of crimes as serious as involuntary manslaughter. By 2019, seven had already taken plea deals for light or no sentences. But even this turned out to be a bad choice. On June 13, 2019, eight more, including most of the highest-ranking officials, were awaiting trial, when, the New York Times reported, “...the Michigan attorney general’s office, which earlier this year passed from Republican to Democratic hands, abruptly dropped the eight remaining cases...” and the defendants walked free.


If the seven government regulators who took plea deals had merely waited for the wheels of “justice” to stop for them as they did for the others, they too could have walked away from their crimes without any real consequences. They probably won’t make that mistake again.

Homeland Security Spent $1.8 Million to Have 88 Employees Stay at Home while being Investigated



State Senator Wright Sentenced for 8 Felonies but May Not Serve Time...


Sen. Wright, convicted of eight felonies, actually did end up being sentenced to time in jail: A sentence of one hour in jail. 


A detective was indicted on 12 felony counts for forging his supervisor’s signature to steal more than $13,000 in bogus overtime. …the federal investigation started in 2011 [and then] he has been receiving his full paycheck.

Chris Papst, “D.C. Detective Charged with Felony Fraud by Federal Grand Jury” WJLA ABC TV affiliate (2015)



Let’s say that you are a police officer. And there is a certain individual you don’t like. Let’s imagine that you want to hurt that person, bad. Say you want to get him thrown not just into jail but into prison, for many years. Say fifteen years. You have the power to do that—or at least to get the process started—using selective enforcement to arrest him for some crime. You have many crimes to choose from. But if you’re in a hurry, and you want to make sure that he is convicted and receives a long sentence, you might want to plant some evidence, or make up a story about him engaging in some illegal activity which brings, say, fifteen years minimum, in prison. So you make up a story. You say that you were stopping him for a minor crime—say driving with a suspended license—and then he tried to kill you. And you swear to that in court.


But you made a serious mistake. The story you made up is proved false in court, because a security camera captured what really happened. So the shoe is on the other foot. You are charged with crimes, and you are found guilty.


You committed a crime and were found guilty. In fact, in the process, you subverted the rule of law—our system of justice—which you had sworn to uphold. Your intention was to use your power as a government official to get an innocent person wrongly put into a penitentiary for many years. What should your punishment be?


Something very like this seems to have allegedly happened (and maybe things like this actually happened a lot, but there happens to be no security camera footage to show the truth). You can see some security camera video footage if it is still available.




and read a story here:




So what punishment does a police detective get, a man who seems to have lied in court to put a person into prison for fifteen years for a crime he did not commit? The government prosecutor asked for a sentence of one year in jail, which may seem so light as to be a joke.


What was the policeman’s actual sentence? The judge sentenced him to one day in jail.


This kind of sentence for government officials is not uncommon, it is more like the rule. The article linked to ends by referring to other examples of light or no punishment for, “...sentencing NYPD officers to probation for such offenses as having sex with a teen in exchange for her freedom, shooting a man in the mouth out of jealousy and then tampering with the evidence, and shooting a man who was walking in a stairwell.”


You can be arrested for almost anything, it seems, and have your life ruined, and go to prison. But when government regulators commit real crimes, what happens to them is a different story.



Treat the Elites

...his decision Friday to use the National Guard to appropriate up to 20% of ventilators and personal protection equipment (PPEs) from upstate hospitals, nursing homes and other facilities in order to treat coronavirus patients in downstate hospitals was not about decisiveness or compassion. It was about power and control.

“Cuomo Risks Upstate Lives with Order to Take Ventilators” The Daily Gazette [Schenectady, NY] (2020)


As we noted above, some real crimes—the kind with actual victims—have to be illegal, and indeed have been illegal for essentially forever. One is theft. But when the lawmakers are the law breakers, and they are above the law, they need not fear being punished for the crimes which they punish others for.


In March 2020, during the Covid-19 epidemic, Andrew Cuomo, the Governor of the state of New York and of course the elite scion of a family of politicians, ordered the military to enter hospitals in small towns in upstate New York and steal privately owned ventilators—medical equipment which was privately purchased by, owned by, and being used to treat the people of those towns—to be redistributed to the big hospitals treating urbanites in New York City. The property of the deplorable small town upstaters was stolen by people who had no right to do that but did have the power. The Democrat governor Cuomo stole it because he could, and he redistributed it to his leftist Elite constituents because he could, even though it was theft. A real crime with real victims. He had no fear of ever being punished for breaking the laws he punished others for breaking. He was above the law, of course. He could do what he wanted. Who was going to stop him?

(reprinted from the first book of the series)


David Daleiden investigated Planned Parenthood and got proof that the organization’s top leadership were harvesting the body parts of aborted babies. Subsequently, he was charged with nine felonies for investigating the organization. Why just nine? It was probably an arbitrary choice. The government regulators might as easily have charged him with ninety, or nine hundred “crimes”. They have tens of thousands to choose from. The flood of overregulation in America is what floats the U.S. government ship of selective enforcement. And it is a destroyer.




Regulatory Force Multiplier #2: Qualified Immunity


“College Student Beaten Nearly to Death—Assailants Claim Immunity from All Accountability”

In 2014, James King, a computer science major, was walking across campus in Grand Rapids, MI when two men came up and grabbed him from behind.


The two men were a Grand Rapids Police Detective and an FBI agent. Allegedly, they were not in uniform, were unshaven and wearing jeans and ball caps. According to James, they never identified themselves as police. When they grabbed his wallet from his back pocket James assumed they were mugging him and he tried to run. Allegedly, the police threw him to the ground viciously beat him unconscious as onlookers cried out in shock. (Grand Rapids police officers on the scene would later order bystanders to delete any cell phone video of the event, but some footage was not destroyed, and his story is worth watching at https://www.youtube.com/watch?v=HujPlUyTXRY).


The Grand Rapids Police Detective and his FBI accomplice later claimed they mistook James for a different person (who was four inches taller than James, had a different hair color, and looked nothing like him, and was being sought for a victimless misdemeanor). James was taken to a hospital for his injuries, but soon was removed from there and taken directly to jail and charged with three “resisting arrest” felonies and his bail was set at $50,000.


So James was facing ten years in prison. But, with his family supporting him, he refused to take a plea deal and chose to risk going to trial. He was actually innocent, after all. The King family spent their life savings on his legal counsel. And a jury unanimously found him innocent of all charges. Besides being nearly killed in the beating, the ordeal almost ruined his life.


And what happened to the Detective and the FBI agent for beating a completely innocent man unconscious, let alone for then arresting him for three felonies and putting him through the ordeal and vast expense of a trial? Nothing. They, as we will see, had immunity from any consequences. (Actually we do know about one thing that did happen to the Detective. The Grand Rapids Police Department named him Employee of the Year. It’s not a joke.)


Another story about the case:

The FBI and Grand Rapids police beat, falsely arrested and maliciously prosecuted 23-year-old James King, according to the lawsuit filed in U.S. District Court in Grand Rapids.

Lawsuit: Fugitive task force nabs wrong person”, Detroit Free Press (2016)



In further news:

Grand Rapids Police Detective was named Employee of the Year.  https://www.grandrapidsmi.gov/Shortcut-Content/News-Media/Police-Department-honors-its-employees-of-the-year.


Grand Rapids Police Detective retired with accolades and a full pension at taxpayer expense, hashtag #LiveToServe



James King was a law-abiding college student who was brutally beaten... Ever since that day, the government has used every tool at its disposal to ensure those officers are not held accountable to the Constitution.

IJ Asks U.S. Supreme Court to Hold State/Federal Task Forces Accountable for Constitutional Violations, Institute for Justice (2020)



It’s a good thing that these government regulators are our public “servants”. Just think what it would be like if they were our masters.



100% Above the Law --- Awful Unlawful: Tales of Qualified Immunity, from https://www.unlawfulshield.com/

What if I told you a statute passed by Congress intended to create a cause of action against public officials for constitutional violations has been transformed by the Supreme Court into a doctrine that immunizes public officials from constitutional violations leaving victims remediless?

Tyler Broker, “Qualified Immunity Empowers Constitutional Violations, But That Can Change…” Above the Law (2018)



In what a Forbes article (“Federal Court: Cops Accused of Stealing Over $225,000 Have Legal Immunity”) called a “baffling decision”, the U.S. Ninth Circuit Court of Appeals ruled in 2019 that “…Fresno police officers accused of stealing over $225,000 were entitled to ‘qualified immunity’ and can’t be sued.”



“Qualified Immunity for Warrantless Strip Search of 4-Year-Old” (2018) https://www.unlawfulshield.com/


“Eleventh Circuit grants immunity to officer who shot a child lying on the ground…” Eleventh Circuit grants immunity to officer who shot a child lying on the ground, while trying to shoot a harmless dog (2019) https://www.unlawfulshield.com/


The stories at https://www.unlawfulshield.com/ were about a few of the instances when judges used the recently created the Regulatory Force Multiplier of Qualified Immunity to protect government officials who harmed citizens. Qualified Immunity was used to protect Alabama Department of Correction’s officers who allegedly used “hitching post” torture on inmates. Qualified Immunity allowed police, DAs (as we will see below) and other government officials to make up their own laws from whole cloth, and never be held accountable for breaking real laws, even violating the Constitution. In fact, especially violating the Constitution.


The intent of Qualified Immunity was to prevent government officials from being held accountable when they harmed citizens and violated those citizens’ constitutional rights.


Beyond the typical, everyday examples of government officials being above the law, the Supreme Court, (using federal regulation Kind #3, Rulings by Federal Courts), created a judicial-doctrine-as-regulation which indemnified government officials from enforcement of the laws in the Constitution itself. The sole purpose of Qualified Immunity (explained in detail in the article quoted at the legal website Above the Law) was to protect government officials from people who weren’t government officials, when the government officials had indisputably done some really, really wrong and illegal and very terrible things.


One day in Caldwell, ID a young woman returned home with her children and found it surrounded by the police, who said that they were looking for her boyfriend. She said that he wasn’t there, but they could look inside to see to make sure, and she gave them a housekey and left. But the police did not use the key to go inside.


“Instead, they called in the local SWAT team and laid siege to the house, bombarding it from the outside with tear-gas grenades. When it was all over, Shaniz’s home and all her possessions were destroyed and (just as Shaniz had said) the ex-boyfriend was nowhere to be found...” The police had spent half a day using shotguns to bombard an empty house with grenades. It was probably a lot of fun. For them. Not so much for her. “With her life in shambles, her personal property either destroyed or coated in a toxic film leftover from the tear gas, Shaniz was left homeless for months...” Robert McNamara, West v. Winfield, Institute for Justice (2020) https://ij.org/case/west-v-city-of-caldwell/


When Shaniz West sued the police for destroying her home, the United States Court of Appeals for the Ninth Circuit denied her any compensation because: Qualified Immunity. The government can destroy your property and literally leave you and your children homeless and there is nothing you can do, because they are government regulators and you’re not.


Police sicced a dog on a suspect who was not only in the act of surrendering but was sitting down. The victim sued and courts gave the police immunity because judges had previously created a ruling/law saying that police couldn’t set an attack dog on a person who was lying down. So a victim sitting down was okay, the court said.


In another case reported by the Institute for Justice:

In 2015, in Greenwood Village, CO, the police were pursuing a shoplifter when he took refuge in a random house. Police attacked the house using “...explosives, high-caliber ammunition, and a battering ram mounted on a tank-like vehicle called a BearCat... the home was totaled.”


What if the government completely destroys your home to capture some guy—a suspected shoplifter--who has randomly taken refuge in your house? Does the government owe you anything? Shockingly, the U.S. Court of Appeals for the Tenth Circuit ruled held that long as the government is using its police power to you destroy your property—even if you are not at fault and could not have prevented the circumstances or stopped police from destroying your property — the government regulators are not obliged to compensate you in any way.


Actually though, in the case of the fleeing fugitive, the local government did originally offer restitution. Quoting the Institute for Justice, “‘This whole affair has quite simply totally destroyed our lives,’ said Leo Lech. ‘My son’s family was very literally thrown out into the street with the clothes on their back, offered $5,000, and told to ‘go deal with it.’” $5,000? For destroying a house worth hundreds of thousands of dollars (because it was, it turns out — it was a nice house)? The offer was both an admission of wrongdoing on the part of the government and an insult to the victims. But never mind, federal judges ruled that the government owed the family exactly nothing.


The family had to take out a $390,000 loan after having to tear down what remained of their home. They then spent $28,000 in legal fees to appeal the judge’s verdict and take the case to the Supreme Court. But in June 2020 the Supreme Court refused to hear the case. Ironically perhaps, in June 2020, five years after Colorado police destroyed an innocent family’s home to arrest an accused shoplifter, Colorado police would stand by and watch Antifa and BLM rioters burn and loot people’ stores and home, and do nothing to stop it.


On May 18, 2020 the Supreme Court had also refused to hear Jessop v. Fresno, the case where Fresno, CA police allegedly stole $225,000 while executing a search warrant, and two other cases from the people who were victimized by police who are protected by Qualified Immunity.


Why doesn’t the U.S. Supreme Court overrule the lower Federal Courts which have issued rulings upholding the right of law enforcement to Qualified Immunity, or at least hear the cases?


Ha ha. The Qualified Immunity doctrine was created by the Supreme Court, in Pierson v. Ray, 386 U.S. 547 (1967).



Far, Far Above the Law

The notice Tiffany Lacroix received in November … ordered her to meet with a prosecutor. But it wasn’t authorized by a judge. It wasn’t issued by the Clerk of Court... it was fake.

Charles Maldonado, The Lens (2017)



A 2017 article titled “Orleans Parish Prosecutors Are Using Fake Subpoenas to Pressure Witnesses to Talk to Them” told the story of Tiffany Lacroix who one day received ominous notice headed with the word “SUBPOENA” next to a logo of the Orleans Parish District Attorney’s Office. It warned that “A FINE AND IMPRISONMENT MAY BE IMPOSED FOR FAILURE TO OBEY THIS NOTICE.” But no Court Clerk had sent it, and no judge had authorized it. It was indeed fake.

Charles Maldonado, “Orleans Parish Prosecutors Are Using Fake Subpoenas to Pressure Witnesses to Talk to Them”, The Lens (2017)



So if the subpoena was a fake, who sent it to threaten Ms. Lacroix? An actual official Louisiana District Attorney. He sent out lots of them, to intimidate innocent people, people not even charged with crimes, people who were in fact mostly victims of crimes. He did this to force them to testify. But even worse, if the people did not obey his fake subpoenas, the District Attorney actually put them in real jail. Completely illegally. He put one rape victim in jail for twelve days. He jailed a child sex trafficking victim for 89 days, including Christmas day in jail. All illegally.


As we have seen, government officials such as the DA had immense power and were above the laws they selectively enforced against private citizens. Some of the DA’s victims did sue him for what he had done to them. But the government refused to even allow the suits. Because immunity. The DA could do whatever he wanted, no matter how illegal and harmful to innocent people, and never be punished, not even sued for damages by his victims. How above the law can you get? There’s more.




2013, a judge in San Bernadino, CA sentenced a city councilman for falsely taking $74,222 in campaign contributions and using it for personal expenses, and filing repeated false campaign statements to hide it.


His punishment?


A $280 fine and “...90 days of weekend jail time served in a work-release program.” Ryan Hagen, The Sun (2013)  https://www.sbsun.com/2013/12/20/ex-san-bernardino-councilman-chas-kelley-gets-5-years-probation-90-days-weekend-jail-time/


In Pennsylvania in 2020, Democrat State Rep. Movita Johnson-Harrell was found guilty of stealing more than half a million dollars from a nonprofit founded to serve the mentally Ill. Sentence? 90 days in jail.  https://conservativeus.com/newly-elected-muslim-democrat-state-lawmaker-gets-just-3-months-jail-for-stealing-more-than-500k-from-nonprofit-founded-to-serve-mentally-ill-and-poor/


Hey, buddy, you seem to have stolen a lot of money! Some actual victims here!! 660 years in prison for you!!! Oh wait, you’re a government official. Let’s make that 90 days of weekend work-release instead, and thank you for your community service. hashtag #LiveToServe



On the further dangers of selective enforcement of the laws, and of tolerating anything but freedom

In the 1600s in England, the rule of law was rooted in the Magna Charta and embodied by Parliament, but it was under assault by King James. He claimed that a divine right gave him “absolute power” to suspend laws enacted by Parliament or ignore them in the case of any person he favored. That assault on the rule of law was to lead to Civil War and the execution of King James’ successor, and thence to the writing of an influential book, which we will turn to again and discuss at some length in this book series, one by Thomas Hobbes. So King James was indirectly responsible not only for the most famous English translation of the Bible, but also for another book which was perhaps second only to that earlier one in the impact it has had on our systems of governance: Leviathan.


Meanwhile, in the 21st Century in the United States, U.S. Congresspersons put themselves and their friends above the law in many ways, including making themselves exempt from regulations they forced on the rest of us.


The practice of Congress exempting itself from the laws it writes emerged as Congress began to adopt broad social policy legislation. The National Labor Relations Act of 1935 is a notable early example. As the volume of employment and anti-discrimination law has grown, so too has the significance of congressional exemptions from it. They first drew national attention in the mid-1970s when it was revealed that the Congressional Placement Office accepted discriminatory placement requests from Congressmen routinely...

Dan Greenberg, “Should Congress Be Above the Law?” Heritage Foundation (1993)



When Congress began to exempt itself from regulations which it created, at about that same time that it began to create a vast amount of such regulations to intervene in more and more of the interactions of those Americans who were not government regulators, such as the National Labor Relations Act of 1935. While making job discrimination illegal for people who weren’t government regulators, by, “…the mid-1970s it was revealed that the Congressional Placement Office accepted discriminatory placement requests from Congressmen routinely...” noted a Heritage Foundation article titled, “Should Congress Be Above the Law?”



A 2013 article in ProPublica titled, “Do as We Say, Congress Says, Then Does What It Wants” listed a few of the laws which Congress passed to control Americans but exempted itself from:

Laws requiring Anti-Discrimination Training

Prosecution for Retaliating Against Employees

Subpoenas for Safety and Health violation investigations

Whistleblower Protections

Keeping Workplace Records

The Freedom of Information Act


While, “…sparing itself from complying with measures it has made mandatory for others,” the article said, Congress routinely, violates the laws that apply to itself and, “the legislative branch’s approximately 30,000 employees.”



All this in spite of the promise made regarding the powers of Congress by the Federalists when they were arguing for the ratification of the proposed U.S. Constitution:

[the House of Representatives] can make no law which will not have its full operation on themselves and their friends, as well as on the great mass of the society. If it be asked, what is to restrain the House of Representatives from making legal discriminations in favor of themselves and a particular class of the society? I answer: the genius of the whole system; the nature of just and constitutional laws; and above all, the vigilant and manly spirit which actuates the people of America—a spirit which nourishes freedom, and in return is nourished by it. If this spirit shall ever be so far debased as to tolerate a law not obligatory on the legislature, as well as on the people, the people will be prepared to tolerate any thing but liberty.’’

James Madison, The Federalist Papers, No. 57 (1788)


By 2020, the American people were not yet to the point of “tolerating anything but liberty”, but their rulers were.



More Above the Law

In the 20th and early 21st Centuries it was famously almost impossible to fire any “civil servant” no matter how bad their performance or behavior. But there were thousands of cases where government employees were convicted of crimes, in spite of all the ways they had to avoid being charged with crimes. However, not only did government officials routinely escape any punishment for crimes they were found guilty of, the government criminals were often rewarded with paid time off and bonuses.


Whatever conclusions we might draw from all this, it is clear that the power of the Force Multipliers of Selective Prosecution, Qualified Immunity, and others were great indeed. Private citizens who were not even charged with hurting anyone did long prison sentences, while the government officials who committed very real crimes with very real victims, routinely went free with no punishment. And they kept their positions as government regulators and kept getting paid even if not working, and got bonuses. Selective prosecution and enforcement, more than just vastly increasing the power of government officials, meant that those government officials were above the laws they created and which they used to prosecute and punish private citizens.


The criminalization of private American citizens was growing in the years leading up to 2020, was snowballing as thousands of new crimes were added every year, enabling ever more “discretion” for prosecutors and other law enforcement officials. In this book we only have the space to take a glance at the tip of the iceberg. There are more force multipliers to be discussed. It would require whole shelves or whole libraries of books to document the totality of the criminalization of Americans by U.S. government regulators. Suffice it to say for now that, as with the Congresspersons who illegally put themselves above the laws they created to control the public, government law enforcement officials didn’t seem to be eager to criminalize each other.



Back to the Era of Deregulation

But now we may wonder: If massive, double-triple mega-super regulation was the reality in the period after the Era of Deregulation, then how can it be that there really was any Era of Deregulation? How could there have been a time when crimes were removed from the books en masse? Or were Qualified Immunity and such other initiatives actually the Era of Deregulation, because such initiatives decreed that regulations, including the Constitution, no longer applied government regulators?


No, of course not. But we are still far from answering our questions about when, and whether, the Era of Deregulation really happened. Let alone even very briefly summarizing that which is the massive enormity of the U.S. system of government regulation. But we have seven different kinds of Regulatory Forcer Multipliers to describe. And so far we have only covered one. If you find the prospect of reading that much more about kinds of government regulation (as evidence that the reality of the last century has been not deregulation but overregulation) you can skip to The EoD Deniers.



Regulatory Force-Multiplier #3: Centralization


The very definition of tyranny is when all powers are gathered under one place.

James Madison, Federalist #47 (1788)


When all government, domestic and foreign, in little as in great things, shall be drawn to Washington as the center of all power, it will render powerless the checks provided of one government on another, and will become as venal and oppressive as the government from which we separated.

Thomas Jefferson, letter to Charles Hammond (1821)


...centralized management by the White House staff has been greatly increased in recent years... It's imperative that we get back to a constitutional and accountable form of government before confidence in our capacity to govern further erodes.

