irritates me time and again that Europeans appear unable to grasp how
substantial the difference is between their attitudes and those of the
Americans. European commentators keep shaking their heads in disbelief of
American rejections of what Europeans regard as self-evident truths.
Of course, this reflects the leftist bias of European media – they have been ridiculing Republican US presidents for the past 50 years: Ford was an idiot, Reagan was a moron, Bush Sr. & Jun. were war mongers and Trump all of the above – presented as facts. No wonder that there is a widespread feeling among Europeans that Americans are not very smart.
me try to explain:
is the product of two and half millennia of hierarchic societies – from the
Romans through to the Sun King. Patricians and plebeians, nobility and
peasants, lords and serfs, educated upper class and ignorant proletarians have
been the rule all the time. Change to this has happened only during the last
those relatively recent changes have been only partial. After substantial
revolutions, the proletarian societies that grew up in their wake failed one by
one, to be replaced by basically authoritarian social structures: central governments and regulated societies requiring
permits and licenses for everything. To Europeans, respect for
authorities is in the blood.
and Australia are products of the British empire, their actual independence is
less than 50 years old, and their ways of thought are inherited. Middle- and
South America are products of Spain and Portugal: populated and governed by
them for 300 years until they themselves failed, leaving a bunch of states
unusually prone to dictatorships and one-party rule.
America was populated by European immigrants through 200 years, displacing a
sparse indigenous population, before they threw off British rule and created the Unites States.
The next 100 years of unchecked immigration from Europe expanded the US through
a bloody civil war and subsequent rigid federal regulations, creating a strong
society with very non-authoritarian attitudes.
The United States is the product of people leaving Europe for a new start – the one single society in the Western World with unbroken development of non-authoritarian, classless independence and democratic rule and the same basic constitution through the last 230 years.
process developed, in a majority of the US population, basic attitudes and
thinking profoundly different from those of European populations. The resulting
differences in ideals and standards are not well known among Europeans.
major difference between thinking in the US and in Europe is best illustrated
by their different economic systems:
The National Budgets of each European
state is roughly two thirds of its Gross National Product (GNP) – meaning that two
thirds of Europe’s economy is routed through and controlled by Governments.
Laws are nationwide.
In the USA, the combined Federal and
State budgets total about one third of the US GNP, leaving two thirds
outside Government control, generated and run by private enterprise. Only
Federal laws are nationwide, and there is no nationwide census registry.
Europeans talk a lot about individual freedom – in reality they see social democratic principles as safer. A good example is their attitude to health services: Europeans generally believe that health care should the public, available to everyone, run and financed by the State.
it appears to Europeans as lunacy when large numbers of Americans oppose
“Obamacare” (of 2010) over Medicare (limited to people 62 or over) and
preferring general health care to be a private choice, run by private
enterprise and financed through insurance policies.
As opposed to all European states, in the USA, citizens can move freely around without registering anywhere (except for voting rights) and no permission or registration in needed to change work, domicile own property.
Nick Davies had Random House publish his book “Flat Earth News” in 2008 – 408 pages. It was extensively commented on the Internet. The book itself is long-winded and very detailed with numerous examples.
To comment on it, I downloaded the part of it that carries the above title. Here, I publish this condensed version of the key part of his book.
My comments are the (numbered footnotes) .
Objectivity is the great myth of modern journalism – that good newspapers or broadcasters produce the objective truth. This is devoid of reality, because recording reality objectively always involves selection. Media managers pretend to have a special claim on the truth, but what they generally promote is not neutrality, not objectivity. Neutrality requires the journalist to be invisible and not to express judgements which are essential for journalism.
 EN: It follows that, by Davies’ definition, there cannot be journalism without the reporter expressing judgement – that is: mere reporting of facts and events does not constitute journalism.
Judgements are transferred
into the hands of outsiders.
Before, news editors and reporters selected stories and angles. Today, journalists
are passive processors of material. The news factory rejects material that does
not meet the informal rules they themselves have evolved. This generates an
account of the world which suffers from three weaknesses:
 EN: “Outsiders” being, apparently, anyone outside the “newsrooms”, as if the “newsrooms” have a monopoly on news judgements and informing the public.
Arbitrary selection of subjects,
Routine use of unreliable – sometimes false – claims,
Political/moral consensus based
on the values of powerful groups in society.
Rule One: Run cheap stories
Select stories which are quick to cover, and safe to publish – those are the cheapest.
This discourages difficult investigations and favours news stories which are
simple and easy to obtain. The reason the story of the trial of O.J. Simpson became
front page news all over the globe for months was that the US media pumped out
masses of text and pictures every day – it was cheap and easy.
