Ed Kilgore reads Barack Obama's speech on financial regulation> and says "what struck me most in a quick reading of the speech was Obama's distinctly 'third wayish' thematics on government's role in regulating the economy." What struck me was the digs at the actually existing third way regime of the 1990s, when a certain someone's husband was president, and when Obama says the powers-that-were betrayed the vision of a mixed market approach in favor of run-amok corporate power:
Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one – aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner take all, anything goes environment that helped foster devastating dislocations in our economy.
Deregulation of the telecommunications sector, for example, fostered competition but also contributed to massive over-investment. Partial deregulation of the electricity sector enabled market manipulation. Companies like Enron and WorldCom took advantage of the new regulatory environment to push the envelope, pump up earnings, disguise losses and otherwise engage in accounting fraud to make their profits look better – a practice that led investors to question the balance sheet of all companies, and severely damaged public trust in capital markets. This was not the invisible hand at work. Instead, it was the hand of industry lobbyists tilting the playing field in Washington, an accounting industry that had developed powerful conflicts of interest, and a financial sector that fueled over-investment.
A decade later, we have deregulated the financial services sector, and we face another crisis. A regulatory structure set up for banks in the 1930s needed to change because the nature of business has changed. But by the time the Glass-Steagall Act was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.
I'll be interested to see what he has to say about it, but this reads to me like an effort to co-opt some of Bob Kuttner's critique of Clintonism by assuaging doubts that an Obama administration would mean more of the same, while still remaining true to a basically technocratic role for economic policymaking.
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