George Shultz, Secretary of State under Ronald Reagan (2011)


In a 2019 article in Reason magazine titled “Central Planning Is Poisonous to Innovation”, Veronique de Rugy reported that the federal government had 58 different programs to fund U.S. manufacturing and those programs were operated by the government regulators at eleven different agencies. But that wasn’t enough. The programs weren’t working. So Congress proposed creating one “czar” who would have the power to control all of the programs. “The senator believes that these agencies’ apparent failures are due merely to the fact that they aren’t all in the same place,” she wrote. “Somehow, moving them all under the care of a manufacturing czar is supposed to unleash their magical powers.”

Veronique de Rugy, “Central Planning Is Poisonous to Innovation” Reason (2019) https://reason.com/2019/06/20/central-planning-is-poisonous-to-innovation/


An ever-deepening tidal wave of government control was one thing, but more centralized control was also a thing. Madison and other authors of the original U.S. system of government believed that dividing that government into multiple separated subsystems would help keep liberty safe from tyranny. It might seem counter-intuitive. Adding more branches of government should have added more government control, right? Not if the effect was to make the power of government more diffuse as opposed to centralized.


(The separation of powers is a famous principle of the U.S. form of constitutional government. And a principle of separation in a larger sense is important in the system thought of this series of books. For example, in the first book we discuss Madison’s argument, in Federalist #10, that the problem of disparate “factions”, e.g. political parties, was effectively solved in the Constitution which he had just helped to create and was trying to see ratified. Madison hoped to allay the fears of some Americans that dividing the government into so many separate parts would lead to factiousness, which might tear the new nation apart.)


But the trend in the United States, at least during and after the New Deal era (except of course perhaps in the EoD, if it really happened), was not only to vastly increase the power of government regulators, but also to greatly centralize that power.


By 2020, the centralization of government control left the power of the states so diminished relative to that of the federal central government that states’ rights seemed to have almost been eliminated, so much control and power was concentrated in Washington D.C. However, while the states lost power to the feds in a relative sense, they increased their power in an absolute sense. In the states legislatures themselves, the tendency was not only to increase regulatory size and power, but to constantly centralize it, even to an absurd extent.


State governments loved to create new regulatory “Task Forces”. And if creating more Task Forces was always a good idea wouldn’t a Task Force of Task Forces which concentrates the power of all the Task Forces into one Task Force be a great idea? The state legislators of Missouri realized this. And they created the Missouri Task Force Task Force to control all the task forces, with a voice vote in 2019.

Task Force passes in May 2019




Adams’ Possible Change of Heart on Centralized Control

As good government is an empire of laws, how shall your laws be made? In a large society, inhabiting an extensive country, it is impossible that the whole should assemble to make laws. The first necessary step, then, is to depute power from the many to a few of the most wise and good.

John Adams, Thoughts on Government (1776)


In 1776, John Adams was an ambitious man looking forward to a time, after the Revolution, when he personally would possess a lot of power in the new government of the new nation. To him then, the concentration of control in the hands of “a few of the most wise and good” sounded like a great idea. He being, of course, one of the “wise and good”. Also, by the time of the Constitutional Convention Adams’ was one of the voices advocating for a stronger rather than weaker central government. But he lived long, and after being President, and seeing what befell the Constitution, it seems that he changed his mind somewhat about the concentration of power.


Power always sincerely, conscientiously, de très bon foi [in good faith] believes itself right. Power always thinks it has a great soul and vast views, beyond the comprehension of the weak; and that it is doing God’s service when it is violating all his laws.

John Adams, letter to Thomas Jefferson (1816)


By 2020, the federal government regulators had created more laws than Adams could have possibly imagined. But no worries, the federal government regulators themselves could violate them with impunity.



Force Multiplier#4: Regulation by Administrative State Delay

If the government had the power to require you to ask its permission to do something—such as by requiring licenses and permits—then government could regulate you just by delaying that permission.


Regulators often took an inordinate amount of time to decide whether or not to let you do what you wanted or needed to do. Often, if the regulators could not find some reason to deny you permission, which is what they really wanted to do (as we will see), they could delay you until your opportunity had passed.


If a business opportunity came along in a fast-changing technology, the regulators could delay your business startup until some competitor acted before you or the opportunity was gone for some other reason. If people formed groups to support or fight an urgent issue, regulators could delay granting tax-exempt status and permissions until the election or referendum was over. Judges could issue various kinds of delays and stays. Of course, in the years leading up to 2020, regulators typically delayed projects such as oil and gas pipelines for years but, perhaps bizarrely, the government regulators also delayed government projects for years, often until it was too late to do them.



Government Regulators Delay Government (at least for a while)

Congress passed and Obama signed the 2010 American Recovery and Reinvestment Act, a stimulus bill to invest $800 billion in ‘shovel-ready’ projects to repair America’s ‘decaying infrastructure.’ But a study done by the government itself revealed that by 2014 less than 4% of the $800 billion had been spent on infrastructure construction.


Why? Because, for one thing, as Philip K. Howard reported in the article “Finding Infrastructure in the Stimulus Plan”, “... ‘there’s no such thing as shovel-ready projects.’ The approval process for any significant project (a new road, or power line, or pipeline) approaches a decade, and often longer.”



So what happened to the other 96% of the $800 billion? Maybe it was unspent and reverted back to the taxpayers? Ha ha, no. Most of it went to government regulators, and to give-away/redistribution programs:

$500 billion bailing out insolvent state budgets, unemployment benefits, and other government benefit programs and agencies

$78 billion subsidies for clean energy

$50 billion subsidies for education and child support

$28 billion for environmental cleanup

and so on.


Which people and organizations finally really received the $50 billion for “education” and “child support”? $50 billion was a lot of money. Whose pockets did it really end up in?


“Laws are like sausages; it’s better not to see them being made,” is a saying attributed to many statesmen and politicians. (Probably it was first said by Otto von Bismarck.) In the U.S. in 2009, the pork in most government sausage was intended for the consumption of leftist organizations (as we saw, that was the final destination of the fines extorted from banks and other businesses by the Obama Justice Department and other parts of his administration). It is likely that, for example, most of those $hundreds of billions of “stimulus” which were rerouted from “infrastructure” to government regulators ostensibly for “education” and “child support” ended up in the hands of Acorn-like community organizers, teachers’ union organizers and leaders, groups organizing drag queen story hours at public libraries, and to the multitude of other organizations with the aim of disseminating leftist propaganda and lobbying for more leftist political activism. Many of those projects probably were shovel ready, but what they were ready to shovel wasn’t gravel or cement.


So was the real Congressional plan for the 2009 Stimulus, all along, simply porky wealth redistribution? I.e. a plan to use regulatory control to empower politicians and bureaucrats to distribute hundreds of billions of dollars to people of their choice, including to themselves? If so, it appears that before long they were at it again:


Fast forward ten years from 2009 to 2019. The Democrat House of Representatives proposed a new ‘Stimulus Bill’, very much like the one created by the Democrat House of Representatives in 2009, except this time it was not $800 billion to be spent, it was a lot more. As of April 30, 2019, President Trump had agreed to sign a bill for $2 trillion in “stimulus”. Senate Minority Leader Chuck Schumer announced, “We agreed on a number, which was very, very good—$2 trillion. Originally, we had started a little lower. Even the President was eager to push it up to $2 trillion.”


But that 2019 bill seemed to fail. Now jump from 2019 to 2020, and the Covid-19.


Weird coincidence. Congress and Trump made use of the Covid-19 virus emergency to pass a “stimulus” bill for... $2.2 trillion. And, with the exception of part of it going to stimulus checks and PPP loans, it looked suspiciously like the 2019 bill, and also like the 2009 bill (although no claim was made that the virus was ‘shovel-ready’). The stimulus/bailout law Coronavirus Aid, Relief, and Economic Security Act (CARES) was 880 pages long. So a lot was packed into it. But what exactly? Mostly pork again? Who knew? Who cared? By far the most common question which the public asked about the CARES act was, “When do I get my check?”


The handout of helicopter money by politicians was not the only handout going on in the CARES Act. The biggest single recipient of the 2020 government bailout/stimulus was not the people who got stimulus checks; it was the government. In the CARES Act the government regulators gave government regulators $600 billion outright. Even if the government gave all 330 million Americans a check for $1200 (which they didn’t actually, since, for example, children got less) that was only a little over half as much as government regulators gave themselves.


For the purposes of “Coronavirus Aid” government regulators gave other government regulators, for example:

NASA: $60,000,000

National Foundation on the Arts and the Humanities: $75,000,000

Energy Department: $99,000,000

Forest Service:

---$37,000,000 for “forest and rangeland research”

---$27,000,000 for “capital improvement and maintenance”

---$7,000,000 for wildfire management

Non-Federal Government Recipients:

---Harvard University: $9,000,000

---National Archives: $8,000,000

---American Indian and Alaska Native Culture and Arts Development: $78,000

---State Governments: $150,000,000,000


We go into more detail about what really happened to the “Coronavirus Aid” in book four of this series. But suffice it to say that the 2019 Stimulus bill (which was actually written before the Covid 19 virus even appeared in Wuhan China) looked a lot more like the 2009 wealth-redistribution-to-leftists bill than it looked like anything to do with a virus. The virus was to the 2020 government-to-government wealth transfer what “infrastructure” was to the 2010 government-to-government wealth transfer.



Back to Regulation by Delay: Delay Without Limit

If there was a fixed limit, which required that government regulators take action by a certain time, and the regulators continued to delay long beyond the time allowed, even many years beyond, typically nothing happened. The regulators just went on delaying. There was no punishment for their lack of action. They were completely unaccountable. If the delays were expensive and deleterious for you, that was your problem and yours alone. But on the bright side, as you waited for the permission from your government masters, you would have plenty of time to sit around and wonder, “How is it that unelected, unaccountable morons have the power to tell me whether I can do this or not in the first place?” It’s a good question.



The NEPA Era

Remember how $106 billion of the 2009 Stimulus bill alone went to the “environment”? For what exactly was money spent on “the environment” spent, and by whom?


The 1970 National Environmental Policy Act (NEPA) initiated the requirement of an environmental impact study of any major project that gets any federal funding or even requires permissions from any federal regulators or regulatory agencies (of whom, as we have seen, there are uncountable thousands, many larger than the largest corporations, and who require lots and lots of permissions from the American people). By 2017, the average environmental impact study was over 650 pages long.


By 2020, government construction projects were rarely examples of speed and efficiency. If you drove a car, you probably were forced to frequently navigate certain city intersections which seemed to be under repair forever. While, on the other hand, big box stores appeared to repair their busy parking lots and entrances almost instantaneously.



The Netherlands is not famous for being the kind of place where caution is thrown to the winds and environment considerations are ignored so that public works construction and be done fast, but a time-lapse YouTube video shows a tunnel being constructed beneath Dutch highway in one weekend.



Britain and France are not famous for non-socialist, small or cheap government. But a NY subway station costs three times as much to build as the same station in London or Paris.



Anyone who ever drove across the Hoover Dam was probably impressed by the size of the structure. It was authorized by Congress in 1928, construction was underway by 1931, and it was finished five years later. But that was before the National Environmental Policy Act. In the NEPA era, an environmental impact study for one twelve-mile section of I-70 in Colorado was 16,258 pages long. Just the environmental impact study took 13 years to put together. Five years longer than it took the Hoover Dam to go from funded to finished.


Besides increasing the power of regulators to use the Administrative State Delay Regulatory Force Multiplier on government projects themselves, there are a couple other aspects to consider:


The cost of the environmental impact studies was, of course, huge, and how much of it went directly or indirectly to environmental activist groups, as a clever way to fund them using the money which builders were forced, by government regulators, to pay to the people who did the studies?


It would be one thing if NEPA had only been used to delay or derail government projects, which were often pork-barrel and unneeded anyway. But NEPA impacts studies were, under the law, required for all projects which required permission from one or another of the tens of thousands of government regulators. And the proportion of projects which required permission grew as the number of federal regulations, regulators, and regulatory agencies grew. And grow they did. At a shocking rate, as we have seen and will see.


The NEPA era of government regulation began in 1970, before the EoD by most accounts. But there seems to be no evidence that the impact of NEPA was ever in any way diminished in any Era of Deregulation. NEPA only ever grew and grew.



In Sweet Home Chicago Did O a Stately Monument Decree...

...And on the pedestal, these words appear:

My name is Ozymandias, King of Kings;

Look on my Works, ye Mighty, and despair!

“Ozymandias” Percy Bysshe Shelley (1818)


The phrase “shovel ready” was associated with President Obama. But in retirement, Obama got stuck in the swamp which he himself had done so much to deepen and thicken, in and exception to the rule that the rules don’t apply to government regulators, or to ex-government regulators.


Maybe alluding to two of the famous works of Romantic Era poets is out of place in a discussion of the Era of Deregulation. And while Chicago was not where Alph the sacred river ran down to a sunless sea, but rather where Lake Michigan lapped upon urban shores, that was where, in 2016, ex-President Obama Khan decreed a stately memorial to himself. What happened next may not surprise you.


Many, many government permissions were required for the construction of the monument. Community organizers formed a group and sued in federal court to prevent the granting of those permissions. U.S. District Judge John Robert Blakey hurried the case along (it only took about a year) and ruled for Obama (no surprise there). “Everyone’s had their day in court. … There’s been no rush to judgment,” he said before declaring there should be “no delay in construction. This case is dismissed.” Chicago Tribune, 2019.



But by 2020 the first shovel-full of ground had still not been dug. “Chicago’s Obama Presidential Center seems no closer to breaking ground as local politicians, preservationists, federal officials, and community groups continue to come to grips with the controversial project...” reported Curbed in “What’s Going on With the Obama Center?”. The Obama Foundation had planned to begin construction in 2018 after getting what was thought were all the needed city approvals that spring. But, “Two years later, there is still no firm timeline for when the $500 million development will start construction...”

Jay Koziarz, “What’s going on with the Obama Center?”, Curbed (2020)



Start construction in only two years? Poor Barack. What was he thinking? And only half a billion dollars for the whole memorial project? The environmental impact study and legal expenses to fight the people fighting it alone were probably going to end up costing more than that, by the time the thousands of government regulators involved finally gave their permissions, by say 2050 or so. If ever. Poetic justice, perhaps?


Obama probably did not enjoy that small taste of his own mega-regulatory medicine. It was Obama who famously said to people about their businesses, “You didn’t build that,” taken to mean that government should rightly be given credit for building businesses because government rightly controlled everything. He said it in the course of his 2012 campaign for re-election, and later walked it back on several occasions, saying for example that what he really meant was “We did not build this country on our own. We built it together.” Anyway, as of 2020, and regarding his monument, it looked like he might not build that. But don’t shed any tears for Barack. Maybe his $half-billion memorial was being delayed, but his other real estate projects made up for it.


In 2020, it was reliably reported that ex-President Obama owned:

—6-bedroom 6,400 square foot home in Chicago

—8-bedroom 8,200 square foot single-family home in Washington DC

—7-bedroom 6,900 square foot single-family home in Martha's Vineyard

— And he was building another home on a beachfront lot on the coast of Oahu, a home of about 5,500 - 7,500 square feet.



They Said It Couldn’t be Done

An honest public servant can’t become rich in politics.

Harry S. Truman, Off the Record: The Private Papers of Harry S. Truman (1954)


When, in 2004, Obama ran for Senate to enter into public service, he still had unpaid student loans. His annual salary of a Senator ($174k) and eight years as President ($400k), and his pension ($219k) did not add up to the $hundreds of millions or even $billions (who knew) that is personal fortune amounted to. (BTW: Both Obama’s $15 million Martha’s Vineyard house and the new house Oahu were at sea level. Kind of strange, when Obama told the public that global warming would place the world’s coastlines underwater in a few years.)


So sometimes even the creators of and winners in the struggle for more and more government regulation themselves seemed at times powerless in the face of more and more government regulation. But the Deep Administrative State Swamp was not really Howard’s “Rule of Nobody”—the U.S. government regulators were far from being nobodies; they were the most powerful people in the world. But the government was like a real swamp. Sometimes the native denizens themselves could hardly move for being mired in the regulatory muck they had created.


Many more examples of the force multipliers of regulation by delay could of course be given. (In third book of this series, we look at a classic example of how regulators at the local, state, and federal levels combined to use regulatory delay alone to (probably) kill a large, multi-million dollar project which would have delivered much needed water to Southern California.)


Force Multiplier#5: Judicial Force Multiplier of Acquitted Conduct “Guilty After Proven Innocent”

If any American is acquitted of charges by a jury of their peers, then some sentencing judge shouldn’t be able to find them guilty anyway and add to their punishment... That’s not acceptable and it’s not American. However, federal law inexplicably allows judges to override a jury verdict of ‘not guilty’ by sentencing defendants for acquitted conduct.

U.S. Senators Dick Durbin and Chuck Grassley (2019)



Acquitted Conduct is a Force Multiplier added on to the other super powers of prosecutors, such as Selective Enforcement.


Suppose you were investigated for the financial “crime” of Structured Transactions—i.e. you had deposited your money in your bank account five times—and in doing that you used the mail, maybe you mailed your deposits to the bank. In the course of their investigation of you and your crimes, federal law enforcement officials interviewed you several times. In collating the different transcripts they were able to find an instance where two of your answers to the same question differed. So the prosecutors charge you with:

-Structured Transactions

-One count of lying to federal law enforcement officials

-Five counts of mail fraud

-Five counts of violating the RICO statutes (the “RICO” law, which we mentioned above, being a law against breaking the law, which allowed you to be charged with even more made-up “crimes”)


Let’s say the prosecutors decided they didn’t have enough evidence to charge you with Structured Transactions because, say, you didn’t actually do the transactions. It would not matter that you were no longer being charged with the actual crime of putting your money in your bank account; the prosecutors could continue to prosecute you for the other crimes related to the crime you did not commit.


Now let’s say that when the jury returned its verdict, they found you guilty of lying to law enforcement officials (remember those “interviews”?) But not guilty of mail fraud. Because you not only never deposited the money, you also never sent the checks through the mail. So, you were not guilty of the “crime” you were originally charged with or the crime you were charged with for committing the crime you were charged with. But the judge can not only sentence you to prison for lying to law enforcement officials, he can also add on five more years in prison for mail fraud, even though the jury found you not guilty of it.


That is “Acquitted Conduct” in action. It meant that the judge could punish you for the “crimes” you were found guilty of, and could also legally give you extra years in federal prison for the “crime” you were acquitted of, even if you never really committed anything remotely like an actual crime.


This story may sound incredible, unless you ever had the misfortune of becoming the target of federal prosecution. Federal judges sentenced people for “acquitted crimes” all the time. The practice was challenged in federal court, and the U.S. Supreme Court ruled that it was legal and just (Joseph Jones, Desmond Thurston, and Antwual Ball v. United States, 2014).


True stories very like the one we made up, and a lot worse, happened in America every day in the 21st Century. (Read, for example, Conrad Black’s shocking and amazing story in A Matter of Principle. If you are under the impression that the U.S. Justice system has anything remotely do with justice, you will not after you read that book.)



Regulatory Force Multiplier #6: Judicial “deference” to Unelected Regulators

Judicial Dark Matter? 

The Constitution has carefully provided a structure for administration of the laws, but the United States has moved away from that structure to a regulatory state that often operates with minimal congressional guidance, inconsistent presidential direction, and deferential judicial review.

Neomi Rao, “The Administrative State and the Structure of the Constitution”, Heritage Foundation, (2018)



In 2020, Neomi Rao was Circuit Judge of the United States Court of Appeals for the District of Columbia Circuit. What did she mean that the U.S. federal government had moved from a Constitutional system to a “regulatory state”? And what exactly is “deferential judicial review”? We are in the process of answering the first question. Now we will look briefly at how judicial deference was used to increase the power of the regulatory state.


Although judicial deference increased the power of federal regulators and the reach and amount of control of the regulatory edicts they created, no one seems to have exhaustively listed acts of judicial deference in any “Register of Federal Regulatory Control”, or even mentioned it much in the media. Maybe judicial deference should be called “Judicial Regulation of the Dark Matter Kind.”


It worked like this:

If federal regulators decided to prosecute you for violating one of their edicts, you were not necessarily entitled to due process, no matter what the Constitution said. You might not be entitled to a trial either. Your accusers, the federal regulators who created the edict, could be both your prosecutors and your judges, and would decide not only your guilt or innocence but also your punishment. This is because federal judges “deferred” judgment, appeal, and your punishment to the federal regulators who chose to prosecute you in the first place, completely erasing even any semblance of your Fourth Amendment right to due process.

The “deference” to federal regulators by judges was not just granted on a case-by-case basis. Judicial rulings from the Supreme Court on down created sweeping deference to all federal regulators across vast areas of regulation.


So some big catalysts for the explosion of the Administrative State were decisions by the “deference rulings” of the Supreme Court, which empowered unelected regulators to create laws, enforce them, and even act as judges in disputes over those laws. And then set the penalty for breaking the laws which the unelected regulators had created out of thin air.


The idea of judges abdicating their power and responsibilities and “deferring” to federal regulators, and in the process voiding your Constitutional rights en masse, may seem like legalistic complicatedness. But it was pretty simple.


Let’s say the Federal Communications Commission charged you with violating a regulation which the FCC created, and the FCC penalized you with a fine or a prison term. (This is not farfetched; the FCC created thousands of regulations about lots of things having to do with communications, from telephone usage to pirate radio stations to the internet, and the FCC continued to create more regulations every year, and all of those regulations applied to all U.S. citizens, including you, whether or not you knew that those regulations even existed or whether or not you could understand them if you did know they existed.) The government regulators at the FCC existed not only created regulations but enforced them as they saw fit. So if the FCC arrested you for running an FM pirate radio station in your bedroom, and you demanded a trial, the judge could defer and send you back to the FCC to be tried, judged, and sentenced to prison by the unelected government regulators who accused you in the first place of violating the law that they had created.


Remember how the kinds of cases that federal courts could hear was limited by Article III, Section 2 of the Constitution? It seems that the federal judges were so busy overstepping their bounds and creating new laws that they did not have time to hear the kinds of cases they were legally allowed to hear. So they just sent those cases back to the federal agencies they came from without hearing them at all.


The “deference” is that the courts deferred to and in favor of the legal power of the Administrative State regulators, as opposed to the courts themselves doing their job. The courts chose not to override or rein in the regulators, and instead to rule that the regulators were not only the lawmakers, but also the prosecutors, courts, and administrators of punishment, with no appeal allowed. As judicial deference, the court ruled that it did not have the power to override the power of the unelected regulators.