Rule Two: Select safe facts
Reporters rely on official
sources because they are reporters know that they are far less likely to be
attacked if they go with the official line – it is safe. The 1952 Defamation
Act (UK) protects journalists from being sued for libel if their story is based
on an official statement by any government department or by an officer of any authority.
if an official statement falsely accuses someone of a criminal
act, the press cannot be sued for using it – if a private individual does the
same, the press can be sued for repeating it.
Rule Three: Avoid the
In the UK, the oldest
electric fence is media law – the Official Secrets Act deters journalists and inhibits
potential sources by threatening imprisonment for those caught publishing
whatever the government deems secret. Libel law is even more powerful, – it covers
any story deemed to damage the reputation of its target.
Multiple electric fences
are erected by professional PR lobbyists. In the US in 2003, the Parents
Television Council (PTC) was responsible for 99.8% of all indecency complaints
to the Federal Communications Commission. In the UK, the Countryside Alliance was
highly effective in disciplining coverage of the debate about hunting.
The world’s most potent electric
fence is Israel’s. Journalists offending the Israel lobby are subjected to formal
complaints and pressure on their editors. A network of pro‑Israeli pressure
groups specialise in complaints against the media: Honest Reporting. They have
offices in London, New York and Toronto and claims 140,000 members.
Rule Four: Select safe ideas
This rule requires moral
and political values to be safe.
First, moral and political ideas are not expressed openly in
the story but are undeclared assumptions. Being undeclared, they are safe from
Second, they reflect the surrounding general attitudes – the consensus.
(3) EN: This is a characteristic trait in journalism in most types of media: an anti-conservative, liberal-leaning bias that invariably skews political reporting to go in favour of liberal politics and against non-liberal politics – Margaret Thatcher and Ronald Reagan being the most typical post-war examples (a shining exception being Winston Churchill).
Rule Five: Always give both sides of the story
If you have to publish
something not “safe”, put in some quotes from the other side to “balance” the
story – to show that you are telling the truth from all sides. This rule is the
embodiment of neutrality. However, it may be used to deliberately making safe against
most complaints an entirely false story by adding to the final paragraph a 100%
denial from the story’s victim.
Rule Six: Give them what they want
Rule Six was precisely expressed
by Sunday Express’ editor in 2003 as:
“We aim at having six sex stories a week. We need to be
constantly stirring things up. We must make the readers angry: the appalling
state of the railways, the neglect of the Health Service, the problem of
teenage pregnancies, the inability of bureaucrats, etc.”
The same rule applies also in
because in today’s commercialised form they need stories which sell. It also
encourages wire agencies to cover subjects which will sell in multiple markets,
like lifestyle stories.
As an example: in May 2005, three days after Tony Blair won his third general election, the political editor of the Independent found that some of the Prime Minister’s own Cabinet colleagues were already saying he would have to stand down within eighteen months. He later recalled: “It was the most significant story I’ve had for ages, and I pleaded for it to be the splash, but the paper wanted a change of pace after the election so instead, we splashed a story about Britain’s vanishing flowers”.
 EN: “Quality Media” in this context meaning non-tabloid newspapers (Times, Guardian, Independent, Observer, as opposed to Sun, Express and Mirror).
Most typical case on record
is the tale of Prince Charles and Princess Diana:
The fairy tale of the joyous marriage sold around the world for years. When it fell apart, it was replaced by
The tale of the evil prince and the beautiful princess. When that fell apart, it was replaced by
The tale of the scheming tart. Finally, after her death
She became the people’s princess.
Rule Seven: The bias against truth
This extends Rule Six into the
way the stories are told. Television’s million tiny tales are
constructed in order to sell. The preference is for human interest over issue;
for the concrete over the abstract; for the current over the historic. This
applies in both print and broadcast.
A mass of stories are not “events”. A train crash which kills a hundred people is News, the hundred car crashes which separately kill a hundred people in a few weeks is not. 387 children vanished in the UK in 2002 – most of them never made a headline. The disappearance of Holly Wells and Jessica Chapman in 2002 was an immediate huge story soley because a picture of the two little girls i Manchester United T-shirts.
Rule Eight: Give them what they want to believe in
Ideas and attitudes
promoted must not conflict with the readership’s general attitudes. The editor
of the Daily Mirror in 2003 apologised
for continuing to oppose the invasion of Iraq even after British troops had
started fighting. “ – one thing I won’t be doing is telling myself I’m right
and they are wrong. The readers are never wrong”.
