Dear President Bush,
The single most important thing you can do is to demonstrate that the creation of wealth through the vigorous expansion of the free market can be accompanied by public policies that enhance the quality of our lives and provide some measure of fairness.
Three engines drive our strong recent economic record: globalization, technological change, and deregulation. But while globalization and technological change have created wealth, they have also exacerbated inequality. Falling unemployment has only recently kept the gap between wealthy Americans and those in the lower-middle-class and below from widening. For people who participate in the new economy, the world is their market, and they prosper. For Americans who cannot join this prosperity, the world is their lower cost competitor, and their economic position erodes.
The pressures of global competition also work against our quality of life. Countries that invite manufacturers to ignore environmental guidelines, use child labor, and provide terrible working conditions for employees have a competitive advantage. One example is global warming: Conservatives tell us that America cannot seek to reduce global warming because we would be at a competitive disadvantage with such nations as China and India who do not share this commitment. But our efforts to make that commitment a condition to open access to our economy are blocked. Globalization is a fact, and it can be an extremely beneficial one. But if it continues to exacerbate inequality and be used against efforts to improve the quality of our lives, it will generate even greater opposition than it now faces.
This is precisely what Franklin Roosevelt confronted in 1933 when he sought to rescue the current system from its own defects. He worked, uncertainly at first but ultimately successfully, to preserve a free market system with public policies that dealt with economic fairness and quality-of-life issues.
A similar synthesis is required with regard to deregulation. We have drastically reduced regulations of telecommunications, financial institutions, the shipment of goods, and air travel. This is one reason why we are now more efficient as a nation. But, like globalization, this phenomenon has a good general effect, along with negative side effects. Many Americans encounter deregulation negatively because they experience the day-to-day disruptions in their lives without directly experiencing the broader beneficial effects. Just as globalization produces greater wealth with greater inequality, deregulation often brings macro economic efficiency and micro consumer inconvenience.
It is not simply inconvenience that troubles people in the deregulatory era. Increasingly there are privacy concerns from citizens who worry that the combination of extremely sophisticated new technology with an absence of any regulatory barriers leaves them vulnerable to an uncomfortable degree of intrusion. The answer is not to stop deregulating, but to make sure that deregulation is accompanied with a full understanding of the negative side effects it can cause. Mr. President, please ensure that globalization and technological change are accompanied by a concern for fairness, and acknowledge the effects of deregulation on the market forces that impact the lives of individual consumers.
Barney Frank
Member of Congress
Massachusetts, 4th District