With the 1984 Chevron Deference decision by the Supreme Court, the same unelected people who wrote the regulations became the police, judge, and jury, and decided on your punishment, and judged your appeal, and even had a say in your possible parole.


Regulatory Force Multiplier #7: Power to Exempt

As we saw, federal regulators placed themselves above the law in many ways. One way was to exempt themselves from the regulations they created to control those Americans who were not government regulators. But the regulators also often had the power to exempt certain private citizens from regulations too.


That may sound like deregulation of a sort, making fewer people subject to regulations. But maybe not. It really amounted to yet another form of governmental power to control, especially when combined with Regulatory Capture.


The IRS is famous for, often at the behest of a Congressperson, creating bespoke loopholes in the tax code for certain individuals and groups. These “exemptions” meant that favored individuals paid less tax or no tax. Just as government regulators having the power to give permission meant they had the power to deny permission, so if they had the power to tax, they had the power to exempt some people from taxation. And they used that power to get more power. They could essentially sell exemptions or trade them for power.


So the power to exempt was a very great increase—a Force Multiplier—of government power, not a decrease, i.e. deregulation. One small story shows how this can work.


Should the U.S. have been trading with China in the 21st Century? It could be argued that buying goods—whether it was U.S. consumers buying finished Chinese goods, or U.S. businesses buying parts and components from China-- was morally wrong, since much or most of the Communist Chinese labor force were little more than government slaves. But was it the proper role of the U.S. government to tell its own citizens that they could not buy goods from China if they wanted to? Those were perhaps difficult questions to answer.


Anyway, the U.S. government did not outlaw buying goods from China. But the Trump administration did establish a new tax, as high as 25%, on the Americans who chose to buy goods from China. But the tax was also an example of Federal Regulation Type #4 “Taxation as Regulation”. The intent was to get revenue (it did put $billions of revenues into the hands of government regulators) but also to control trade. And the tax was also constructed in such a way that regulators could use it for regulatory capture, a lot of regulatory capture. Because a set of Gov Swamp bureaucrats were given the power to tax or exempt from tax—on an apparently completely arbitrary basis—every single American business hit by the tax. It was another regulatory capture windfall for the swamp denizens.



Who are the Federal USTR, TPSC, and TPRG?

The Office of the United States Trade Representative (USTR) is the United States government agency responsible for developing and recommending United States trade policy to the president of the United States, conducting trade negotiations at bilateral and multilateral levels, and coordinating trade policy within the government through the interagency Trade Policy Staff Committee (TPSC) and Trade Policy Review Group (TPRG).

Wikipedia https://en.wikipedia.org/wiki/Office_of_the_United_States_Trade_Representative


With the power of government regulators to tax all the American companies which bought components made in China, also came the power to exempt some of those companies from those taxes. In other words, if you owned a business making air cleaners, and you imported from a Chinese company some of the parts for the motors in your air cleaners, and you wanted to get out of paying the U.S. government a tax of 25%, you could go to the Office of the United States Trade Representative USTR and beg them permission to be exempt from the tax.


A lot of money was at stake: In February 2020, the U.S. had tariffs on $370 billion worth of imports from China, significantly raising the cost of many goods to the Americans who bought them. The new increase in the expense of U.S. businesses which needed Chinese imports to stay in business was to, say, force layoffs. Such was the case with HealthWay Family of Brands in Pulaski, NY, which was denied exemptions on parts it imported from China to build air cleaners, and had to lay off 17% of its workforce and halt plans to expand. The tax on importing parts from China cost that one company $700,000 in 2019 alone.


A lot of American businesses had a lot to lose as a result of being at the mercy of the USTR regulators:

In January 2020 alone, more than 4,500 U.S. businesses made over 8,700 requests to the government regulators at the USTR for exemptions from the tariffs. And in total, from the inception of the Trump tax on Chinese products until January 2020, the USTR received more than 52,700 requests for exemptions. But by the end of 2020, the USTR had only ruled on about half of them. (So a regulatory Force Multiplier #3: “Administrative State Delay” was also at work, as companies were left hanging, wondering how and whether to change or not to change their supply chains to try to deal with the situation they were put in by government regulators.)


One owner of a Florida business hard hit by the tariffs, by the delays, and by the arbitrariness of the decisions made by the government regulators complained, “There’s no insight into how or why USTR is making decisions on exclusions. It goes into a black box and there’s no rhyme or reason that anyone can figure out into how the decisions are being made.”


PRO TIP for business owners: Consult a Washington D.C. K-Street professional lobbyist to find out which government regulators you need to “lobby” (wink wink) to get the exemption you need! ACT NOW, before your competitors do. Bring money. A lot of money.


Maybe, in 2020, the Government Swamp System hated American businesses so much because the Government Swamp System was a business. A business which produced only one product: Regulation. Regulation was for sale, but it was not cheap. It cost a fortune, in many different ways. (See book 4 of this series for more information.)


Government regulators love the power to arbitrarily pick winners and losers, for obvious reasons. It’s not just the money; regulators can use that power as leverage getting still more power.


So the story of the Trump Tariffs and the Federal USTR was indeed about the power to exempt, but it was also an example of two other aspects of government regulation which we have discussed and will discuss a bit more below:

1. Federal Regulation #4: Taxation as Regulation

Taxation is taxation, and also regulation. Tariffs are a tax, but during the era of the Trump tariffs the media rarely said the words “tariff” and “tax” in the same sentence, or referred to the tariffs as taxation. Indeed, the tariffs were not just another way to pump $hundreds of billions from the private sector into govswamp (although the tariffs did do that, of course). The tariffs were expressly intended to be another way for government regulators to control business and trade. And the Americans affected, including a great many businesspeople on the right, rarely if ever objected to tariffs as a tax increase per se, although of course they were tax increases. Most of the political right and the business people who objected to the tariffs objected because of the intended regulatory effect, the decrease of trade with China.


2. Regulatory Capture As we will see now.



Regulatory Capture and Rent-seeking

Like the power to exempt from regulation, regulatory capture may appear at first almost to be a form of deregulation, a power to deregulate. But it isn’t. It is closer to being a form of extortion.


The Revealing Case of Browning-Ferris Industries 2015-2018: How Regulatory Capture may look like Deregulation (but it isn’t)

Labor unions and private sector businesses are locked in a never-ending struggle for power. And when one of the combatants wants a competitive edge, they can ask government regulators to give it to them.


That is partly because both labor unions and corporations, as kinds of systems, are the creations of government. Modern labor unions could not exist without the legal “right” to strike, to organize, to force businesses to negotiate with the unions, and other “rights’ created by government regulators in the past and enforced by government regulators in the present (many of them to be found at the National Labor Relations Board (NLRB)). Similarly, favorable tax rules and laws which indemnify shareholders and provide other legal protections to them are why corporations exist. Without the basic tax and legal benefits granted them by government regulations, most businesses would have little or no reason to legally incorporate.


Modern U.S. labor unions were created and empowered in the New Deal in 1935 by the Wagner Act. “It gave employees the right, under Section 7, to form and join unions, and it obligated employers to bargain collectively with unions...” according to the article “The 1935 passage of the Wagner Act”, at the NRLB site.



The Wagner Act also created the National Labor Relations Board (NRLB). With only about 1,600 employees (https://www.nlrb.gov/who-we-are/organization-chart ), the NRLB was a small agency in terms of size compared to others, but it was huge in terms of its power. What the NRLB decided affected and/or determined the outcome of issues where many billions of dollars and a great deal of power were at stake. The NRLB could create new federal regulations in somewhat the same way that federal courts do, by issuing them as rulings.


The story of the Case of Browning-Ferris Industries is short but illustrative as to why some acts of government may look like deregulation but are really nothing of the sort.


In 2015, when Barack Obama was president and in control of the NRLB, labor unions went to the NRLB to ask for new regulations to give them more power to organize. Under Chairman and Obama appointee Mark Gaston Pearce, the NRLB ruled to create a federal regulation which held a company liable if it interfered with workers’ rights to organize a union, even if the organizers didn’t even work directly for the company.  https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-browning-ferris-industries .


Labor unions applauded the move.


Then Donald Trump was elected, and he eventually appointed John Ring as NLRB Chairman, who soon moved to repeal the Obama era Browning-Ferris regulation, and this repeal was approved in a 3-2 vote by the then-Trump-controlled NRLB.


Repeal = Deregulation? We’ll see.


Anyway, “Business groups like the U.S. Chamber of Commerce applauded the move.” https://www.wsj.com/articles/nlrb-pushes-to-rescind-obama-era-union-ruling-1536929983


But was Browning-Ferris really repealed? And was the net result really less regulation? Could you chalk the ruling up as “+1 for Trump’s Era of Deregulation”?


No, no, and no.


For one thing, in 2018, the NLRB withdrew the Trumpist repeal and reinstated the Obama-era regulation. So there could have been no permanent deregulation. But how, you may ask, could the regulation be repealed if Trump was still president and his man was still in charge of the NLRB? It worked this way: The NLRB’s “ethics officer” ruled that the Trump-appointed head of the NLRB should have been disqualified from the case because of conflict of interest. So the repeal was repealed, and no deregulation occurred..


But suppose that the Obama regulation had not been reinstated. And Trump’s repeal had stood. Would this process really have been “deregulation”? Or was it really just regulatory capture (or “rent seeking”)? 


No it was not real deregulation and yes, it was all politics and power and regulatory capture at work from start to finish (and going all the way back to 1935 and the regulation which started the whole thing). No matter which side—businesses or unions—won a given battle, the regulatory power of the NRLB was never diminished. The power of the unelected members of the NRLB to issue edicts to influence or determine the outcome of multi-billion dollar power struggles —which affected ordinary citizens in many ways, including often costing citizens vast amounts of money —was always increased, not diminished. (Anyone who believes anything else probably believes that “ethics” was the true reason for the repeal.)


But, of course, as we said, the Browning-Ferris decision was not really final anyway. It seems that nothing like it was ever really final. Regulations could be repealed, the repeals could be unrepealed and the unrepeals overturned in court rulings and on and on and on. And every step was controlled by government regulators. The reversal of the repeal of the ruling could be appealed, reversed, repealed again, the repeal repealed again. Regulatory capture was not deregulation, it was the opposite. It was all about the ever-increasing power of government regulators to, among other things, increase their own power.


It is fair to say in general that whenever government had regulatory control of one of our systems of human interaction (such as labor unions or corporations), then government regulators could sell, or rent, that control and power to people and groups who stood to gain money or advantage from new rules and rule changes in their favor. That was regulatory capture, or rent seeking. Sometimes one side won, sometimes the other. But the regulators could never lose, because they never lost power. They only got more power. Move along folks, no deregulation to see here.


But if the Browning-Ferris story was not one of deregulation in an EoD (and it was not) then what might a story of real deregulation have looked like? If there had been a real EoD?


Labor unions were created by government regulators. If the government regulations which gave unions rights and power (such as the power of union members to refuse to do their jobs but not to be fired for that refusal, i.e. the “right to strike”) then labor unions would not exist in anything remotely resembling their present form, and then neither of course would the NLRB. Real deregulation would be to repeal the government regulations which created labor unions, and one consequence of that would be the elimination of the NLRB, and its 1,600 employees would have to look for either productive work or other government jobs. Or just retire, collect their pensions, and become lobbyists.


And real deregulation of corporations might be the repeal of the regulations which give the owners of corporations advantages over other kinds of business owners, such as preferential tax treatment and indemnification of shareholders from civil and criminal laws. Such repeal would mean that all businesses would be owned by individuals or partnerships. Maybe that is a good idea, maybe it is not. Maybe repealing the laws that created the labor unions is a good idea or maybe it is not. But those repeals are what real deregulation would be. And of course that never really happens.


In the meantime, the immense power of federal regulators strengthens labor unions or helps big corporations put their smaller competitors out of business (as we discussed above, Regulation Is Good for Goldman”). Or both.



Back to Regulations created by the NLRB

Remember the Obama appointees to the powerful NLRB who were making all those impactful rulings? They were there illegally, and all of their rulings were illegal. It’s true. And the fact that all the NLRB appointments made by Obama were illegal was decided by nothing less than the U.S. Supreme Court itself. How did that happen?


President Obama illegally appointed NRLB by intentionally doing it when Congress was not in session. He was the first President in U.S. history to try that trick. He knew it was illegal when he did it. His action was challenged in court, and the Supreme Court voted 9-0 that Obama had acted illegally; even the Democrat appointed judges and far-left leaning justices ruled that the appointments had been illegal.


But you know what? That didn’t matter at all. Because Obama’s appointees to the NRLB immediately, upon taking office, began making new laws in the form of their rulings, and it took the Supreme Court three years to rule that the Obama appointees were illegal. In those three years, the illegal Obama NLRB made hordes of decisions empowering labor unions. But even though the Supreme Court justices ruled that all of those NRLB regulations-created-by-ruling were illegal, not a single one of the NRLB rulings was ever repealed, changed, or reversed. They just went on being regulations as if nothing had changed. No “deregulation” to see here, even if the rulings were 100% non-legal according to the government regulators’ own regulations.



Certificates of Need: Regulatory Capture in a Plague Year

Phillip Truesdell and his family operated an ambulance company in southern Ohio. When the Wuhan Flu happened along, it was expected that more ambulances would be needed across the state border in Kentucky during the pandemic than would be available. The Truesdells wanted to help but Kentucky prevented them by it its Certificate of Need (CON) law.

Anastasia Boden, Angela Erickson, “Coronavirus Puts Absurdity of Inflexible Government Regulations in Sharp Relief” Fox Business (2020)



A similar story was reported in the article “The Story Behind the Certificate of Need: What It Is, Why It Exists, And Why It Has Been A Thorn in Virginia’s Side for Decades”, in the Virginia Mercury newspaper in 2019. All businesses which could be classified as medical providers “…must receive approval [Certificate of Need] from the state certifying that there is a need before they can do things like open a freestanding emergency room or add new hospital beds. The process is cumbersome and it can take years—and thousands of dollars—to complete.” Katie O’Connor, “The Story Behind the Certificate of Need: What It Is, Why It Exists, And Why It Has Been A Thorn in Virginia’s Side for Decades” Virginia Mercury (2019)



You operate a small hospital in Virginia and you cannot add hospital beds unless you spend years and thousands of dollars getting permission from government regulators? How can that be?


“Certificates of Need” were created by state government regulators at the behest of large hospitals and other health care businesses. Those businesses wanted to protect themselves from competition. So that if you wanted to, say, open a walk-in clinic in your town, the government had a way to deny you that opportunity, to keep you from competing with certain people (i.e. the kind of people whom government regulators like to protect, the kind of people who have a lot of money). So government regulators used Regulatory Capture to give some people advantages over their smaller competitors.


The way the media worked, a leftist telling a sad “Certificates of Need” story of how ambulances and hospital beds were missing when needed would make evil capitalist businesses the villains, for wanting to stifle competition. But the capitalists were only buying the Regulatory Capture which government regulators had for sale, regulations which only the regulators had the power to create. So it would seem that if anyone was doing anything evil, which of course they were, it was the government regulators, who were the ones in control of the thing.



Regulatory Capture, Extortion, and the Love of Control

... in any autocratic regime, the holders of power become increasingly tyrannical with experience of the delights that power can afford… the man who is actuated by love of power is more apt to inflict pain than to permit pleasure... If you require a building permit, the petty official concerned will obviously get more pleasure from saying “No” than from saying “Yes”. It is this sort of thing which makes the love of power such a dangerous motive.

Bertrand Russell, Nobel Lecture (1950) http://www.nobelprize.org/nobel_prizes/literature/laureates/1950/russell-lecture.html


We implied above that a government regulator who had the power to deny you permission to do what you wanted would tend to deny you that permission. That is exactly what Bertrand Russel was talking about.


extortion n. the practice of obtaining something, especially money, through force or threats.


The power to give permission was the power to withhold permission. The power to regulate was the power to threaten to regulate. It was also the power to put individuals in prison and to put businesses out of business and so it was also the power to threaten to do that. However, these unwanted regulations could sometimes be avoided, by contributions to government regulators, for example. And then those nasty, poisonous regulations could be visited upon your competitors instead of upon you. The price could be money (as mentioned in the definition of “extortion”), or it could “something” else. While in less-developed countries, the government employees usually preferred bribes of cash money, in the U.S. the government regulators also liked to be paid off in increased control. With more power and control, they could always get more money. Then they would have both more money and more control. And, anyway, some people—lots of people in fact, like Russel’s petty officials—just love control. It is an end itself. To them, the power to control other people is its own reward. (That subject is discussed at length in the first book of this series of books, while extortion-by-government is a subject of book 4.)



#8 Assorted Minor Force Multipliers—TIPS and TRICKS

As James Madison said, in the U.S. system of government the regulations should have been known to and knowable by the citizens. If America had a representative form of government, and the regulators were doing the public’s will, and the regulations were what most Americans wanted, then regulators would have no reason to hide what they were doing from the public. But by 2020 they did try to hide it.


FEDERAL REGULATORS, Use this one simple trick to keep the people from seeing what you are doing:

Fall 2012 – December 21 (Friday before Christmas)

Spring 2013 – July 3 (day before Independence Day)

Fall 2013 – November 27 (day before Thanksgiving)

Spring 2014 – May 23 (Friday before Memorial Day weekend)

Fall 2014 – December 22 (three days before Christmas)

Spring 2015 – May 21 (Thursday before Memorial Day weekend)

Fall 2015 – November 23 (one week before Thanksgiving)

James Gattuso, “Obama Administration Announces 144 Big Regulations Right Before Thanksgiving”, The Daily Signal (2015)



Why did gov love to announce new regulations just before holidays? The article points out that Obama was required by law to publicly announce the plans for regulations, but nothing was stopping him from doing it when he hoped fewer Americans were paying attention. Of course, that implied that he didn’t want the American people to know what he was really doing. Or perhaps more than “implied”. Maybe “proved”?


Obfuscation—intentionally making the laws difficult to understand—seemed to be another trick used to keep the people from knowing what the regulations really were, and to allow regulators to interpret the regulations to mean whatever the regulators wanted them to mean. That intentional obfuscation is discussed in the third book of this series, i.e. issues relating to Plain Language executive orders and English as a communications system.


Why would any writer intentionally make his writing hard to understand? Often it is to help him to lie or to hide something (as in long fine-print Terms of Service which are disadvantageous to the user). In the second book of this series we briefly discuss a trend reported in a 2018 article in the prestigious journal Science: “The number of articles retracted by journals had increased 10-fold during the previous 10 years. Fraud accounted for some 60% of those retractions...”

Jeffrey Brainard and Jia You, “What A Massive Database of Retracted Papers Reveals About Science Publishing’s ‘Death Penalty’” Science (2018)


And an earlier paper titled “Linguistic Obfuscation in Fraudulent Science” in the Journal of Language and Social Psychology had reported discovering a trait shared by the writers of papers who were trying to mislead or hide something from the reader: Obfuscation.

David M. Markowitz, Jeffrey T. Hancock, “Linguistic Obfuscation in Fraudulent Science”, Journal of Language and Social Psychology (2015)



Why did government regulators create regulations which they knew most people would not be able to understand? Why would regulators intentionally try to keep the public from realizing what they—the regulators—were up to? If the regulators were trying to void and avoid the will of the people, was that what James Madison would have called “tyranny”?


Maybe, in 2020, the whole “legislative” branch of the federal government was really nothing more than political theater. The people in Congress were unrepresentatives, rulers standing in an empty room making empty speeches to C-SPAN cameras, while their appointees—the real government regulators—issued hundreds of thousands of edicts creating new victimless crimes, taking more and more control of Americans’ lives. Always taking more in taxes, always increasing the size of government and the amount of control it had over its subjects, always increasing the power of the rulers and controllers, no matter who won the elections. It seemed that in 2020 Americans had indeed lost their republic.


We said, “Always taking more in taxes.” But didn’t the politicians say time and again that they had been cutting taxes? That was just political theater. Smoke and mirrors. The politicians said they “cut taxes” almost every year but they essentially never really did. They cut some rates, but they raised others more. Almost every year between 1960 and 2020, the federal government took more money in taxes than it did the previous year. In those 60 years, only in 1971, 2001, 2002, and 2008 did the federal regulators take slightly less in taxes than they had taken the previous year. Every other year they took more than they took the previous year. https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762


And before 1960? From the time the Constitution was ratified in 1789, up to and including 1959, the federal government took a total of $1.1 trillion in taxes from the American people. In the year 2020 alone federal regulators took $3.46 trillion. (And that year the government regulators borrowed almost a $1 trillion more.)



Taxation Without Representation & Taxation as Regulation

Taxation without representation is tyranny. It was a principle which led a generation of Americans to create the United States. By 2020 representation had decreased so much, and the government regulators become so unaccountable and overbearing, that it was difficult to make the case that our system of government was really a republic in anything more than name. But as representation was decreasing and vanishing, taxation was always increasing, more than media or government would ever admit. And much of the taxation was not aimed just at moving wealth from the private sector to government, it was taxation as regulation, intended to control the behavior of Americans. The kind of tyranny which our forefathers rightly rebelled against became the reality in America again. Only worse.


For now, regarding the EoD, it seems increasingly unlikely that any Era of Deregulation happened between the time of the New Deal and the Obama administration. It looks like since the beginning of the New Deal, the stream of government regulation was constant and growing every year.


But that is not what the narrative of the mainstream media or academia says.


The original Era of Deregulation ended with the election of Obama in 2008, if not sooner, we have been told. And then Trump announced his EoD 2.0 in 2017. And it became an established fact, in media and academia, that the first Era of Deregulation was a real thing and it really did happen. That became the presumption of almost all writers: That the EoD was history was written in stone; it was a part of the way Americans thought about their nation’s past, both the people who liked deregulation and the people who didn’t. By 2020, they both believed the EoD really happened.


But that had not always been the case. There were people who called the meme out as false, even as a falsehood.



Chapter 6  The EoD Deniers And the Final Quest

Many journalists claim that the U.S. economy since the late 1970s has been very free, with little regulation; that this absence of regulation has caused markets to fail; that there was a consensus in favor of little regulation; and that, now, this consensus is fading. On all these counts, the reports are false.