(5) EN: Davies presents this as if it is the editor’s duty to push his or his journalist’s particular view forward as that of the newspaper, disregarding what the readerhip might mean. The consequence of such a belief would be that editor(s) have an obligation to use the power of their newspaper to push their view(s) on their readers, rather that reflect what the opinion of the readership is …
Rule Nine: Go with the moral panic
This rule applies in times
of perceived crisis. Unlike the other rules, it is compulsory – always invoked
by big deaths: the nation mourns; everybody must mourn. Princess Diana’s death 1997
saw Rule Nine at its most powerful. War invokes moral panic. In 1982 the Sunday Times refused to run a story critical
to the Falklands war, while fighting was going on.
 EN: This type of “conflict” has arisen over the past three decades (since Watergate) – a gradual development process of the media. Today, media define their mission as being “to question” and “investigate”. This has developed into media pushing their own lines of argument and opinions – qualified or not. Respect for the role of their own county’s armed forces and desire for the successful completion of their mission is no longer part of their “mission”.
Rule Ten: The Ninja Turtle Syndrome
Stories widely published elsewhere must be published even if they clearly lack merit – reinforced by the journalist habit of covering their backs by colluding on stories – to come up with an agreed version. In 2005 it was disclosed that for ten years the New York Times and the Washington Post had been faxing each other their front pages, before the presses rolled.
These ten rules fit the new structure of corporate news organisations. Journalists denied the time to work effectively survive by taking the stories that everybody else is running; reduce them to simplified events; and churn them out fast.
 EN: It is Davies’ basic assumption that the deterioration of journalism is due to the newspaper/TV network owners no longer providing a number of journalists sufficcient to allow each of them enough time to do his job. The question arises: What is that job? Is it to gather stories overlooked today? Is it to investigate leads to potential new stories? Is it to spend more time checking and corrobborating the stories he finds? And finally: how much more time does the journalist need than what is at his disposal today?
The undererlying assumption is that by being provided with more time to do the job, journalists would produce better stories (obviously, they would also produce more stories). Davies offers no suggestions as to what kind of incentives would be neeeded in order to make the journalists allocate their extra time in ways that would suit their employer.
Another Davies assumption is that the extra stories they would find and produce would fill a void that is at present unfilled. What void? Stories found and told in bygone times, when the jounalists were many and had lots of time? What stories were that? Are they really missed today? Was the World a better place whern there were 300,000 journalists where there now are only 100,000?
The Universal Declaration of Human Rights issued by the UN General Assembly in Paris on 10 December 1948 (Resolution 217 A). Its 30 Articles spell out the rights of every human individual, applicable to everyone on the planet.
Only once – in one single line (Article 29, 1) – does the word “duty” appear. In effect, the whole declaration is an award of wide ranging rights to any and all individuals without any corresponding duties to society – such as, for instance, an obligation to possess reason, to be informed, enlightened …
Article 21 secures everyone “the right to take part in the government of his country, directly or through freely chosen representatives – their will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures”.
Not a word about any qualifications for voting – not even literacy …
The Webs of Interdependency
The present day world of over seven billion people live in around 220 different national entities and territories. Despite being divided by a multitude of crisscrossing ethnical, religious, linguistic, cultural, political as geographical boundaries, all are tied together by invisible layers of intricate, finely meshed webs of technical, financial, commercial and physical connections.
These webs create a mass of interdependencies in all fields and at all levels, the totality of which so complex and interwoven that no single individual or entity is able to overview it, let alone understand it – the same goes for political leaders. The World’s education systems turn out droves of specialists in all fields, who ably manage specific bits of the system – but the totality is unmanageable.
The Widespread Ignorance
Add to this the fact that the seven plus billion individuals who make up the global population are completely unaware of the actual complexity of these connections and interdependencies. Add also that in comparison to that complexity, the general level of knowledge of the average individual is so basic that they are not much better than analphabets – exacerbated by most educational curricula failing to impart essential knowledge of financial and economic basics.
The Absence of Responsibility
Looking at how the present day world is reeling under “democratic” referendums and structure-shattering elections, it is obvious that the chief cause is that questions of overriding international importance are put before uninformed, often practically illiterate people who are free to wield their vote without being held accountable – without a shred of responsibility – voting is secret.
United States Founding Father and author of the Declaration of Independence Thomas Jefferson (1743 – 1826) stated: ‘We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness”.
That is an impressive charter. Left out of that story, however, is that Jefferson presupposed that all men are persons of reason, not just anybody who happens to be alive.
The ancient Greeks used the word “idiot» for someone not displaying interest in politics. For them, such a state remained an exception – not the rule .
2000 years later, Immanuel Kant (1724 – 1804) turned this around, implying that lack of interest in the whys and wherefores is the natural state of the human being, while craving for enlightenment (aufklärung, opplysning) is exceptional, despite such potential residing in every human being.