David R. Henderson, “Are We Ailing from Too Much Deregulation?” Cato Policy Report (2008)



Once upon a time, there were a few voices in the wilderness crying out (in the less-than-mainstream-media or on the edges of academia) that the EoD meme was a fraud.


Anthony Randazzo in a 2009 Reason magazine article titled “The Myth of Financial Deregulation” wrote that media critics of free market finance had, “…painted a damning picture of the housing bubble as the product of deregulation and reduced governmental oversight...” And he warned that, “As Washington prepares to debate regulatory overhaul this summer, it is more important than ever to wrestle the myth of deregulation to the ground.”  https://reason.com/2009/06/19/the-myth-of-financial-deregula/


But, as we know, the “myth of deregulation” was not “wrestled to the ground” in 2009, or in the subsequent years. Instead, the opposite happened. The EoD became established history.


Those publications which questioned the reality of the EoD tended to be small and mostly conservative or libertarian. While those which purveyed the EoD meme included all the big corporate media such as New York Times, Washington Post, Los Angeles Times, Time magazine, the broadcast and cable TV networks, and so on (we will tell the story of their involvement when we relate the true history of the meme).


However, it is beginning to look more and more like there was no real EoD . It appears from what we have seen that the deniers were right and was no such thing as an Era of Deregulation at any time in the U.S., at least not since the advent of Progressivism eventually led to the New Deal flood of regulation.


Before we make that claim once and for all, let’s continue hunting for the elusive EoD. Just to be sure that a real one is not lurking back there in 20th Century U.S. history somewhere.



The final quest for the EoD: No stone unturned



The world’s industrialized nations have much higher obesity rates than the developing world, and the problem is getting worse... the World Health Organization adds another causal factor: deregulation.

Lydia DePillis, “Study: Deregulation Is Why You’re Fat” Washington Post (2014)


It’s not a joke. In 2014 the Washington Post, in the article “Study: Deregulation Is Why You’re Fat”, reported that fatness inthe world’s industrialized nations” was growing, and those countries had increasingly high obesity rates literally due to “deregulation”.


The article did not claim that deregulation directly added fat to your body. The article cited a study from the World Health Organization (2014) by Roberto De Vogli, Anne Kouvonenb & David Gimeno entitled, “The influence of market deregulation on fast food consumption and body mass index: a cross-national time series analysis”, which claimed a correlation between “...a higher prevalence of obesity and easier access to fast food.” The reason for the easier access to fast food was the “macroeconomic growth” of rich nations. Meanwhile, the people of poor nations stayed fashionably thin thanks to their greater amount of government regulation. WaPo wanted to make poor people thin again by putting them on the Socailism Diet.


So the syllogism of the Washington Post (the same Washington Post which would soon accuse conservatives of purveying fake news) was:


1. Deregulation resulted in “factors, such as general macroeconomic growth”, which made people economically better off.


2. Economically better off people could afford more fast food.


3. More and faster food made people fat.


4.Therefore, if you were fat, it was because of the Era of Deregulation.


(Of course, the Washington Post failed to mention that:

1. The never-changing position taken by all editorial content on the Washington Post since forever was that Deregulation did not make people economically better off, it harmed them.


2. Rich countries also had more gym memberships per capita than poor nations, but Washington Post did not argue that belonging to a gym made you fatter.


3. People in rich countries were more likely to read The Washington Post, but no claim was made that The Washington Post made you fat.


4. The Washington Post printed fake news by the ton.


So how were we Americans to solve the problem of deregulation-caused macroeconomic growth causing fatness? Reduce or eliminate economic growth by adopting a high-regulation government regimen, such as socialism, which was guaranteed to eliminate the prospect of economic growth. If less government control made you fat, then more would make you thin. And indeed this had been proved in places like North Korea and Venezuela.


But maybe other and new regulations might have been created to avoid wealth and so the resultant fatness. A federal regulator could issue a new law making fat illegal. Because making a bad thing illegal, as all leftists knew, caused the bad thing to immediately disappear. That was the magic of government control.


If you read the Washington Post article you will see that it made no reference to any actual instances or examples of the economic deregulation which it said had resulted in people being fat. That the Era of Deregulation did happen was taken for granted by the writers. It was a historical fact. It always was.


Above we quoted Paul Krugman saying and asking, “The evidence, then, is totally at odds with claims that tax-cutting and deregulation are economic wonder drugs. So why does a whole political party continue to insist that they are the answer to all problems?


Krugman was of course a famous economist and a Nobel laureate. Read the whole article yourself, “On Economic Arrogance”, New York Times February 20, 2017) https://www.nytimes.com/2017/02/20/opinion/on-economic-arrogance.html


If you search the article for “deregulation”, you will find that the only usage of the word previous to the above quote was, “As I said, belief that tax cuts and deregulation will reliably produce awesome growth isn’t unique to the Trump-Putin administration.” So prior to Krugman saying, “The evidence, then, is totally at odds with claims that tax-cutting and deregulation...” he actually did not present any evidence. He did not present any facts about any deregulation. None. His conclusion was based on evidence he said he gave (“The evidence, then, is...”) but which he never gave. There are several facts about the effect of tax cuts, but nothing about deregulation.


So what, you may ask? The point is that Krugman, a serious academic, could write in an important national media outlet, “The evidence, then, is totally at odds with claims that tax-cutting and deregulation are economic wonder drugs” without providing even a description or name or list of any of “the evidence” of deregulation. Zero.


The Era of Deregulation was so universally and unquestioningly believed to have happened—to be a part of real history—that in the mainest of mainstream media a famous academic could base conclusions on the historicity of the EoD, with zero examples of it, in spite of saying he had given examples. The era of “deregulation” was just The Truth.


By the time of Krugman’s article, writers about the Era of Deregulation did not feel obliged to provide any evidence or examples of deregulation to use the EoD as a rationale for still more regulation. Maybe that was because there really was no such evidence?



Our Search: Where We Are Now

We’ve come a long tortuous way through some of the swamp of government regulation looking for the EoD unicorn. We may be tired. Our hearts may no longer be in the quest. Will it go on forever, we may be wondering? Can we go on forever, wading through the disagreeable mire of government regulation looking for something which we seem to be no closer to finding than when we started?


No, we can’t go on forever. That would not be practical. However, we have not found the EoD yet. So what do we do? What if the EoD doesn’t exist? What if it never really happened? Then we will never find it, and we will be forced to wander forever through the irrationally incoherent and voluminously labyrinthine swamp of slimy government regulatory bodies and their odious regulatory output. Surely only government bureaucrats or lawyers should have to suffer such a fate, you may be thinking. Not us.


We agree. Indeed, there may be no way to prove that the EoD never happened (a negative being famously hard to prove). But what if we can prove that the purveyors of the EoD do say about it is false? If their claims for the EoD turn out to be lies, then can we not conclude that the meme is a lie?


That is what we will devote the next part of this book to doing. Proving the lie to indeed be a lie.


Because --SPOILER ALERT—the Era of Deregulation is indeed a lie, of course. It never happened. We will try to show that there was no EoD by a methodical process of elimination. It will be a slog. It will involve more ugly tramping through the federal regulatory swamp, and, perhaps even more distasteful, we will have to look at a lot of writing and claims by leftists about the EoD. It will not be pretty.


Still, some of what we find may be enlightening regarding the true natures both of government regulation and leftists’ lies (the two are related, it turns out). But if you are not interested in reading more about the former, you might skip to The Bio of the EoD Meme, a story about the latter, i.e. the true story of the leftist EoD meme, its biography as it were, from its humble beginnings as a bit of leftist mass media narrative—one little story in which appeared in the Los Angeles Times on October 10, 2004—to being an unquestioned and unquestionable truth and bona fide official era of U.S. History. With no good evidence for it ever having been produced.


Otherwise, if you choose not to take the airboat and skip the quagmire to The Bio of the EoD Meme, take a dose of mental quinine, because it’s going to be a long, sickening hike through disease-infested regulatory swampland and leftist disinformation.


The Left’s Evidence for It

The whole thing—the EoD; the regulation; the media stories about it—might seem just too complicated and confusing to sort out. Repeals could be unrepealed, overwritten by bureaucrats, some of whom weren’t even directly employed by the government, and overruled by judges, and federal government repeals could be reinstated not only by the federal itself but by state governments (as we will see), and so on and on and on. How really vast, deep, and dense was the jungle of the U.S. government system of regulation in the 21st Century? And how many areas of it were intentionally hidden from public view? Or intentionally made incomprehensible, vague, and bewildering in other ways. How like a real swamp it was, the few paths which did exist being camouflaged by obfuscation and marked by misleading signage intended to create confusion. A quagmire of quicksand, dead ends, poisonous fauna, and asps slithering in the slime underfoot.


Was there an end to the swamp journey? No, as we said, because the EoD is a lie. So now we are going to show that the real evidence for it is, to the extent that it exists at all, is so infinitesimally small (especially compared to the really gigantic expanses of regulation) that it amounts to proof that there really was no Era of Deregulation. Because if the EoD was real, then all the thousands of people who have been propagating it should have left some of that evidence somewhere. So let’s get started looking at the claims which EoD purveyors make to support their meme. We will see that they are truly pathetic.



Which of our Systems of Human Interaction (SoHIs) Did EoD Believers Say were Deregulated?

Maybe we cannot count acts of deregulation. In fact, we now know we can’t; it’s impossible. We cannot count regulations, or repeals of regulations, or be sure that the repeals were not themselves repealed or reversed or ruled out or whatever. So we now take a different tack to find the truth about the claims that there was a real Era of Deregulation. We ask this question:


Which of our regulated systems of human interaction — such as businesses and so on — exactly did the EoD proponents say were deregulated the Era of Deregulation? The purveyors of the EoD meme must have a list of them somewhere. You would think.



Looking for the List of Deregulations

Some examples of Systems of Human Interaction (SoHIs) in America:

political parties





communication systems



sports leagues



Let’s try to get a handle on how much deregulation had to happen to say that there really was a real EoD.


First, what percent of those (and all the other American SoHIs which existed in 2020) would you say were regulated to some extent by the federal government?


It’s hard to know the correct answer of course, but it is certainly a very high percentage. There are hundreds of thousands of government regulations; they must be regulating something.


Only a tiny handful of our SoHIs are explicitly protected — mostly by the Bill of Rights — from government regulation. And almost all of the systems of human interaction in America that are not explicitly protected from regulation are indeed regulated. You can get a glimpse of this reality for yourself by looking at the federal government’s own lists of federal agencies. In these lists you can find agencies regulating almost every SoHI you can think of, literally from A to Z. One list is https://www.usa.gov/federal-agencies


Of course that A-Z list is not a complete list of all the governmental entities in America which have the power to create regulations, that complete list would be many times longer, if it could really be compiled. The point is that if you look at the lists you can indeed find, you will see that our list of ten kinds of SoHIs is only a tiny, tiny fraction of all the SoHIs which were regulated by the government in the U.S. in 2020. Almost all SoHIs were regulated to some extent. Most to a great extent.


Okay, remembering your guess about what percent of our SoHIs were regulated, now please make another wild guess:

How many of those regulated systems were significantly deregulated by the federal government sometime between 1970 and 2010, would you say?

A. Almost all, probably, 90% or more

B. Most, about 75%

C. About half 50%

D. Few of them, about 25%

E. Very few 10%

F. Even fewer than 10%


If more than 50% of our systems were deregulated between 1970 and 2010, then we could conclude that there certainly was a real EoD. But we should also ask: Of those systems which were regulated in 2020, how much of the regulation of each of them had been repealed in the EoD? In other words, to what extent were each of our SoHIs deregulated? If the answer is that less than, say, 1% of the regulation of each system was repealed, then surely we can conclude that there was no real EoD. But, on the other hand, if more than 50% of the regulation of most of those systems was repealed then surely the EoD was real.


So, which SoHIs were deregulated and by how much? Were 40% of them deregulated by 60%? Maybe we could answer that if could find a list of deregulated SoHIs and/or a list of deregulations.


If the EoD meme purveyors have never provided lists of deregulated SoHIs or of the repeals of them, then why? Because why would they keep the lists a secret?


Maybe it is impossible for some reason that such lists could have been made? What would that possible reason be? It doesn’t matter, because some such lists actually do exist, it turns out.



First List of Deregulations, Wikipedia

Wikipedia may not always be the best place to find the truth, but it is often a good place to find what a lot of people believe to be the truth. So let’s see which SoHIs Wikipedia says were deregulated in the EoD, and by how much. It turns out that, as of this writing, the Wikipedia article on Deregulation ( https://en.wikipedia.org/wiki/Deregulation ) did indeed have both a list of deregulated SoHIs and a list of deregulations.


Wikipedia’s list of deregulations was organized by regions of the world. The section about deregulations in the United States (the longest section and of course the one we are interested in, because while we are not disputing the fact that there was a real World Wide Era of Deregulation, we are disputing the lie that there was a U.S. EoD) was organized mostly chronologically, and so it was a record of the deregulation events comprising the timespan we are looking for, according to most writers about the EoD, or at least the ones the writers of the Wikipedia article referred to. The part of the article about the U.S. EoD begins with the “History of regulation” in the U.S. from 1890. Then it goes on to the EoD, which Wikipedia says began in 1970 and lasted until 2000.


So the Wikipedia information seems to be enlightening right away. It tells us when the EoD happened (if that time span is a bit surprising, perhaps).


Because, according to Wikipedia, the G.W. Bush administration—2001 to 2009—was not in the EoD. This might seem odd since, as we have shown, some EoD promulgators, including Obama himself, whose administration ended the EoD, claimed either that G.W. Bush was a big deregulator or even that his administration was the EoD. We already pointed out that published claims for when the EoD actually happened were all over the place and there was little or no agreement on the dates, so it would seem that Wikipedia was just as entitled to have its EoD timing as anyone else was, even if it seems that those dates could hardly be accurate.


The rest of the Wikipedia section about Deregulation in the U.S. —i.e. after the History of it—is organized by industries which were deregulated. So here is our official (if you think of Wikipedia in those terms) list of those American systems of human interaction which really were deregulated in the U.S. Era of Deregulation.


The systems which Wikipedia says were deregulated between 1970 and 2000 were:


1) Transportation


–Highway (Motor Carrier): Trucking, Busing



2) Energy

3) Communications

4) Finance



Then, following a brief description of the deregulation of each industry, Wikipedia had a list of 14 separate laws which were repeals of regulations, and that list was titled “Related legislation”. So, 1.) The repeal of the regulation of the seven Industries on the list, and then 2.) the individual “related” acts of deregulatory legislation, were the deregulations which Wikipedia said comprised the real era of deregulation, from 1970 to 2000. So now we have the lists we need, or at least two of them, which we can use to see if the EoD was a real thing.


One of the first things you may notice about the list of U.S. deregulated systems is that is seems rather short. Why only seven, when we know (and as we will see the government itself agrees) that hundreds or even thousands of regulated SoHIs exist in the U.S.?


If the seven industries on the list comprise only, say, 10% of the grand total of federally regulated systems of human interaction, that would mean that during the 30 years of deregulation from 1970-2000 about 90% of our systems were not deregulated. That doesn’t sound much like the Era of Deregulation we were told about, when thousands upon thousands of laws were repealed in an anarchistic orgy of anti-government venom leaving almost all American SoHIs naked and defenseless before a destructive onslaught of laissez-faire market forces.


Recall your answer to the question, “How many of those regulated systems were deregulated by the federal government between 1970 and 2010?”


If you said, “F. Even fewer than 10%”, then Wikipedia seemed to agree. And we might conclude that if only such a tiny number of our SoHIs were deregulated that no EoD really happened. But maybe there’s more to it.


Maybe the seven Industries on the Wikipedia list might still amount to a significant EoD if each of those seven was massively deregulated during the 1970-2000 period. Like if 60% of 70% or maybe even 90% of regulations of each of those industries were repealed, for example. Or maybe those deregulations, even if few in number, had outsized impacts on Americans for some reason. However, this has never been the claim of EoD meme purveyors. In their accounts, the EoD was big; it was big, broad, long, and deep. A huge number of laws were repealed. The EoD broadly deregulated America on a vast scale, and not just a small number of industries either. Lots of them. Most of them. Enough to make us fat and cause the 2008 Financial Crisis and lots of other terrible things. And not just industries were deregulated, but lots of other kinds of SoHIs too. The EoD removed the “safety net” and repealed the regulation of almost every SoHI, we were told. So did the deregulation of seven industries really somehow deregulate all of America? How could that be?


(As we will see, the deregulation of seven industries did not comprise the Era of Deregulation, because those seven industries were not really deregulated to any significant extent. What really happened to them between 1970 and 2000 was that the regulatory burden on all of those industries was massively increased, and the tiny amount that did happen was papered over with astonishing amounts of new regulation, even before the 1970-2000 timespan ended. So there was no EoD. As you will see, if you have the stomach for more wading through the regulatory miasma.)


Now, if you can stand it, we will answer three questions:

Are the systems on the list enough to amount to a real Era of Deregulation from 1970-2000?

If not, were there any big deregulations omitted from the Wikipedia list?

Were those seven systems really heavily deregulated?



The 7 Industries on the Wikipedia List amount to less than 5% of federally regulated American SoHIs


A List of all the Industries in America? Fed gov has that, pretty much. 

The federal government (specifically the Executive Office of the President, Office of Management and Budget, at census.gov) has a list of all the Industries in the U.S. It is the North American Industry Classification System (NAICS) of the United States Census Bureau:

https://www.census.gov/eos/www/naics/ )


An alphabetical list at:

https://www.bls.gov/iag/tgs/iag_index_naics.htm ).


Also, the Code of Federal Regulations has a useful list of American systems that are regulated by federal agencies as 50 “Titles”:

https://www.gpo.gov/help/about_code_of_federal_regulations.htm .


According to the official federal list of the Office of Management and Budget (OMB), there are, broadly categorized, 67 Service-Providing Industries in America. The individual industries themselves are listed by the OMB as sub-sub-categories. A heading category being a kind of industry.


This means that when Wikipedia lists the “Communication” industry as one which was deregulated, they really mean what the federal government terms “Telecommunication”. Because the OMB category which includes Communication industries, i.e. the category called “Information”, includes Publishing and other systems which were never deregulated because they were never regulated in the first place (freedom of the press being protected by the Constitution). Since “Information Industries” as a whole were never deregulated, Wikipedia was really claiming that two “Communications” sub-industries were deregulated, i.e. “Telecommunications” and what is called “Broadcasting (except the Internet)”. Not the whole of the Communications industry.


In other words, using the government’s list of Industries, the Wikipedia article was wrong to say that the “Communications” system was deregulated. Even the EoD purveyors could only claim that at most only two subparts of the Communications industry were ever deregulated. But it will turn out that even that claim is a massive exaggeration. In those federal Categories of industries which Wikipedia says were deregulated, only a very few of the industries in the categories were ever deregulated at all.


Remember, the Wikipedia list of all the industries which were deregulated in the EoD is:

Transportation, including:


–Highway (Motor Carrier): Trucking, Busing







The point here is that by claiming that, for example, the “Communications” industry or the “Finance” industry were “deregulated” the implication is that the whole industry was widely deregulated, when in reality the opposite happened.


So for example,

The NAICS category “Finance and Insurance” includes the industries:

“Securities, Commodity Contracts”

“Other Financial Investments and Related Activities” which would include Banking, one of the industries Wikipedia says was deregulated.


But that category also includes “Monetary Authorities - Central Bank”. No one claims the Federal Reserve was deregulated between 1970-2000. Not only was the Fed never deregulated and never will be, it is a regulatory agency, in reality.


The NAICS category “Finance” includes “Insurance Carriers and Related Activities”. Wikipedia does not claim that the Insurance industry was deregulated.


While some purveyors of the EoD meme do claim not only that the whole financial sector was deregulated in the EoD but that the deregulation caused the 2008 Financial Crisis, that claim is simply false. Preposterous actually. The U.S financial sector was and remains perhaps the most highly regulated system on Earth, at least outside actual, literal dictatorships.


So really Wikipedia was claiming that the “Finance” industry was deregulated when at the very most only a few parts were deregulated (if any really were). The regulatory burden on financial institutions was greatly increased between 1970 and 2000.


The point we are making is that Wikipedia says that those seven industries were deregulated. But when you look at those industries and their subsystemsas categorized by the federal government itself it is clear that Wikipedia listing them under “Deregulation” and implying that they were all deregulated is very misleading. They were not. And, as we will see, precious little if any real deregulation happened to any parts of those industries.


It is boring to bore down into regulation in detail. But the point is that the idea that an EoD happened can only be entertained if you do not look at the details and the reality of regulation. So let’s do some more boring.



The 7 Deregulated Industries as a proportion of all the Service industries in the U.S.

The 7 industries which Wikipedia listed as deregulated were among 67 “Service-Providing Industries” in the U.S.

Some of the other 60 systems are:

–”Real Estate and Rental and Leasing”

–”Publishing Industries (except Internet)”

–”Food and Beverage Stores”


–”Educational Services”


All the restaurants and grocery stores in America, all the colleges and universities, all the books, newspapers, and magazines. All the real estate including rentals. All the hospitals. And 53 more industries. That is a lot of systems of human interaction. And Wikipedia article did not claim that any of them were deregulated at all between 1970-2000. And these 60 un-deregulated systems were not small or insignificant industries compared to the seven which, Wikipedia said, were deregulated. Most of the never-deregulated systems, such as all the real estate and rentals in America, were as big as or bigger than, for example, trucking or busing, which Wikipedia said were deregulated.


So according to Wikipedia, seven industries were deregulated and sixty were not. That means Wikipedia claimed that only 12% of U.S. industries were deregulated between 1970 and 2000. Is that enough to amount to a thirty yearlong era when “...regulation has been a dirty word in Washington. Politicians of both parties vied to see how much of the economy they could free from the oppressive yoke of government control...” (Michael Mandel)? The answer doesn’t matter. Because actually the percentage of industries which Wikipedia says were deregulated is not 12%. It was really less than 10%. Much less. Here’s why:



The Wikipedia-7 Industries as a proportion of: (Service + Goods = ) all Industries

The Industry sub-sub-categories in the NAICS were actually sub-sub-sub-categories. The two big major categories of all Industries are:

Goods-Producing Industries

Service-Providing Industries


According to NICS, there were 36 Goods- Producing Industries. According to Wikipedia, none of the Goods-Producing Industries were deregulated in between 1970-2000. The only industries which were deregulated, according to Wikipedia, were Service-Providing Industries. And the Goods- Producing Industries listed on the NAICS were very heavily regulated by government, such as:


Construction of Buildings

Transportation Equipment Manufacturing

Forestry and Logging

Fishing, Hunting and Trapping

Beverage and Tobacco Product Manufacturing


The Goods- Producing Industries were regulated by some of the biggest, most powerful agencies in the federal government, from OSHA and NLRB to the BLM, EPA, and BATF. Some of the industries on the list are among the most heavily regulated in the U.S. The point is that Wikipedia did not claim that any of them were deregulated during the vast “Era of Deregulation”. Logging and hunting were so regulated by the EPA, the BLM, and thousands of other government agencies, federal, state and local, that in many parts of the U.S. those activities had, by 2020, almost ceased to exist. How could it be that, if there really was an “Era of Deregulation” as Wikipedia claims, none of the Goods-Producing Industries were deregulated?


The total number of Goods- Producing Industries (according to the federal government) was 36, so the total number of all kinds of regulated industries in the U.S. (also according to the federal government) was 103 (not just 67). And so the percent of industries which (according to Wikipedia) were deregulated was not 13%. It was less than 7%.


If less than 7% of our Industries were deregulated even a little, that doesn’t sound like much of an EoD. It doesn’t sound much like that time when “deregulation...spread like wildfire, unmindful of counsels of caution” (as Judge Richard D. Cudahy wrote in what was one of the very first descriptions of the EoD, in 1998, as we will see).



The Point

So the point is that the Wikipedia article said (if you are using the OMB list as the source for a list of all U.S. industries) that about 7% of our regulated systems were deregulated in the Era of Deregulation. But actually that’s not correct, either. Wikipedia actually claimed that less than 4% were deregulated. Simply because not all of the systems which were regulated by the federal government between 1970 and 2000 were “industries”. In fact, most of the systems of human interaction which were regulated by government were not industries. They were other kinds of systems. Government regulated—and so potentially would have deregulated in a real, sweeping EoD—many other kinds of systems than just industries. If you look again at the list of federal regulatory agencies (A-Z Index of U.S. Government Departments and Agencies  https://www.usa.gov/federal-agencies ) you see that most of them actually regulate systems other than industries.


Remember our list of “Some examples of Systems of Human Interaction (SoHIs) in America”?

political parties





communication systems



sports leagues



Only a few of those are “industries”. Exemplifying the fact that: Even if the U.S. government had deregulated all the industries in America, instead of just the 4% claimed by Wikipedia, most of the SoHIs in America would still not have been deregulated in the “vast” so-called “Era of Deregulation”.


So why list only industries?


If, between 1970 and 2000, 1% of our systems were deregulated and 99% became more regulated than ever, is that an “EoD”? Because what about all the new regulation of the 1% which was heaped on those systems during the “Era of Deregulation”?



Why List Only Industries? The Wikipedia-7 as a proportion of all regulated American systems

The only examples of U.S. deregulation given by Wikipedia as having been deregulated in the EoD were Industries. As we said, the federal government regulates lots other kinds of systems, from unions, immigration, and political parties to Indian affairs and endangered species. Even if the federal government, in the years 1970 to 2000, deregulated all of the industries in America, that would not mean that all of our regulated systems were deregulated, or even half of them, very far from it.


A list of all the kinds of SoHIs in America would be a long list, and most of them were regulated by the federal government. If only half of the federally regulated systems in America were something other than Industries, then the Wikipedia list systems deregulated in the EoD amounts to less than 5% of all of the regulated systems in America.



The Era of “Everything Gets More Regulated” 

In 2017, The Economist, in an article titled “Grudges and Kludges: Too Much Federal Regulation Has Piled Up in America” asserted that America’s “regulatory problem” was not deregulation but rather was too much regulation, and the overregulation didn’t start with Obama’s presidency. The Economist article referred to a period of about 40 years when, “…the number of prescriptive words like ‘shall’ or ‘must’ in the code of federal regulations grew from 403,000 to nearly 963,000, or about 15,000 edicts a year...” So The Economist’s era of overregulation coincided with everyone else’s era of deregulation: It was the years from 1970 to 2008. https://www.economist.com/united-states/2017/03/02/too-much-federal-regulation-has-piled-up-in-america


Who was right?


Tens of thousands of new federal laws and rules were being added to the regulation of our systems of human interaction between 1970 and 2000, as the Federal Register or the Code of Federal Regulations (CFR) for those years showed. https://www.govinfo.gov/app/collection/cfr . Actually, thousands of new regulations were being added to the 5% that Wikipedia said were being “deregulated”.


Calling that time period an “Era of Deregulation” does not seem accurate, if our SoHIs were being regulated more than ever, by the addition of many thousands of new laws and edicts. The real 1970-2000 time period does not sound much like the era when “Democrats from Carter to Clinton helped roll back the government’s regulatory power” (James Ridgeway). In the real world, the period 1970-2000 was not a time when the government’s net regulatory power was “rolled back” at all; the opposite happened, on a massive scale.


It seems that the list of deregulations in the Wikipedia article falls far short of providing evidence of a sweeping Era of Deregulation, given that it discusses deregulation probably than 1% of our SoHIs. But we are not giving up. Our search for the EoD goes on. Wikipedia could be wrong, right? It’s happened before.


Before we can conclude without doubt that Wikipedia was wrong about the EoD, and there really was no such thing between in the U.S. between 1970 and 2000, we need to rule out at least two more possibilities:

Maybe a lot of big, consequential acts of deregulation were omitted from the Wikipedia article for some reason.

Maybe the individual repeals that Wikipedia says happened in the EoD were few but the effects somehow so huge that they manage to outweigh the vast amount of regulation that we know without doubt really was happening between the start of the New Deal and Trump EoD 2.0.



Other Lists - Maybe Wikipedia Left Out Some Big Deregulated Systems? 

Do other writers about the EoD have lists of deregulated systems which differ from or add to Wikipedia’s? Yes they do.


Two Early Lists of Deregulated Industries by Federal Judges: The ‘Folklore’ of Deregulation  

This Commentary traces these beliefs as they have grown and proliferated in telecommunications, the airlines, and electric power, so as to form a folklore of deregulation...

“At the dawn of the new millennium, deregulation has spread like wildfire, unmindful of counsels of caution,” wrote Judge Richard D. Cudahy, In 1998, in the article “The Folklore of Deregulation”, in the Yale Journal on Regulation. Giving us one of the earliest descriptions of that phenomenon that caused the Era of Deregulation. He blamed it on a “touching faith in competition as the universal solvent of economic ills” and “quaint and obscure beliefs” which appeared and “…proliferated in telecommunications, the airlines, and electric power, so as to form a folklore of deregulation.”


So he provided us with what may have been the first of (and turns out to be one of the very few) lists of deregulations which happened to SoHIs in the EoD. The EoD was, at least in part, the deregulation of:

- telecommunications

- airlines

- electric power


(Before we get too excited, Judge Cudahy was not someone who could be described as politically agnostic. And the idea that, for example, telecommunication had really been deregulated had been debunked ten years earlier. “Undoubtedly, the greatest surprise in telephone industry deregulation has been the absence of deregulation,” wrote Robert W. Crandall in 1988 in a Brookings Institution article titled “Surprises from Telephone Deregulation and the AT&T Divestiture”, “…for the industry continues to be almost as highly regulated today as it was twenty years ago.”)


Richard Cudahy was a judge of the U.S. Court of Appeals for the Seventh Circuit, appointed by President Jimmy Carter. His quoted paper is a derisive description of the whole idea of “deregulation”, which was portrayed therein as an emerging blight: “In the early Sixties, the funnel cloud of deregulation drifted ominously out from the Chicago Midway [reference to Milton Friedman’s ‘Chicago School’ of Economics], driving bureaucrats everywhere to the storm cellars.” By the phrase “a folklore of deregulation” he was not referring to the meme of an Era of Deregulation (which did not properly exist yet, as we will see); he meant the foolish, common-folks idea that reducing the amount of government regulation is a good thing. That was what the judge was deriding. Although the paper was a precursor to the EoD meme itself; Judge Cudahy did himself not use the phrase “era of deregulation”.


As we said, Judge Cudahy’s paper listed three industries which were deregulated:

· Long-Distance Telecommunications (note that he properly identified “telecommunications”, as the industry which was supposedly deregulated, not “communications”, as Wikipedia misleadingly said).

· Airlines

· Electric Power


He was writing in 1998—near the end of the time period which Wikipedia said was the Era of Deregulation. But his list is of deregulated industries is shorter than Wikipedia’s. And it does not add any deregulations or deregulated industries or any other kinds of SoHIs. So if we want to find big deregulation missed by Wikipedia, we need to keep looking. Cudahy didn’t give us any.


There are other lists of deregulations, and at least one or two do include deregulations missing from the Wikipedia article. But those other lists are not lists of deregulated industries so much as lists of individual acts of deregulation.



Another Democrat Judge, Another List

Writing in his book Clarence Thomas and the Lost Constitution (2019) Myron Magnat said of left-sided Supreme Court Justice Stephen Breyer that he, “... assumes America is rightly governed by a ‘living Constitution’… Judges make up law ‘with boldness and a touch of audacity,’ as Woodrow Wilson put it, rather than merely interpreting a Constitution he thought obsolete.”




Another judge’s list of deregulations is in a paper titled, “Regulation and Deregulation in the United States: Airlines, Telecommunications, and Antitrust” in the book Deregulation or Re-Regulation?: Regulatory Reform in Europe and the United States (1990) by Giandomenico Majone. The list is in a paper by Justice Stephen Breyer, in that book. His paper was not so acrimonious or florid as Judge Cudahy’s. It is more scholarly. Breyer was a U.S. Appeals Court Judge when he wrote his list of deregulated industries in 1990. (Like Richard Cudahy, Stephen Breyer was appointed to the federal judiciary by Carter, and later Breyer would be appointed by Bill Clinton to the U.S. Supreme Court—where in 2020 he still sat, on the left end of the bench.)


Judge Breyer’s list of the U.S. industries which were deregulated was:

1. Airlines

2. Trucks

3. Railroad

4. Natural gas

5. Telecommunication 2010: Dodd-Frank, the Repeal of the un-repeal of Glass-Steagall, and lots more

6. Other Deregulatory Efforts


So Judge Breyer does add something to the Wikipedia list, a category of ‘Other Deregulatory Efforts’. How many acts of deregulation does it list?


One. I.e. “The deregulation of stockbrokers’ fixed commissions began, with regulatory commission decisions in the late 1960s.”


We are looking hard for any real acts of deregulation. We really are. But it’s not easy to find any. So let us grasp this one and take a closer look at it.


It is indeed true that a change in stockbrokers’ fees mandated by the federal Securities and Exchange Commission did happen in 1975, and that change gave rise to discount brokerages, so it was not an insignificant change. At the risk of being picky (pickiness being often unavoidable when dealing with the letter of the law), but the truth is that the change was not really government deregulation, because it did not end or repeal any previous government regulations. The SEC’s new rule only changed rules which had been created by the New York Stock Exchange—a private sector entity—not by the federal government. So Judge Breyer’s example was not a repeal, but rather government regulation which led to a sort of deregulation, by using law to change a rule of a non-government system. The change ended the fixing of the commissions which stockbrokers were paid, allowing them to charge less. But in no way did that one little change stop government regulation of how much people in the financial sector got paid. As we will see, there was still lots and lots of regulation of that. But it does seem that in a way we have found one real deregulation, sort of. Or have we? Sorry, but It’s really not that simple. To see the reality and the truth, we need to look into the reality of federal regulation as it really does exist.



Not Dodd-Frank Again?!?! (Another story of fake deregulation.)

You say you want the government to control how much people are paid on Wall Street? There’s a re-regulation for that. In 2010 (in the process of un-repealing Glass-Steagall) Dodd-Frank created new regulations which gave government regulators the power to control how much financial sector employees were paid. But it seems that this was not actually put into effect right away when Dodd-Frank was passed. This particular government control of the pay of financial systems workers was not put in action until Obama decided to do so six years later, in 2016, when his time in office and his opportunity for regulating were running out and he was famously regulating as fast and as much as he could, often by Executive Order.


The 2016 Wall Street Journal article “New Rules Curbing Wall Street Pay Proposed” reported on proposed Obama regulations to control pay on Wall Street. The subhead of the article was, “Senior executives at largest firms would have to defer more than half their bonus pay for four years under proposed regulation...” It said that, “Hedge funds and asset managers generally were excluded from the most stringent parts of the plan.”



By 2019, the actual federal regulation (in Dodd-Frank) controlled the amount of pay of some of the people in the financial sector, but it had still not been enacted, because the people who were to be regulated were far from poor or powerless and they had succeeded in fending off the enacting of the new regulations.


A Wall Street Journal article three years later, in 2019, titled “Limits on Wall Street Pay Are Back on Regulators’ Agenda” reported that, “The rules are required by the 2010 Dodd-Frank financial law… Twice proposed during the Obama administration, they weren’t completed earlier in part because of industry pushback.”




“Industry pushback”. Was that a euphemism for Regulatory Capture? Rich and powerful people in the private sector can sometimes buy new regulations, or pay to fend them off.


So in 2019 it began to look like the federal regulation to control pay in the private financial sector would finally be enacted. Because the private sector executives themselves began asking for it. What? Why would they lobby to have the amount of money they were paid limited by law? Even cut in half. Because they feared that if Democrats, who were then the House majority, got more power in the future, they would get around to using Dodd-Frank to regulate the pay of financial employees to a much greater degree than had been proposed so far. So the employees of financial businesses hoped to inoculate themselves against future greatly increased regulation by choosing to suffer less now and get it over with.


The point of this too-long story is that if we, in 2020, were to take Judge Breyer’s statement about the deregulation of stockbrokers’ commissions to mean that how much stockbrokers were paid was broadly and permanently deregulated, that was not what happened. The opposite really turned out to be the case.


Does it seem that a pattern is emerging? It is boring to go into all this detail. But it is necessary to know the actual truth, which is almost always hidden under layers and layers of details and disinformation. Lawyer Nyhan’s warning about how complicated government regulation really is was an understatement. To see if there ever really was any deregulation you have to look into the details, because that is where the devils are hiding the truth. People propagating the meme of the EoD make surprisingly few claims about any real acts of deregulation. But even those claims usually turn out to be questionable at best, if you look at what really happened under the surface of the claims. The swamp is deep and murky, for a reason.


Anyway, it would seem crazy to say that the few examples of deregulation we have seen listed so far—which mostly did not really happen anyway if you check into it, as we will continue to see—add up to a massive, three or four decades long Era of Deregulation. If we want to find out if there was or wasn’t an EoD, we have to look still more at the claims made for it by the people who love to claim that it was real.



The Return to Kinds of Federal Regulation: Type #9 Antitrust

Judge Breyer’s list did not really add much in the way of new examples of governmental deregulation. Deregulating what stockbrokers were paid was one snowflake of repeal amidst a blizzard of new regulations, and it melted, if it ever really existed (because who knows what the laws really were or meant). So Breyer’s list of deregulations in the Era of Deregulation was a little longer than Cudahy’s but considerably shorter than Wikipedia’s. And, unfortunately for EoD meme lovers, Breyer added a complication—a seed of doubt—to the whole idea that even the five industries on his list were ever really deregulated at all. The final paragraph of his list of deregulated industries is this, “It should be noted that ‘pure deregulation’ still involves the application of anti-trust laws. This matter will be discussed in Part II.”


Hm. “pure deregulation”? What exactly does that mean? Remember that Robert W. Crandall, in the 1988 article Surprises from Telephone Deregulation and the AT&T Divestiture said, “Undoubtedly, the greatest surprise in telephone industry deregulation has been the absence of deregulation, for the industry continues to be almost as highly regulated today as it was twenty years ago.”


It will turn out that antitrust will change what we learned—or seemed to have learned—about the few tiny bits of deregulation listed in the Wikipedia article. It will turn out that making “deregulated” companies subject to antitrust regulators more than canceled out the minuscule amount of deregulation which actually did happen to the seven industries. This is what Judge Breyer was referring to in his note about antitrust. Like the imaginary “repeal” of Dodd-Frank, the deregulations in the Wikipedia list have still existed at all when the article was written, if they ever did exist.


Do we already have way too much information about federal regulation? Yes, but we are now threatened with having to add a whole new kind of regulation to the eight kinds on our list above: Antitrust Regulation. A whole new voice in the way that government speaks regulation to us. Kind #9: Federal Antitrust Regulation is another big fat can of regulatory worms. A kind which is enacted by the regulators in Congress, and by the courts, and by the Administrative deep state, and in a big, big way.


To very briefly summarize the relationship between antitrust and deregulation (the relationship which Breyer was referring to in the final paragraph of his paper):


Four of the five industries which were listed by Breyer as Deregulated were, as we will later see, de facto government controlled monopolies all along—monopolies created by government—and as such they enjoyed much exemption from the massive weight of federal regulation Kind #9 Antitrust. Because while other, non-monopoly industries are subjected to a heavy, heavy burden of antitrust regulation, government monopolies are almost completely exempted from it.


In other words, if the “deregulated” industries, as a result of deregulation, lost their government-granted protections from antitrust Regulation and became subject to it, then they, as a result, became not deregulated but more regulated than ever.


And it’s true: Once the Wikipedia seven industries were “deregulated” they became subject to control by federal antitrust regulation, and that was a weight much, much greater than any which had been lifted by “deregulation” (and we will soon see that the regulations which were removed from the seven industries were actually very, very few, and most were temporary and were reinstated later).


So, in the end, there was no net deregulation of the seven industries, if only because Judge Breyer’s implication was correct: Adding antitrust regulation alone amounted to much, much more regulation than the small amount of deregulation which was removed (if any really was removed). In other words, the few ounces of deregulation which the industries enjoyed was more than offset by the adding on of tons of antitrust regulation.


And we will now see that Gov Regulation Kind #9 is a heavy, heavy kind indeed.



Bernie and the Permissioncrats

...we will start requiring major media corporations to disclose whether or not their corporate transactions and merger proposals will involve significant journalism layoffs... And we will prevent media-related merger and deregulation decisions at federal agencies that adversely affect people of color and women.

Bernie Sanders, “Bernie Sanders on his plan for journalism” Columbia Journalism Review (2019)



Bernie Sanders Sen. Vermont (I) wrote the above article in the process of running for the Democrat nomination for President, and he began it with the words “When I am president, my administration will put in place policies that will reform the media industry...” Senator Sanders outlined his plan for vastly increased government control of American media and communications systems. A heavy dose of antitrust regulation figured in Bernie’s plan to implement that new control. (The quote from the article is not all of Bernie’s plan; for example he was also going to require that, before any mergers were approved by government regulators, the companies had to create a plan whereby the employees could take over the companies via employee stock-ownership buyouts.)


Under Sanders’ plan, all business “transactions” (which could mean almost anything a business does) done by media were to be subject to denial by federal antitrust permissioncrats. If business transactions adversely affected people of color and women, permission would be denied by antitrust regulators. That would be bad news for businesses. Because, according to media outlets such as The Washington Post, virtually every major economic event or change (except, of course, more government regulation) adversely affected America, and, famously, women and minorities were always hardest hit. Therefore, it looked for all the world like when Bernie’s plan was implemented, permission for all business transactions done by media was going to be denied by government regulators. At the very least, it looked like Sanders was proposing to nationalize control of all media, by using the power of antitrust. It’s a powerful kind of regulation.



Telecommunication Regulation, via Antitrust 

How much weight does antitrust regulation bring to bear on industries such as Telecommunications? As of 2019, among other things, the rollout of 5G technology in the U.S. by American telecommunication companies was being significantly impeded by federal antitrust regulators.


According to some observers at the time it was proposed, a merger of Sprint and T-Mobile would produce a company with the resources needed to speed up the 5G rollout and also to be a more viable competitor to the telecommunication giants AT&T and Verizon. Both Sprint and T-Mobile needed the merger, it was said, and the public would probably be well served by a more viable competitor in the market, and 5G wireless would become a reality faster. But federal (and state) antitrust regulators had the power to stop the merger, and deny the two companies permission to do what they thought best for their businesses.


“Biggest Threat to 5G Is the D.C. Swamp” announced a WSJ headline in March 2019 https://www.wsj.com/articles/biggest-threat-to-5g-is-the-d-c-swamp-11552085782


The Sprint and T-Mobile had the merger deal ready to do in early 2018. That year passed.


On March 8, 2019 the FCC “paused its months-long review of the proposed merger” in a move which made it look like the merger probably would never be allowed to happen.


Martin Baccardax, “FCC Pauses T-Mobile-Sprint Merger Review as Legere Pushes Home Broadband Case” The Street (Mar 8, 2019)  https://www.thestreet.com/investing/stocks/fcc-pauses-t-mobile-sprint-merger-review-as-legere-pushes-home-broadband-case-14890866


2019 passed.


2020 arrived, and the Sprint T-Mobile merger was not only still being held up by antitrust regulators, it was looking more and more like the all-powerful federal trustbusters were never going to allow it at all. And it wasn’t just them.


As the… US telecommunications industry awaits U.S. District Judge Victor Marrero’s decision” state antitrust regulators stepped in as the California Public Utilities Commission threatened to block the merger. And so the just quoted article in Market Realist titled “T-Mobile and Sprint Merger Looks Less Likely” put the odds of the merger ever happening at only 40%.


Ambrish Shah, “T-Mobile and Sprint Merger Looks Less Likely” Market Realist (2020) https://articles2.marketrealist.com/2020/02/t-mobile-sprint-merger-looks-less-likely/#


We said above, it was thought that the result of the merger would be a company more capable of competing with telecommunications giant AT&T. But wait. Wasn’t AT&T busted up into the Baby Bells by federal antitrust regulators way back in the 1970s? What was it doing being an evil telecommunication giant again? Weren’t we supposed to have been saved from the dastardly Muh Bell by the brave federal trust-busting Feds and their trusty antitrust weapons? It’s hard to tell what really happened there, of course. Laws and government regulators were involved. We must push on.



But Good News at Last?

Finally, on February 10, 2020 the Wall Street Journal announced that the Sprint and T-Mobile merger had been approved. But, we might wonder, at what cost? In the fast-changing world of telecommunications, two years is a long time. If the merger was a good thing, what was the cost to the two companies and their customers of delaying it for so long?



But Bad News...

The federal antitrust regulators were busy little swamp beavers, and that story was only the second most important antitrust story of February 10, 2020. The most important story appeared on that day’s Wall Street Journal directly above the good news about the Sprint-T-Mobile merger. It was big antitrust news.


The FTC regulators announced that their massive antitrust power had become retroactive.


The WSJ story “FTC Expands Antitrust Investigation Into Big Tech” reported that the FTC announced trustbusting attacks on Alphabet, Amazon, Apple, Facebook, and Microsoft ordering them to begin providing detailed information about their previous acquisitions of other companies. The government regulators at the Federal Trade Commission said they planned to go back and “unwind” mergers which they had previously, finally, at great cost and delay, approved.


John D. McKinnon, “FTC Expands Antitrust Investigation Into Big Tech” Wall Street Journal (2020)



So the FTC now (without any additional empowerment by Congress or any other elected officials) had the power to go back and “re-examine” all the mergers which had ever happened the past—the whole past—even mergers which the FTC and other permissioncrats had tortuously approved at glacial speed and immense cost. Then the FTC could undo the mergers. And start the whole process of granting or withholding permission all over again.


Was antitrust a regulatory superpower or what! No wonder Judge Breyer pointed out that it could easily cancel what appeared to be deregulation. But there was more to the antitrust power of government. Regulation Kind #9 added vast powers to the arsenals of many, many federal regulators, not just those whose primary superpower was antitrust.


Not only did the SEC, FTC, and the Antitrust Division of the Federal Department of Justice who had big antitrust powers. So did the CFPB and the Fed. And as we will soon see, a number of Congressional Committees and Subcommittees had it too. And state regulators also. They had immense antitrust power (just as they had the power to control the trucking industry over and above the power of federal regulators). And what made all this even worse was that a very reasonable reading of the Constitution, as we will see, deems all federal regulation of communication systems, such as telephone companies, patently unconstitutional: the power of the federal government to control communication systems did not seem to exist at all during the first century or more of the United States’ history. So where did it come from? Not from the Constitution.



The Sword and Shield of Antitrust

The Enforcers — Both the FTC and the U.S. Department of Justice (DOJ) Antitrust Division enforce the federal antitrust laws. In some respects their authorities overlap...

“The Enforcers” Federal Trade Commission website



The FTC exists as a Constitutional anomaly. In one hand, it wields a mighty sword—the power to not only prosecute cases, but to judge them too; in the other, a massive shield—near-total protection from political accountability, with the Commissioners who direct its actions subject to neither democratic election nor at-will removal by the President. For decades, the agency has leveraged that power against American companies indiscriminately.



The second epigraph is from a motion filed by a company which chose to fight back after being set upon by some of the federal antitrust regulators.


When the Federal Trade Commission’s army of antitrust regulators singles out a target, the initial assault takes the form of a lawsuit. The FTC sends a letter announcing that it is investigating, then it sues the company. As of 2021, the FTC had sued lots of companies over the previous 25 years ( https://www.ftc.gov/news-events/press-releases/1998/10/ftc-wraps-record-year-antitrust-enforcement ).


What percent of those suits did the FTC lose? Zero percent. The FTC always wins all suits. Because the FTC regulators are their own prosecutors, judge and jury, and are totally unaccountable. The only recourse the attacked companies have is to appeal the verdict to the courts. When they do, about 20% of the cases are overturned. But, of course, the people judging the appeals are themselves also federal regulators, brethren in regulatory arms with the regulators at the FTC. It’s not too hard to guess whose side the judges tend to be on. It’s probably a safe guess that only the most egregious and unjust of the FTC’s attacks are ever overturned by federal judges.



The Powerful U.S. Senate Antitrust Subcommittee  

We mentioned that in addition to all the other federal agencies with vast antitrust powers, Congressional subcommittees wield them too.

Jurisdiction of the Subcommittee on Antitrust, Competition Policy and Consumer Rights include:

Oversight of Antitrust law and competition policy, including the Sherman, Clayton and Federal Trade Commission Acts

Oversight of Antitrust enforcement and competition policy at the Justice Department

Oversight of Antitrust enforcement and competition policy at the Federal Trade Commission

Oversight of competition policy at other federal agencies.



In 2020 the Ranking Democrat Member of the Subcommittee on Antitrust was Amy Klobuchar. The Bloomberg Law story “Dem Presidential Candidates Seize on Antitrust as Campaign Issue”, reported that while on the campaign trail for her Presidential campaign in 2019 she was promising to take federal antitrust powers to new heights, “Sen. Amy Klobuchar (D-Minn.) said she wants to make antitrust ‘cool again’.”



But the federal and state agencies, large, numerous, and powerful as they were, were not the only wielders of the government’s antitrust power; they might not even have been the most powerful.



Antitrust Power of the Courts

“Google has recently warned that it may bring antitrust actions against internet service providers that abuse their market power,” reported a Brookings Institute article in 2006. Could Google use antitrust powers against their competitors? Yes they could, using friendly courts. The article describes, “…the ability of private parties [Google/Alphabet] to enforce the antitrust laws—encouraged by the prospect of treble damages.”  https://www.brookings.edu/opinions/competition-and-antitrust-law-can-protect-the-internet/


In the end, the long-delayed fate of the Sprint T-Mobile merger was decided not by the regulators at federal executive agencies such as the FCC or by Congressional antitrust regulators, but by a federal judge, ruling in a suit brought by a coalition of 14 government regulators, state attorneys general (AGs) who had sued to block the merger. (Remember how we said that state government regulators had immense antitrust powers? That was an understatement.) And even after all that, the Sprint T-Mobile merger was still possibly temporary—Federal regulators reserved the right to return to the deal and reverse it at any time in the future. Government antitrust action could, as will see, be virtually eternal.


Beyond the Senate Antitrust Subcommittee, the DOJ, FCC, and FTC, the Fed, and so on, federal judges routinely made antitrust rulings and such rulings could amount to new laws, passed from the bench. When someone sued a company for antitrust, and a judge ruled on the case, it could result in a huge fine for the company and a whole new ‘interpretation’ of federal antitrust law. It could lead to the eventual breakup of the companies involved, and eventually other companies too. So the federal judiciary was another arm of government with big antitrust regulatory powers.



The Amazingly Long Arm of the Powerful “Antitrust” Federal Regulators

According to a 2020 article on antitrust in The Economist, “Government lawyers routinely blocked mergers merely on the grounds that the resulting company would be too big.” The article identified a newer antitrust phenomenon it termed Neo-Brandeisianism, or “hipster antitrust” or what we might call “Woke Capitalist Stakeholder Antitrust” i.e. a merger is denied by government regulators because the companies submitted “an ill-defined set of social goals”.




Ill-defined social goals? In 2019, the federal government regulators had threatened the Academy of Motion Picture Arts and Sciences with antitrust action because the Academy was engaging in monopolistic practices by not giving Netflix enough Oscars. (Coincidentally, that was the year that the Obamas had signed a multi-year contract to produce shows Netflix for an undisclosed sum, but probably larger than the $130 million they had been paid by Penguin Random House for their memoirs.)  https://reason.com/2019/04/03/antitrust-oscars-academy-justice-dept/


The day after Senator Amy Klochbar threatened to make antitrust cool again, “Senator Elizabeth Warren (D-Mass.) proposed breaking up Amazon Inc., Facebook Inc., and Alphabet Inc.’s Google and strictly regulating them as ‘utilities’. (Something Obama had done begun to do via the FCC, but which Trump reversed.) Two other Democratic candidates—former Colorado Gov. John Hickenlooper and Sen. Bernie Sanders of Vermont—have also invoked antitrust in recent days.”


Elizabeth Warren Calls for Breakup of Amazon, Google, Facebook



Nilay Patel, “Elizabeth Warren Wants to Break Up Apple, Too” The Verge (2019)



“The growing backlash against leading tech companies is reaching a fever pitch,” reported a 2019 story in The Motley Fool titled, “Calls to Break Up FAANG—Except This One”. Which one was not to be broken up? “Only Netflix was spared from Warren’s wrath, resulting in one brokerage house calling the streaming giant its top pick.” https://www.fool.com/investing/2019/03/19/calls-to-break-up-faang-except-this-one.aspx (The Czarina of the Unaccountable CFPB seemed to have a thing for Netflix. Did she just love bad TV shows or were campaign contributions and lobbying dollars involved?)


In the age of antitrust power, it was good to have political connections, and even the vast amounts officially spent by the big corporations on lobbying were apparently only the tip of the iceberg lettuce. Retiring politicians were set to receive hundreds of millions of dollars in “royalties” for their memoirs, and in six-figure “speaking fees”, and $millions to “serve” on the boards of corporations, or for their children to do so, and so on. If you wielded the regulatory power of antitrust, you were in line for some big, big paydays.


The long arm of federal antitrust regulation was not just long in power it was long in time. Once the federal antitrusters got a grip on a business they were not letting go any time soon. Assaults by the heroic trustbusters didn’t just drag on for years, they could go on for centuries.


In 2019, the Justice Department announced that it might soon end its breakup of Standard Oil, which it began in 1911, over a hundred years earlier. In 2019 the DOJ also decided to consider ceasing persecution of businesses accused of creating a monopoly in “drilled horseshoes”. And the DOJ also announced, you will be happy to find in case you have been thinking about trying to corner the market on Saloon & Parlor Entertainment Systems, that the DOJ was considering bringing to an end its trustbusting initiative, begun in 1921, aimed at preventing a monopoly in player piano rolls. The DOJ was considering ending trustbusting efforts in the areas of sardines, phonographs, ice cream cones, amusement tickets, and typewriter parts, and others. So much deregulation! But alas coming too late to be a part of the official Era of Deregulation.



Where Did Antitrust Come From? (It doesn’t seem to be in the actual Constitution)

The Congress shall have Power… To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes

Article I, Section 8, Clause 3 U.S. Constitution


The vast leviathan of federal antitrust power first reared its regulatory head in the very earliest days of what would become the Progressive Era. It was allowed due to what might charitably, if disingenuously, be described as a very, very broad and theretofore novel and unimagined interpretation of one line of the U.S. Constitution. The Interstate Commerce line.


There were no signs and portents in the sky to herald the beginning of a new era when Theodore Roosevelt moved into the White House in the autumn of 1901. He announced that he would carry forward the late President McKinley's policies, and in his earliest utterances as President he gave the financial and industrial powers of the day no cause for undue alarm… It was not until several months had passed that the first signal flare of the new era went up: in February 1902, Roosevelt's attorney general brought suit for the dissolution of the Northern Securities Company under the Sherman Antitrust Act.

Frederich Lewis Allen The Big Change: America Transforms Itself 1900-1950 (1952)


The Northern Securities Company was a holding company set up after the ‘Northern Pacific Panic’ by J. P. Morgan and associates to stabilize control some railroad properties. When Theodore Roosevelt created governmental ‘antitrust’ powers not only to destroy the Northern Securities Company but also to charge its owners with relatively newly created (in the 1890 Sherman Antitrust Act) “crimes”.


So, on that fateful day in 1902:

“Morgan was dining at home when the news of the suit came to him by telephone. He was dismayed and indignant. He told his guests that he had supposed Roosevelt to be a gentleman, but a gentleman would not have sued; rather he would have asked Morgan privately to reorganize or abolish the Northern Securities Company in order to bring it in line with the government's wishes. The great banker felt that Roosevelt was treating him, an honorable man, like a common crook.”


The financier had no clue as to hundreds of thousands of new ways to be a “crook” which were going to be invented by government in the succeeding decades. In his day, being a criminal meant actually doing something criminal.


But anti-capitalists in the media rejoiced at Roosevelt’s action. The publisher of the New York World newspaper, Joseph Pulitzer, was “overjoyed” at Roosevelt's action and in a letter to his editor exulted that the President had "subjugated Wall Street." This, observed Allen in his book, was, “…an exaggeration; but at least the battle was joined. This battle between the President and the emerging plutocracy...”


J. Pierpont Morgan himself did not, of course, go to prison for his “crime”. Instead, if he did not exactly welcome the new reality of government antitrust overlords, he did he go on to adapt to it quite successfully. (Whatever the harmful effects of antitrust were to be on most of America, they didn’t seem really to faze the elites.)


That there indeed was an "emerging plutocracy" of monopolists and robber barons became an undeniably a true part of Mainstream Narrative thanks to Pulitzer and the rest of the ‘emerging editorial board of the leftist media’. Much as, in its day, the Era of Deregulation meme would be manufactured by the media. But the big change which was aborning — the real change — was Progressivism itself, the vast wave of super-constitutional powers which would be the foundation of the immense increase in government regulatory control over America in the new century, and into the next. T.R. Roosevelt increased the powers of the office of the President more than anyone had since Lincoln. He seemed to be the first President to believe in control as the way that all American SoHIs should work. When any problem seemed to appear, his first impulse was to “solve” it by the application large amounts of government regulation, riding roughshod over the Constitution all the way (his sudden executive order changing the spelling of the English language, a story we tell in the book GovSwamped, being one of the more ludicrous examples.)


If the 20th Century saw a battle between government and the private sector — in the form of government regulators versus capitalist wannabe plutocrats — then who won? And what was the form of government which emerged in the 21st Century as the outcome of the contest? We discuss that in the book KleptoState.



Problems with Antitrust?

The time may have indeed come to consider repealing the antitrust laws.

James Sagner, Is U.S. Business Overregulated? How Government Destroys Our Ability to Compete Globally (2011)


‘Repeal the antitrust laws’??? Is that a joke? When was the federal government capable of permanently repealing anything—even the least little thing—let alone the massive miasma of antitrust regulation which gave so many thousands of federal regulators so much control of the business, economy, and finances of the United States?


But it was true enough that the federal antitrust regulation system did seem to be problematic in some ways. James Sagner had his reasons. “The antitrust laws cannot be made sufficiently specific to allow fair and consistent application,” he wrote in his book, “and, in any event, should not impede U.S. companies from developing strategies to allow them to compete in global markets.”


The Sherman Antitrust regulation of 1890, invoking and vastly expanding as it did the power of the federal government to control all commerce “among the several States” was one of the first big federal government expansions of the power of government to control almost everything in the private sector. America got along fine without big federal control of private businesses for much of our history. But, over a hundred years after the Constitution was ratified, the federal government decided that “monopolies” were bad and federal regulators had to abolish them. And the media suddenly began producing a vast body of literature about “robber barons” and so on. And the U.S. government began creating its own monopolies. Lots and lots of them.


Monopolies were bad? Then why were the biggest and most long-lasting of all monopolies the monopolies which were created by the government regulators? And, of course, the federal government itself was a monopoly. The biggest monopoly of all, by far. But you’re not supposed to notice things like that though. Because Robber Barons!!!


By the time the 21st Century rolled around, U.S. antitrust regulators had almost unlimited power (unlimited it seemed even by time itself). But the single greatest power of federal regulators regarding monopolies may not have been the power to control the businesses accused of being monopolies (historically, almost none of the companies subject to antitrust attack really were monopolies, almost all had numerous competitors), but in the power of federal regulators to create monopolies. The real monopolies, such as those enjoyed by energy utilities, cable companies, transportation companies, communication companies, the USPS, and so on. Monopolies created by government regulators. With the intention of giving some companies advantages over others, or preventing competition entirely, in huge, decades-long industry-wide programs of regulatory capture. It’s a true story, as we will see.



Antitrust in 2020

Economist Milton Friedman believed that the antitrust case against Microsoft set a dangerous precedent that foreshadowed increasing government regulation of what was formerly an industry that was relatively free of government intrusion and that future technological progress in the industry will be impeded as a result

United States v. Microsoft” Wikipedia


Maybe, as of this writing, antitrust in action is not a takedown, it is really a shakedown. The government regulators in the Justice Department, and the droves of other agencies and entities where the regulators have antitrust powers, are actually the strong-arm enforcers for the U.S. Government’s huge Extortion Division. The government regulators use the threat of antitrust to extort money from the most successful corporations.


Government regulators opened up a 13-year antitrust attack on IBM in 1969. And in 1992, the Federal Trade Commission launched a similar antitrust assault on Microsoft, charging that Windows and Internet Explorer were a monopoly on personal computers and browsers.


Neither corporation was broken up, of course. After spending many years, and many $millions were paid to defense lawyers and many $millions of taxpayer money was spent by government regulators (and many more $millions on lobbying and campaign donations?), both companies ended up with what amounted to slaps on their wrists at most. Anyway, as what happened in the marketplace showed, Microsoft never had a monopoly on personal computer operating systems; Apple and Unix were and remained viable competitors. Internet Explorer was never a monopoly, and Microsoft lost out to its competitors in the browser wars due to competition, not as a result of any actions by the government, whose government “anti-monopoly” attack ended in 2007. the Wikipedia article “United States v. Microsoft”, “In the January 2007 edition of the Journal of Business & Economic Research, Jenkins and Bing argue that, contrary to Friedman's concerns, the settlement actually had little effect on Microsoft's behavior.”


IBM was not broken up or made to substantially change its business, and it never had a monopoly on computers in the first place, a fact demonstrated by its loss of market share to competitors over the succeeding decades, a loss not due to government antitrust action but simply to the competitors, who had always existed. The “monopolies” were never real. But the $millions they cost, most of it going one way or another to government regulators, was.


Arguably, the government antitrust extortionists never had any intention of breaking up either IBM or Microsoft, or punishing them in any way for anything, and had had no thought whatsoever about the “public good” either. IBM and Microsoft delivered goods and services to willing buyers, and lost those customers when competitors offered better. No government regulators needed. It seems that maybe the “antitrust” was just a shakedown, and a demonstration of the power in the long and lucrative antitrust arm of the government regulators. This idea is further explored in KleptoState, the fourth book of this series.



Conclusion of the Judges’ Lists

Anyway, it seems obvious that the judges’ lists are too short to support the idea of an EoD which deregulated most of America’s thousands of kinds of Systems of Human Interaction. So we need to keep looking for the huge number of repeals which swept away hundreds or thousands of important regulations, as we have been told happened in the Era of Deregulation. Where are the deregulations? They must be somewhere. The EoD promulgators wouldn’t’ lie to us, would they?



Lists of Deregulations, instead of Lists of Industries

Maybe instead of looking for deregulated systems we should try again to look more for specific acts of deregulation. Maybe lots of more of those happened than it seems. Maybe there were individual laws passed in the EoD which resulted in sweeping repeals of many regulations across many different systems, much in the way that the 1933 Banking Act or Dodd-Frank created hundreds of new regulations at one time. According to lawyer Nyhan and his explanation of the nature of laws, such a mass deregulation does seem possible (of course, he didn’t say that any such thing actually happened).


So maybe to find evidence of the EoD we need a List of Deregulations, instead of a list of SoHIs which were deregulated. In spite of how hard it would seem to be to make such a list (considering that repeals are just more laws and there are hundreds of thousands of laws and that repeals can be unrepealed and so on) let’s see if we can find such a list.


A Short History of Financial Deregulation in the United States compiled by the Center for Economic and Policy Research seems to be one. Unfortunately, as the title of the paper suggests, it is indeed short; it is a list only of financial deregulations, and there aren’t many. We will look at the list, and the acts of deregulation on it, below when we discuss deregulation of the financial industry, or lack thereof, in some detail.


The Wikipedia article on Deregulation itself itemized acts of deregulations, in two ways.

1. You can make a list of the deregulations that are discussed individually in each section about a particular Industry, as we discussed.

2. And then, as we also noted, the Wikipedia article had an actual list of acts of deregulation, entitled “Related legislation”.



Wikipedia List of 14 Deregulation in: “Related legislation”

By the word “Related” it is meant that most of the acts on the list are related to the deregulation of the seven deregulated Industries on Wikipedia’s list of deregulated industries. So most of the 14 repeals were (alleged) deregulation which we already discussed. But some of the list may be new examples of the real deregulation in the EoD which we have not talked about (because we could find almost none of it). Maybe these repeals are those which we have been looking for, i.e. the ones which swept away most of the government regulation in the U.S. during the EoD.


Unfortunately the list, which you can see at https://en.wikipedia.org/wiki/Deregulation , is bit of a disappointment. Only three items on the list are deregulations which we have not already discussed. 


#1 Hart–Scott–Rodino Antitrust Improvements Act (HSR)


This Act, amending the Clayton Act, requires companies to file premerger notifications with the Federal Trade Commission and the Antitrust Division of the Justice Department for certain acquisitions. The Act establishes periods that must elapse before such acquisitions may be consummated and authorizes the enforcement agencies to stay those periods until the companies provide certain additional information about the likelihood that the proposed transaction would substantially lessen competition in violation of Section 7 of the Clayton Act. The Act also requires a filing fee.


Summary of the Hart-Scott-Rodino Act

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “Act”) was adopted to provide the Federal government with the opportunity to review the potential effects on competition of certain mergers, acquisitions or other consolidations... Once all parties to a transaction submit completed filings and pay the filing fee (generally $45,000 per transaction imposed upon the acquiring person), there is a 30 day waiting period before the transaction may be completed.



So the HSR required that if you as an individual or a business wanted to buy a business you had to file a huge form, and hope it was accepted, wait 30 more days if it was accepted, and pay $45,000. That’s Wikipedia’s idea of “deregulation”? It sounds more like extorting money using the power to withhold permission. That and a big chunk of paperwork to fill out. Let’s look at the other three.


#7 Regulatory Flexibility Act (RFA) 5 USC §601 et seq (1980) The purpose of the Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), is to fit regulatory requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to the regulation.


Since it was originally passed, the Regulatory Flexibility Act has been changed a lot over the years by regulators (including a change made by the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) although perhaps that change was repealed, or not, when Dodd-Frank was not really repealed; we are not going to try to read Dodd-Frank to find out, it’s 27,000 pages of regulations! Even after it was repealed!!!). What the RFA does now (if it was not repealed) is not clear. You can read about it at https://www.sba.gov/category/advocacy-navigation-structure/regulatory-flexibility-act . However, it does not appear that in its long history the RFA ever really repealed any regulations whatsoever.


#10 The Natural Gas Wellhead Decontrol Act of 1989 (NGWDA). According to Congress, the NGWDA “Amends the Natural Gas Policy Act of 1978 to declare that the price guidelines for the first sale of natural gas do not apply to: (1) expired, terminated, or post-enactment contracts executed after the date of enactment of this Act; and (2) certain renegotiated contracts.” So this act is a small amendment to a previous regulation which controls natural gas prices, and it only affects the price of the “first sale of natural gas” at the wellhead. Well, that’s something. Some real deregulation! Price of The First Sale of Natural Gas at the Wellhead Free at last!!!


Last on list:

#14 Gramm-Leach-Bliley Act We already know—from the depressing and boring story of Glass-Steagall—that the GLBA finally really repealed nothing. Glass-Steagall had already been overwritten by the Fed and then it was reinstated by Dodd-Frank. But this item on the Wikipedia list does at least remind us that the story of Glass-Steagall will never end.


But seriously. This is the list of the 30 years of the EoD, when major repeal of large amounts of regulation wiped out vast swaths of laws, deregulating hundreds of industries, and most for our systems of human interaction? Something about the prices of some natural gas? In reality, the whole natural gas industry is controlled by thousands of lengthy laws and regulations, and by numerous federal agencies and courts. To deregulate it by only say 10% would require many hundreds of repeals and reversals of court rulings at the very least, each of them far, far more substantial than the Natural Gas Wellhead Decontrol Act of 1989. And apparently those never happened. Because if they did why aren’t they on the list of deregulations? If those big deregulations really happened, why not list them, or at least a few?


By removing some of government created monopolistic pricing, the Natural Gas Wellhead Decontrol Act may have saved some consumers of “first sale” natural gas (whatever that is) some money, but in no one’s wildest imagination could it be claimed to have comprised sweeping deregulation of the natural gas industry, let alone the thirty-year Era of Deregulation which article, and proponents of the EoD, claim happened.


As we said, the other nine (of the 14) items on the Wikipedia list relate to the seven deregulated industries we already discussed and will discuss further below. We will see that those nine, in reality, amount to almost zero net deregulation.


Is it crazy to keep looking for the EoD? Maybe, but we’ve come this far. No one said that it would be easy navigating the seemingly infinite morass of government regulation looking for what appears now to be a tiny needle of deregulation in a Mt Everest-sized pile of government control and command. Let’s give the EoD one more chance and look at each claimed deregulation of each of the seven industries one by one, looking for some convincing evidence that any significant deregulation really did happen. But for now we will note that, while Wikipedia’s list of 14 deregulation was not necessarily intended to be exhaustive, we might wonder: Only 14? From 1970 to 2000? That’s massive deregulation? When tens of thousands of new regulations were being created in every one of those years? How could that possibly amount to net deregulation?



Individual Acts of Federal Deregulation of 7 Industries

1) Transportation


—Highway (Motor Carrier): Trucking, Busing



2) Energy

3) Communications

4) Finance (FinReg)


What exactly were the repeals that supposedly deregulated those industries?


The Deregulation of Transportation

The Railroad Revitalization and Regulatory Reform Act of 1976... The Act was the first in a series of laws which collectively are described as the deregulation of transportation in the United States...



How regulated were railroads? A lot. There was a 15% tax on passenger rail travel. Local governments levied additional property taxes on land owned by railroads. And the railroads, “….had to deal with antiquated work rules and unyielding trade unions...” Government regulation contributed to the bankruptcy of several major railroads bankruptcy in the 1960s.




After World War II, the American public began to switch from passenger trains to cars and planes. This was one reason why the passenger-travel services provided by the railroads began to lose money (another was, as we said, the accumulated sludge from decades of government taxation and regulation). When the Penn Central railroad went bankrupt in 1970, Congress essentially nationalized it, funding it from then on with taxpayer dollars (mostly coming, of course, from people who never rode the trains, which were in 1970 mostly used by commuters who worked at high-paying jobs in the biggest cities) until creating Amtrak as a government-owned corporation in 1971 (its stock owned by the government and its board members appointed by the President of the U.S.).


This obviously was not deregulation. Even proponents of the EoD meme did not claim that nationalizing private industries and forcing poor people to pay for rich people’s train tickets was an example of deregulation.


But then, in 1976, Congress passed the Railroad Revitalization and Regulatory Reform Act. And the Era of Deregulation of the U.S. Transportation system was born, we are told, by the authors of the EoD narrative.


So exactly what was The Railroad Revitalization and Regulatory Reform Act about? What were the deregulations which it accomplished?



What the Railroad Revitalization and Regulatory Reform Act Did

The Railroad Revitalization and Regulatory Reform Act establishes zones of freedom, where the railroads could raise or lower their fares without ICC review.



The U.S. Department of Transportation (DOT) has a webpage (the link above) about what The Railroad Revitalization and Regulatory Reform Act did. And as of 2020 that’s all it said, “The Railroad Revitalization and Regulatory Reform Act establishes zones of freedom, where the railroads could raise or lower their fares without ICC review.”


And that’s all the Railroad Revitalization and Regulatory Reform Act seems to have done. That was the grand total of all the deregulation of railroads. The change allowed railroads to set some of their own prices, it made it a little easier for railroad companies to ask government regulators for permission to serve more people and to restructure their businesses to make them more efficient.


You might wonder why, in the first place, had it become necessary for railroads to beg government bureaucrats for permission to do those things? One answer is mentioned above: By 1976, government had piled so many regulations on the railroad companies that they could do almost nothing without getting permission from a government regulator. They couldn’t even lower prices without permission. We will discuss that more below (Regulatory Capture is involved). You can download the law at https://www.gpo.gov/fdsys/pkg/STATUTE-90/pdf/STATUTE-90-Pg31.pdf . If you do look at it, you will see that the Act seems to add a lot more regulations than it repeals; but, given the real nature of federal regulation, it is very hard to tell for sure. But that’s what the Act looks like: A large increase in regulations.


The Railroad Revitalization and Regulatory Reform Act set the pattern for the subsequent “deregulation” of the U.S. Transportation system. In that it deregulated almost nothing. It gave the railroads permission to set some of their own prices and it required government bureaucrats to be more lenient in giving railroads permission to serve more routes. It left the massive regulation of railroads by a small army of government bureaucrats almost entirely intact. And, the little deregulation it did was only needed because government regulators had been giving some railroad companies competitive advantages over others, in a widespread, decades-long orgy of regulatory capture. Allegedly, regulators sold regulations to those railroad companies who had the money to buy them, until the whole railroad system became so inefficient and so burdened by thousands of regulations, and the prices were so high, that the public finally demanded an end to it. (At that point in U.S. history it was apparently still possible for the public to do such a thing.) However, there wasn’t an end to it. Just a couple drops of change in a vast sea of regulation. We will see that story repeated, as variations of it will turn out to be all that really comprised the so-called “era of the deregulation” of transportation in the U.S. To wit:


Repeal a little bit of government price control.


Make it easier for transportation companies to request permission from government regulators to serve new routes.


Keep all the other thousands of regulations.


— Eventually reinstate most or all of the tiny number of deregulations.


Meanwhile, federal regulators kept creating thousands of brand new regulations.



More About the Purported Deregulation of Transportation in the U.S.

Federal regulation of commercial transport went back a ways.


In 1824, the U.S. Supreme Court in Gibbons v Ogden ruled that “the power to regulate commerce, so far as it extends, is exclusively vested in Congress.” (No mention of scores of huge unaccountable Administrative State agencies which were created by government regulators in the 20th Century.) And commerce was taken to include transportation. It seems that canals were regulated by the states. www.canals.ny.gov/reimagine/Docs/Canal%20Law.pdf


Fifty years before the Interstate Commerce Act of 1887, highly publicized instances of exploding boilers in steamboats had been the rationale for the federal government to claim the power to regulate that form of transportation and subsequently the others.


“...it was the problem of boiler explosions on steamboats that led to the first instance of federal safety regulation (in 1838 and again in 1852), which in turn served as a precedent for the government’s more extensive subsequent interventions into private markets.”

Richard N. Langlois, David J. Denault, Samson M. Kimenyi, Bursting Boilers and the Federal Power Redux: The Evolution of Safety on the Western Rivers, University of Connecticut (1994)


(The conclusions of the paper questioned whether the federal regulations ended up really making steamboats safer, and concluded that they didn’t.)


In 1887 Congress passed the Interstate Commerce Act to regulate aspects of the rail system. Over the following years, the control of the federal regulators was greatly increased

1893 - Railroad Safety Appliance Act gave the Interstate Commerce Commission (ICC) jurisdiction over railroad safety, taking that power away from the states

1906 - Hepburn Act authorized the ICC regulators to set maximum railroad rates and it expanded the ICC’s authority to begin to regulate all common carriers.

1910 - Mann-Elkins Act gave the ICC more power to control railroad rates, and also power to regulate telephone, telegraph, and wireless companies. In the New Deal, in 1934, Congress transferred that power by creating the Federal Communications Commission to regulate communication systems. To many Americans, the New Deal was the beginning of mega-regulation of America. But it had started in the earlier “Progressive Era”. Three years after the Mann-Elkins Act, the Federal Reserve was established to control money supplies and the banking industry. Also in 1913 income tax was inaugurated.

1935 Motor Carrier Act, in the New Deal, greatly increased the powers of ICC by giving it control of trucking and busing.



Eventually, the biggest, most impactful acts of deregulation of transportation in the EoD were said to be the Motor Carrier Act of 1980 and the Airline Deregulation Act in 1978. Before we look at the deregulation, if we can really find it, we will look at the regulation it was supposed to have repealed. Government regulators did create laws with “Deregulation” in their name, but, as we have learned, when it comes to government regulation words can be deceiving.



Motor Carrier Act of 1980: Regulatory Capture and Truckin’ with Smokey

A bit of the history of the regulation of trucking is given on the website of the Estes trucking company:

“...in the 60-year stretch from 1935 until 1995,” the truckers recall in a memoir titled “Life Before Deregulation”, “federal and state authorities imposed restrictive, complicated and inefficient rules around pricing and territory that were originally designed to limit trucking’s ability to out-compete the railroads.” Life Before Deregulation from a history of the Estes trucking company  https://www.estes-express.com/about-us/deregulation.html


So the regulation of trucking was motivated by a desire on the part of government regulators to protect the railroads from competition? So it would seem, and another history explains further.


“The ICC began regulating interstate trucking after Congress passed the Motor Carrier Act (MCA) of 1935,” wrote Scott Mall, in “Flashback: Interstate Trucking Under the ICC’s Thumb”. Continuing, “Advocates for this legislation were the ICC (Commissioners and staff), state regulators and the railroads, which wanted trucking to be more regulated, because as the Great Depression deepened they had been losing more and more business to the trucking industry.”

Scott Mall, “Flashback: Interstate Trucking Under the ICC’s Thumb” Freight Waves (2019)




According to the Wikipedia “Deregulation” article we have been referring to, the Deregulation of trucking consisted of two acts of deregulation:

Motor Carrier Act of 1980 (not to be confused with the Motor Carrier Act of 1935)

Surface Freight Forwarder Deregulation Act of 1986


Was commercial trucking in the U.S. really deregulated, with the passage of those two acts, like Wikipedia says?


First, it should be said that the second act on the list, the Surface Freight Forwarder Deregulation Act of 1986, was really just an addition to the Motor Carrier Act of 1980 and made some minor technical changes to it (mostly it just adjusted the jurisdictions of regulators of “freight forwarders”  https://www.congress.gov/bill/99th-congress/senate-bill/1124 ). (No writers about transportation outside Wikipedia article seem to claim that the Surface Freight Forwarder Deregulation Act was really a repeal of anything).


So any real, significant deregulation of trucking came in the form of the Motor Carrier Act of 1980, signed into law by Jimmy Carter. Before looking at what the MCA really deregulated we will glance at what had previously been regulated, by the earlier Motor Carrier Act of 1935.


From the story quoted above:

“The MCA required new trucking companies to seek a ‘certificate of public convenience and necessity’ from the ICC... [Compare this to the state ‘certificates of need’ which in 2020 prevented ambulance drivers from picking up sick people in one state to take them to a hospital in another state, as we discuss in the third of this series.] New trucking companies found it extremely difficult to get certificates. This led to an artificial restriction on the number of trucking companies. In 1940, Congress extended ICC regulation to include inland water carriers, another competitor of the railroads. At that point, the ICC controlled all forms of surface freight transportation.”


That was just for starters. The ICC controlled almost everything about trucking: the routes truckers could drive; the prices they could charge; the towns they could provide service to; what they could haul and how much of it; and lots more.


Quoting again from “Flashback: Interstate Trucking Under the ICC’s Thumb”, “The result of ICC-mandated reduced competition was a wasteful and inefficient industry. Carriers’ routes and the products that could be carried over them were narrowly defined. Backhaul was rarely allowed; and convoluted regulations frequently required trucking firms to go miles out of their way.”


All this restrictive regulation of the relatively new trucking industry was done to protect the older railroad companies from competition, as the already powerful and rich railroad industry apparently had lots of federal government regulators in their pockets, like so many nickels and dimes.



Trucking Monopolies, Regulatory Capture, and the Reed-Bullwinkle Act

In attempting to curtail competition among motor carriers, ICC regulation also made the industry grossly inefficient. Carriers had to waste resources. Permissible routes and products were narrowly specified. Truckers with authority to carry a single product, such as tiles, from one city to another might not have authority to haul anything on the return trip.

Thomas Gale Moore, “Unfinished Business in Motor Carrier Deregulation” Cato Review of Business and Government (1991)



Federal regulators essentially took total control of the trucking industry during the New Deal era and following decades. The Estes Express history of trucking which we quoted above goes on, “With the advent of the Motor Carrier Act of 1935, the Interstate Commerce Commission (ICC) essentially determined which companies became interstate motor carriers, what they hauled, where they hauled and the fees they charged. It was a powerful political agency.”


“In attempting to curtail competition among motor carriers, ICC regulation also made the industry grossly inefficient,” wrote Thomas Gale Moore, in “Unfinished Business in Motor Carrier Deregulation”, in 1991. The result of all the government regulation was not just unfairness and regulatory capture. The resulting inefficiency made everything which Americans needed to ship cost more. “Carriers had to waste resources. Permissible routes and products were narrowly specified. Truckers with authority to carry a single product, such as tiles, from one city to another might not have authority to haul anything on the return trip.”


But if government regulation caused everything to cost more because shipping cost more, the government regulators of course had a solution: More regulation, in the form of price controls.


The New Deal Motor Carrier Act of 1935 did not, at first, give federal regulators the power to set the rates which truckers charged, but “required that carriers’ rates be reasonable as to both minimum and maximum.”, said “Trucking Deregulation in the United States”, Federal Trade Commission (2007). Why require a trucker to charge his customer a minimum amount of money? By requiring minimum rates, the federal regulators protected railroads and the bigger, richer, established trucking companies (who had enough money to buy regulatory capture) from having their rates undercut by new competitors.


Years passed. Government regulators created a complicated, top-down system which completely controlled commercial trucking in the U.S. It created monopolies, fiefdoms for selected trucking companies who were protected from competition by the government regulators. And the whole system was explicitly exempted from Antitrust laws by federal regulations. That’s right, while private sector companies which were not really monopolies were increasingly targeted and attacked by federal antitrust regulators, the government-created monopolies—the real monopolies—were 100% immune to antitrust laws.


The immunization from antitrust laws and the creation of powerful “rate bureaus” was done by Congress in 1948.


In 1948, with the motor carrier industry facing antitrust lawsuits and investigations by the Department of Justice (DOJ) and several states regarding collective activity, Congress passed the Reed-Bullwinkle Act. That act allowed “rate bureaus” operating under ICC-approved agreements to set rates collectively, and immunized the activities of bureaus operating under an ICC-approved agreement from the antitrust laws. In the environment of pervasive regulation, almost all carriers belonged to a rate bureau.

Trucking Deregulation in the United States” Federal Trade Commission (2007) https://www.ftc.gov/sites/default/files/attachments/us...oecd.../ibero-trucking.pdf


More years passed.


By the 1970s, the lane rights which the government regulators sold to truckers had become more and more expensive. (Compare the truck “routes” to the $million taxi ‘medallions’ created and sold by government regulators in New York and other cities, discussed in book three.) Some routes sold for hundreds of thousands of dollars. Everything just kept getting worse. “


“And the resulting patchwork of authority often created very inefficient paths that required carriers to go hundreds of miles out of their way,” said the Estes history “Life Before Deregulation”, “New carriers had an even tougher time...”


By 1980, the federal government controlled almost everything about commercial trucking in the U.S. by means of thousands of federal regulators, regulations, bureaus, and agencies. Government regulators even made it a crime for trucking companies to publish their prices. The regulators and regulations added immense amounts of cost and inefficiency to the transportation system, which, as we said, required Americans to pay more for everything that was moved by trucks and to have to wait longer for it to arrive. And for no other real reason than to further enrich and empower certain people, most of whom, allegedly, were government regulators.


Then came the famously deregulatory Motor Carrier Act of 1980.


What exactly did it deregulate?


The Act prohibited rate bureaus from interfering with any carrier’s rights to publish its own rates. As implemented, it removed most rate making from the rate bureaus, eliminated most restrictions on commodities that could be carried, and deregulated the routes that motor carriers could use and the geographic regions that they could serve.

“Motor Carrier Act of 1980” Wikipedia  https://en.wikipedia.org/wiki/Motor_Carrier_Act_of_1980


So. In all of this book so far, in all the fake repeals and the real laws and regulations we have looked for and at, this is the first actual post-New-Deal deregulation of any significance we have found. The Motor Carrier Act of 1980 did actually repeal some significant regulations. Finally!


The act allowed trucking companies some freedom to set and even to publish the prices they charged for carrying cargo. It somewhat decreased the federal government regulators’ power to control what routes trucking companies could carry cargo on and what cargo they could carry.


But that’s it. What the Wikipedia article says was actually deregulated were:

1. Prices

2. Routes of Distribution and kinds of cargo carried


Everyone knows that government agencies, such as the federal Department of Transportation, the Surface Transportation Board, and scores of other regulators control a lot more about trucking than just those two things. You may have noticed that even after trucking was “deregulated” in 1980 there were still obligatory weigh stations on the Interstate, for example. The federal officials operating those were certainly controlling something. “Deregulation” did not mean “ending regulation” or anything remotely like that. Federal agencies still controlled the interactions between management and unions, such as the Teamsters. The EPA and OSHA never repealed their regulations trucking, they increased them. And so on.


Probably more than 99% of the federal control of trucking was never repealed. Instead, in the years before and after 1980, tens of thousands of new regulations were added, and those were not repealed and probably never will be.


If you wanted to start trucking to make some money, listed here are a few of the things government regulators made you do in 2020, forty years after the trucking business was supposed to have been “deregulated”:


“Comply with all trucking-specific business licenses, permits, and forms:

“In addition to the general federal and state requirements, there are tax, license, and permit regulations that apply specifically to the trucking industry. Depending on the type of trucking business you plan to run, several important requirements may include:

  ·Federal DOT Number and Motor Carrier Authority Number Understand your requirements and apply for these certifications online at the Federal Motor Carrier Authority’s website.

  ·Heavy Use Tax Form (2290)’ Comply with tax regulations related to the heavy use of U.S roads with IRS Form 2290

  ·International Registration Plan (IRP) Tag’ Understand your requirements and obtain IRP tags by visiting your stat’s transportation website and their IRP portal.

  ·International Fuel Tax Agreement (IFTA) Decal’ Understand your requirements and obtain IFTA decals by visiting your state’s transportation website.

  ·BOC-3 Filing - Use a processing agent and the BOC-3 filing content option to secure and maintain active operating status...”

from “Starting a Trucking Business”, Small Business Administration (2017)  https://www.sba.gov/blogs/starting-trucking-business-0


Deregulation did not really deregulate trucking. It really only changed two regulations, and only one, if you are picky and notice that the federal government actually still retains the power to control the routes truckers drive. Because it does. The change in the federal government’s power to control the routes truckers drive was, at most, a reform and not a repeal. The DOT did not really repeal government regulators’ power to regulate the routes which truckers serve. In reality, the DOT still has that power, and truckers still have to ask permission to serve regular routes. And the DOT can still deny truckers permission to serve new routes. In other words, what Wikipedia says was repealed still exists.


What the ERDRMCT Really Says

“Elimination of Route Designation Requirement for Motor Carriers Transporting Passengers Over Regular Routes” DOT, Federal Register (2009)



So actually the era of the deregulation of trucking consisted of one deregulation. While leaving thousands in place and adding thousands more.



Was that it really? 

Perhaps there really were a larger number of repeals or reforms of trucking regulations between 1970 and 2000? If there were, writers on the EoD do not seem to discuss or list them. Ever. Why not? It’s pretty obviously because more deregulations never really happened. Basically the deregulation of trucking consisted of those two relatively minor changes in federal regulations, one of which didn’t really deregulate anything, while all other regulations remained in effect and regulation was greatly increased.


According to the Federal Trade Commission 2007 report Trucking Deregulation in the United States (which we will quote from again below) that indeed is the official story of the deregulation of trucking: Two changes. And the two changes were not nearly as ‘deregulatory’ as they might seem; not only did one not really deregulate anything, probably neither of the two deregulations was really permanent (as we will see).


The Era of Deregulation was said to have been a time of net decrease in regulation. So in contrast to the two deregulations, how many new regulations were created 1970-2000? You might guess that it is impossible to really count them. And of course you would be right. But to get a rough idea of the amount such regulation, visit the Department of Transportation website https://www.transportation.gov/ and search for “regulations” and you will find many links. (But keep in mind that isn’t the whole list; many other federal agencies also issue regulations to control trucking.)


Looking at the site, it seems that as of January 2020 more than 1,700 Rules, Proposed Rules, and Notices had come from the DOT since 1994. If you could go back and count the new regulations created by DOT starting 1970 (the beginning of the Wikipedia EoD) to 2010 (the end of the Bush era and one year after the 2009 “Elimination of Route Designation Requirement for Motor Carriers Transporting Passengers Over Regular Routes”), the total number of new regulations would probably be much larger than 1,700. You would not know how many of the proposed rules became rules, how many affected trucking, and how much impact they had, but the weight of thousands of new regulations versus a total of two deregulations would hardly seem to constitute an end to the federal regulation of trucking.


And keep in mind that the 1700+ were just the new regulations from DOT. The Congress, the president, the federal courts, and many other federal agencies, from OSHA and the NRLB to the EPA and the IRS, also created new rules which regulated the trucking business during that time period. Lots of them. As we will see.



So It’s All “Happy Trails” and Free-Wheeling to Truckers after the 80s?

The scenario put forth by promulgators of the Era of Deregulation meme implies that the Motor Carrier Act of 1980 deregulated trucking and all onerous federal regulations were repealed and the truckers drove happily and freely into the sunset never to be troubled by federal regulators again. But as we have seen, that is not quite true. In fact, the opposite is what really happened.



The EoD Comes to Trucking, or Not 

The Estes Trucking website we quoted above ends its history of the regulation and deregulation of trucking with a short timeline titled “Regulating the Industry”, which lists 4 acts of regulation then ends with 2 acts of deregulation. which are:

1980--The Motor Carrier Act of 1980 sharply curtailed federal regulation.”

1995--The ICC Termination Act of 1995 lifted most remaining federal motor carrier restrictions.”


True, the big, powerful government regulatory agency called the Interstate Commerce Commission was eventually dissolved. And the words “lifted most remaining federal motor carrier restrictions” may leave the reader with the impression that after the Interstate Commerce Commission was terminated all the oppressive federal regulation was “lifted” away forever. The ICC was eventually dissolved fifteen years after the 1980 Motor Carrier Act passed, but its regulatory power was still not dissolved by any means; that power was just transferred to other federal agencies.


The Surface Transportation Board (STB)

The STB was established in 1996 to assume some of the regulatory functions that had been administered by the Interstate Commerce Commission when the ICC was abolished... The STB has broad economic regulatory oversight of railroads, including rates, service, the construction, acquisition and abandonment of rail lines, carrier mergers and interchange of traffic among carriers. The STB also has oversight of pipeline carriers, intercity bus carriers, moving van companies, trucking companies...



The Federal Motor Carrier Safety Administration (FMCSA) is an agency in the United States Department of Transportation that regulates the trucking industry in the United States.



The Federal Motor Carrier Safety Administration (FMCSA) https://www.fmcsa.dot.gov/

The FMCSA has created many new regulations (it is of course hard to count how many, but certainly very many). It spends a significant amount of money to do that, “I am pleased to present the Federal Motor Carrier Safety Administration’s (FMCSA) fiscal year (FY) 2017 Budget Request of $794.2 million...”



And of course the powers of Congress to pass its own laws to control trucking were by no means dissolved or in any way lessened by the end of the ICC (and pass such laws Congress did, in great quantity).



Trucking Is Not Unregulated in 2021; It Never Was Really Deregulated

As we said, two regulations were repealed or at least watered down; and the ICC was dissolved and replaced by other government regulators. But the total weight of the regulation of trucking was to be greatly increased in the succeeding decades; and that great weight was also added in the form of the other kinds of federal regulation.


That is a pretty accurate description of the so-called “Era of Deregulation of Trucking”.


The reality was that almost every part of the U.S. trucking system was regulated before 1980-95 (the era of the “deregulation” of trucking) and if anything really changed  after 1980, it was the addition of thousands of regulators and regulations.


These are a few of the acts of regulation passed by Congress and signed by Presidents during the time that we are told was the “Era of Deregulation” (if you include the G.W. Bush presidency):

 •  Surface Transportation and Uniform Relocation Assistance Act, 1987

 •  Intermodal Surface Transportation Efficiency Act (ISTEA), 1991

 •  The National Highway System Designation Act (NHS), 1995

 •  Transportation Equity Act for the 21st Century (TEA-21), 1998

 •  Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), 2005


The list is far from inclusive. It does not include the other kinds of regulation. Most new regulation of trucking during the EoD came not from Congress but in the form of edicts from the Administrative State in general. As we saw, after the phasing out of the ICC, other federal agencies took control of trucking in the U.S., and in 2020 they still had the power to control trucking prices and routes. In 2020, government regulators controlled almost every aspect and facet of the trucking industry, adding cost to every mile driven by every truck and to every delivery made. Like they did before “deregulation”.


On July 6, 2012, President Obama signed an omnibus highway bill. Another act, the “Moving Ahead for Progress in the 21st Century Act” had already been signed by Obama in June 2012, and both required, among many other new regulations and controls, that a “national freight policy” be created by federal regulators. Among other new regulations, it mandated electronic monitoring devices for all truckers. Just one more in the influx of thousands of new federal regulations of trucking coming endlessly down the pike. Was that “electronic monitoring devices” regulation impactful? Let’s take a quick glance at what the regulation of the “deregulated” trucking system did.



How the Deregulated Trucking is not the reality: The example of the ELD Ordeal

In 2016, federal regulators of trucking decreed that all big rigs in the U.S. had to be equipped with Electronic Logging Devices (ELDs) by December 2017. Immediately, problems were predicted.


“Analysts say the shift to ELDs will likely raise shipping costs and make it harder to book transportation at a time when trucking capacity is already tight,” said a 2017 Wall Street Journal article “Slow Start for Truckers Under New Rule on Logging Hours”. Some analysts were more sanguine, and didn’t, “…expect significant market disruptions until April, when big rigs without ELDs can be removed from the road.”

Still, “Analysts say the shift to ELDs will likely raise shipping costs.”



And some companies predicted that the ELDs would hurt truckers’ income and lower pay would. “…exacerbate a driver shortage in an industry with a reputation for high turnover.”  https://www.wsj.com/articles/some-trucking-firms-seek-to-put-the-brakes-on-electronic-logs-1505390400


By 2018, a Chicago Tribune article titled “Why a new trucking regulation is driving up the cost of produce” reported that grocery prices were rising as truckers experienced difficulties and delays caused by problems with the new devices. “For Pete’s Fresh Market, a 12-store grocery chain in the Chicago area, truckloads of produce from Mexico have roughly doubled in cost since the new devices were mandated.”



When the ELD decree was issued by the government regulators, some trucking companies already used the devices (if not the particular model which government specifically mandated) before federal regulators forced them to do so. Other companies said the devices were not useful, for a variety of reasons. But whether the ELDs were useful and worth the cost of the new regulation (a cost which would be passed on to consumers as higher cargo transportation prices) is not the point. The real point is that the EoD claims that the U.S. trucking system was “deregulated” are a bad joke. It was immensely more regulated in 2020 than it was in the 1980s after the MCA was passed, supposedly deregulating it. An army of government regulators still had the trucking industry firmly in its iron fist, and the grip was always getting tighter.



The Deregulation that Did Really Happen

But perhaps the most remarkable things about the story of the deregulation of trucking are these two:


1. Trucking actually was deregulated a bit, at least temporarily. Which is at least something, because It seems that over 98% of our SoHIs were never deregulated even a little. It is very hard to find any real deregulation by the federal government in the years 1970 to 2010, but there is no doubt that trucking was at least sort of temporarily deregulated to a very small extent in two ways. So that is a remarkable and rare event.


2. The amount of deregulation of trucking in 1980 was minuscule, compared to the weight of regulation which was in effect and which would be added in subsequent years. But as relatively small as the deregulation was compared to the amount of regulation, the tiny deregulation still resulted in huge benefits to the American public.



So How Did that Trucking Deregulation Work out for You?

According to a 1988 FTC study, federal and state regulation of trucking drove prices up and encouraged inefficient practices. According to earlier statistics, trucking regulation increased freight rates by one-third to one-half and increased the freight bill to U.S. industries by $5.5 to $7.3 billion per year. Studies indicate that high prices and protection from competition generated substantial supracompetitive profits for carriers owning operating certificates and significantly higher wages for union members employed, but imposed large net welfare losses on society. Even during the years of high fuel prices (in the mid-seventies), major carriers earned on average a 50 percent higher rate of return than did firms in other sectors of the economy. The same study cited research finding that the average interstate TL rates fell about 25 percent between 1977, before the reforms took effect, and 1982, after they were in place.

“Trucking Deregulation in the United States” Federal Trade Commission (2007) https://www.ftc.gov/sites/default/files/attachments/us...oecd.../ibero-trucking.pdf


The improvements in trucking efficiency and all the billions or even trillions of dollars saved since 1980 as a result accrued due to two little changes in trucking regulations at the federal level. What happened next may shock you.



What the Feds Deregulate the States Regulate

Above we quoted the Estes history saying, “With the advent of the Motor Carrier Act of 1935, the Interstate Commerce Commission (ICC) essentially determined which companies became interstate motor carriers, what they hauled, where they hauled and the fees they charged. It was a powerful political agency.” The rest of the paragraph is, “Shortly thereafter, all of the states also followed suit by enacting similar legislation for intrastate commerce.”


In other words, when state regulators saw how well federal trucking regulation worked (for the federal regulators), state regulators created and added on their own separate level of government control of trucking. The states created their own state versions of the ICC. So the state regulators had their own power to create their own monopolies, drive up prices, prevent competition, and allegedly sell that power in the Regulatory Capture marketplace.


It might be unbelievable to some people that state politicians would do such a thing, when the federal regulation had been such an unmitigated and undeniable disaster for trucking and consumers. But wait, there’s more.


“Putting an end to the regulation of trucking would improve transportation efficiency and save consumers billions of dollars a year,” reported a 1994 Journal of Commerce article titled “Deregulation of Intrastate Trucking Would Save Billions UPS Says”. Okay, but wait. Wasn’t trucking already deregulated, back in 1980? The article even says so, “…interstate trucking was largely deregulated by the Motor Carrier Act of 1980.” https://www.joc.com/deregulation-intrastate-trucking-would-save-billions-ups-says_19940626.html


What gives? Well, we pulled a small trick. We left one word out of the first part of the quotation, “intrastate”. It really reads, “Putting an end to the regulation of intrastate trucking would improve transportation efficiency and save consumers billions…” And the article goes on, “Some 40 states continue to regulate trucking within their borders, even though interstate trucking was largely deregulated by the Motor Carrier Act of 1980.”


That’s right. The feds really did enact two tiny, temporary deregulations of trucking in 1980. But what government regulators did next was just sick.



State-by-State Deregulation of Trucking

So after the federal government deregulated trucking pricing and distribution, and it became an obvious, indisputable fact (even admitted by the government itself) that the original ICC regulations had not been necessary or beneficial but rather had been hugely harmful to the public, what did the states do? The states of course followed suit and repealed their control of trucking. Ha ha no.


Most state government regulators refused to divest themselves of their control of the pricing and distribution of trucking services, in spite of the fact that it was known that such control was only beneficial to the regulators and to those trucking companies and unions which enjoyed the monopolies created and controlled by the state regulators. At the cost of a lot of harm to smaller truckers and to the public.


The result of these remaining controls is inefficiency... For example, it costs about 40 percent more to ship blue jeans from El Paso, Texas, to Dallas than to transport the identical jeans from Taiwan to Dallas.Cato Review of Business and Government Quoted by Thomas Sowell, Basic Economics (2006)


The U.S. antitrust agencies were active proponents of trucking deregulation, and sought to advocate competition in the sector by explaining the costs that trucking regulation imposed on consumers and the benefits of competition. The Federal Trade Commission (FTC) alone made at least 17 such submissions, principally directed to state governments that retained the power to regulate intrastate trucking even after interstate regulation ended at the Federal level. In a submission to the Railroad Commission of Texas, for example, the FTC presented evidence that shipping of a common consumer product that cost $2.52 per mile between two key cities in Texas’ regulated market cost only $1.46 per mile for a similar distance in the unregulated interstate market.

“Trucking Deregulation in the United States” Federal Trade Commission (2007) https://www.ftc.gov/sites/default/files/attachments/us...oecd.../ibero-trucking.pdf


As of 2007, twenty-seven years after the federal government repealed the two ICC controls on trucking, the FTC said of attempts to convince state regulators to abdicate their harmful control of trucking prices and services, “Deregulatory efforts are ongoing.”




The deregulation of the airlines was very similar—almost identical—to that of trucking, except even less deregulation of airlines really occurred. But to be thorough, we tell the story.


Air Transportation - Deregulation Deja Vu

The first laws purportedly deregulating airlines had nothing to do with flying passengers. They deregulated some aspects of cargo carrying, very much like the removal of some of the regulations on the trucking industry. FAA regulations were not involved. What did happen was that the Civil Aeronautics Board relinquished some control of routes, domestic rates and fares, and mergers and acquisitions, and then the CAB was phased out, but its regulatory power was not, it was transferred to other federal agencies and increased.


For the general public, the only things that deregulation really affected were the pricing of fares on domestic routes and the changing of some of those routes. And by 2020 the federal regulators would retain or regain almost all control of routes and of airline pricing, as we will see. The reality was similar to what we quoted Crandall saying about communications deregulation, “...the industry continues to be almost as highly regulated today as it was twenty years ago.” The airlines were far more regulated in 2020 than they were after they were supposedly “deregulated”.


One might think that, after “deregulation of pricing”, the airlines were freed to set their prices. Well, not quite. Most airline prices were still strictly controlled by government regulators in 2020. Even the amount that an airline could add to a ticket price for a surcharge to cover increased fuel costs was controlled by the federal regulators. What most reasonable people would assume was meant by “deregulation” of the airlines never happened at all.


You might like to skip the rest of the story of the “deregulation” of the airlines. If so, skip to The Era of Energy Deregulation. (Or, if you are sick of all this detail about deregulation that never really happened, you can skip all the way to The Bio of the EoD Meme and thence to the end of the book.)


According to Wikipedia (and other chroniclers of the EoD) the deregulation of the whole air transport industry consisted of only one act, the Airline Deregulation Act of 1978.


On the other hand, the regulation of the air transport industry is a different and much, much longer story, which we will very briefly summarize. The regulation of the air transport industry consisted of thousands of acts by thousands of regulators. The story is not unfamiliar.


In 1938, the Civil Aeronautics Act established federal control of air transportation by what would become the big and powerful Civil Aeronautics Board (CAB). The Federal Aviation Act of 1958 added another controlling agency, the FAA. By 1978, federal regulators controlled the air transport system of the U.S. in very much the same way that the ICC had controlled trucking, for much the same reason, and with much the same result.


The CAB [Civil Aeronautics Board] earned a reputation for bureaucratic complacency; airlines were subject to lengthy delays when applying for new routes or fare changes, which were not often approved. For example, World Airways applied to begin a low-fare New York City to Los Angeles route in 1967; the CAB studied the request for over six years only to dismiss it because the record was “stale.” Continental Airlines began service between Denver and San Diego after eight years only because a United States Court of Appeals ordered the CAB to approve the application.



As we said above, the first air transportation sector supposedly to be “deregulated” was air cargo starting in 1977. Some of the restrictions on the routes which air cargo transporters were allowed to ask permission to serve were repealed. Operators of scheduled freighter service were allowed to apply for unlimited domestic all-cargo service, and charter carriers were allowed to apply for the right to carry cargo nationwide. Why had it not always been the case that companies could apply to serve whatever routes which they realized needed more service?



Airlines “On Own”? (not exactly)

“The Civil Aeronautics Board did something today that major Federal agencies hardly ever do. It went out of existence,” announced the New York Times in 1985 in the story “C.A.B. Dies After 46 years; Airlines declared ‘On Own’”. The story quoted then Civil Aeronautics Board chairman C. Dan McKinnon said that, “…the C.A.B had ‘nursed’ the airline industry, setting fares and awarding routes…” for 46 years, but all that was over now. ‘’‘Now they [the airlines] are on their own,’ he told employees and airline representatives attending the board’s last meeting.” And he added, “‘Free enterprise and private industry do a better job than the Federal Government.’’

Irvin Molotsky, “C.A.B. Dies After 46 years; Airlines declared ‘On Own’” New York Times (1985)



But the story of the regulation of the airlines in America did not quite come to a total end in 1985, in spite of the claims of the CAB’s head and the New York Times that the airlines were now “on their own”. By 2020 the air transport industry was still greatly regulated, and was to become ever more controlled by the FAA, DOT, Congress, and many others government regulators.


The 1978 Airline Deregulation Act ended the reign of the CAB (just as the ICC, that bane of trucking, was eventually dissolved). But if the CAB was dissolved in 1978, then why is the NYT story saying that the CAB ended “today” dated 1985? Because it took that long for the federal government to close the agency, even though numerous other federal agencies had taken over the power the CAB had enjoyed long before its real demise came.


The NYT story quotes the head of the Civil Aeronautics Board, “Mr. McKinnon said that the board should have gone out of business in six months instead of five years. ‘Five years is too long,’ he said. ‘People don’t believe it will happen, and you get into a lame duck syndrome. When you go to Congress, it’s hard to convince them to give you money...’”


It was “hard” to get money to do your overregulation of the airlines — overregulation which the FAA, DOT, et al were now doing — when your agency was put out of commission five years ago? Note that he did not say, “impossible”.


So the super-slo-mo repeal of the CAB apparently finally really happened, and the airline industry was deregulated, and was completely “on its own”, and companies were free to run their businesses in the best way they could in a free market, because, ‘‘Free enterprise and private industry do a better job than the Federal Government.’’ Right?


Not quite. As we said, the federal control of airlines was just transferred to other federal regulators, who greatly increased regulation. As we will see, the truth was that in 2020, the federal government still even controlled which routes airlines could serve. Almost nothing, it seems, was ever really permanently repealed.


Perhaps the only exception was that, as of 2020, the FAA didn’t directly set all domestic airline fares. So this was one identifiable actual deregulation of air transportation, a genuine repeal which as of 2020 had not yet, it seemed, been un-repealed. So the Great 1970-2000 Era of Deregulation of the airlines essentially amounted to two regulatory changes:

1. The airlines were allowed to set prices for some tickets (though not other services).

2. Federal control of the routes which air transporters could fly were ended.


Except that #2 never really happened, as we will see, so there was actually a total of 1 deregulation of the airlines. And #1 didn’t really happen much either.


Ostensibly, the airlines were ‘free to set their own prices’. But in 2020 federal regulators at the Department of Transportation DOT, for one, micromanaged and controlled the prices for how much could be charged for added luggage, to how much rent hangar owners could charge, and the refunding of fees for delayed luggage. “DOT has regulations to control the Refunding of Baggage Fees for Delayed Checked Bags”  https://www.federalregister.gov/documents/2016/10/31/2016-26199/refunding-baggage-fees-for-delayed-checked-bags   https://www.faa.gov/airports/airport_compliance/hangar_use/


In 2012 DOT proposed new regulations, with stiff penalties, for what part of ticket prices the airlines could publicly say were for fuel surcharges.



These new regulations caused airlines to stop calling the fuel surcharges “fuel surcharges and calling them “carrier-imposed charges”. https://www.wsj.com/articles/did-the-airlines-actually-eliminate-fuel-surcharges-1425488470


We could go on and on. The idea that government ever generally deregulated the airlines, even that it deregulated the prices airlines charged, was not true. It really deregulated almost nothing. If anything, government control of which routes airlines could fly, and the cost and effort required to get permission to serve new routes, actually increased, a lot, as we will see when we look at the sordid story of the whistleblowers and Southwest Airlines in 2019.



Final Truth about the Two Repeals of Airline Regulation 

Even the Wikipedia article on Deregulation grudgingly admits to some benefits of the two-really-just-one tiny, sort-of deregulation of the airlines, “The Airline Deregulation Act is an example of a deregulatory act whose success has been questioned. Since deregulation, real prices for air travel has fallen by more than half, and travelers have more options; but there have been questions about disruptions, employee pensions...”

Wikipedia “Deregulation” https://en.wikipedia.org/wiki/Deregulation


To get the cost of their tickets cut in half by deregulation the air traveling public might presumably be willing to endure some “questions” about “employee pensions”.


But even the one tiny deregulation could be repealed at any time and the regulation reinstated. An article titled “Deregulation and Re-Regulation of Transportation” published by the Cato Institute in 1982 ( https://www.cato.org/publications/policy-analysis/deregulation-reregulation-transportation ) said of deregulation of airlines, “Unfortunately, there are disturbing signs that this progress may be halted and in part reversed...”


Prescient words.


In June 2019, a Reuters story reported a puzzling shakeup in the FAA office devoted to controlling the operation of Southwest Airlines. “Reassignments” of three of the regulators were, “prompted by allegations that managers retaliated against whistleblowers.


The article was a little mysterious. It mentioned complaints about Southwest regarding the accuracy of the weight of checked bags, and the “mistreatment of mechanics”, and other “operational issues”. But, “The agency [FAA] said it found no rule violations and that the assignment of additional inspectors was standard practice to preclude any deterioration in maintenance.” https://www.reuters.com/article/us-faa-southwest-safety/faa-reassigns-three-in-office-overseeing-southwest-airlines-source-idUSKCN1TR011




So what had really happened regarding the “whistleblowing” among the federal regulators of Southwest Airlines? The answer was cleared up a bit in a story by Andy Pasztor and Alison Sider titled “FAA Lowered Bar for Southwest Airlines Approvals, Complaint Alleges” which appeared in the Wall Street Journal in 2020. https://www.wsj.com/articles/faa-lowered-bar-for-southwest-airlines-approvals-complaint-alleges-11579712828


It seems that the reasons for the “reassignments” of FAA regulators were not exactly what the FAA had told the Reuters reporter. What had really happened was that some FAA regulators blew the whistle of accusation at other regulators in their “office” (i.e. the office where government regulators controlled the operations of Southwest Airlines). One FAA regulator said others “…engaged in ‘gross mismanagement and an abuse of authority’ for “the financial benefit of the airline…’” Then the accused regulators retaliated against the whistleblowers, although exactly how was not made clear (no sprinkles on their donuts?)