Those who reach the state of the enlightened, autonomous individual are the illustrious few; scientists, scholars, statesmen, some artists, a few princes. This does not mean that most people are stupid – quite a lot of us are very smart idiots.
Kant’s Three Levels of Human Existence
In his work “Religion within the boundaries of Reason alone” Kant distinguishes between three levels of human existence:
The bottom level is the purely organic reptile brain.
The second is the unique level of intellectual cleverness man possesses, ranging from technical dexterity to the street-smart predator.
Only on the third level do we ﬁnd the speciﬁcally human side of human existence: responsibility and accountability.
The first two levels make up the animalistic side of our species – a very versatile animal. Describing the third level Kant uses the word responsibility in accordance with its inherent meaning:
the ability to respond to the demands, questions and evaluations of the community. The basis of this is the sense of right and wrong, in contrast to success and failure. The ability to respond in what is deemed an adequate and socially acceptable way, and act accordingly, is what makes up the responsible person.
This third level is always in conflict with the other two, which are tuned toward instant gratification of desire. lt is the task of parents and other eclucators to cultivate and reinforce the level of responsibility to the point where it masters the vegetative and cunning levels both for individuals and for communities. Only when the third element wins, communities are transformed into civilization.
Therefore, the transition of a community from an embedded-in-nature state into civilization is also one of eliminating idiocy in favour of responsibility. Kant’s moral philosophy is centred on the concept of autonomy – he distinguishes between a person who is intellectually autonomous and one stays in an intellectually dependent and immature status.
Kant defines «Enlightenment” (Aufklärung, opplysning) as man’s emergence from his self-inflicted immaturity. He argues that the immaturity is self-inflicted, not from a lack of understanding but from the lack of courage to use one’s reason, intellect, and wisdom without the guidance of another.
Kant understands the majority of people to be content to follow the guiding institutions of society (Church and Monarchy), unable to throw off the yoke of their immaturity due to lack of resolution to be autonomous. To work their way out of this immature, cowardly life is difficult for individuals because we are so uncomfortable with the idea of thinking for ourselves. The key to throwing off these chains of mental immaturity is reason.
Reason (Vernunft, fornuft) is the capacity for consciously making sense of things, establishing and verifying facts, applying logic, and changing or justifying practices, institutions, and beliefs based on new or existing information.
Bestowing rights on people without any corresponding obligations, without holding them accountable for their votes, without responsibility, is the certain way to disaster, considering the complexity of the web of inter-dependencies that constitute the present world, described above.
The United Nations
The statutes of The United Nations are a pitiful half measure: free right of veto, no global law enforcement, keeping up the system of completely sovereign states, issuing a statement of “Human Rights”, all about rights and noting about obligations – A concept that is but a bastard patched up from limbs of various derivations, and that looks like anything one chooses to see in it, has no essence. Void of integrity, it unavoidably gravitates toward the black hole of morally euthanized humanity. 
 The UN Declaration – 30 Articles, 8 pages – was followed two years later (Rome, November 1950) by de European Convention on Human Rights and Fundamental Freedoms – 59 Articles, 32 pages(since amended by 16 additional Protocols) – because several Articles of the UN Declaration were objectionable to some European nations (notably Norway opposed Article 20, part 2, preventing mandatory organisation memberships).
 Note that the “demos” of ancient Greece was made up purely of the upper classes of men (no servants, no slaves, no women), a very limited portion of the actual population.
 Kant’s use of “vegetative” here is in the sense of “living a life that is dull, inactive and unchallenging”
 Source in respect of Immanuel Kant: “Kant and the barbarians”, Carlos Wiggen, 2012 – ISBN: 1477666915
34,000 UN soldiers ikilled in action not found worthy of inclusion in the Peace Prize
The Korean War in author David Halberstam’s words:
“On June 25, 1950, seven divisions of North Korean troops crossed the border into South Korea, intending to conquer the entire South in three weeks. The South Korean Army was completely unprepared for the attack, and the only US force in Korea was a tiny advisory mission. The US government, under President Harry Truman – with the approval of the UN Security Council – quickly decided to use US and UN forces to draw a line against the Communists in Korea, initially transferring forces from Japan.
(The approval of the Security Council was due to the Soviet Union boycotting the Security Council meetings at the time (for other reasons), so they did not get to use their veto – EN)
Harry Truman, intent on limiting any confrontation with the Soviet Union, downplayed the nature of the conflict, and called it not a “war”, but “a United Nations police action«. The Korean War came to last three years, not three weeks, and, even at the cost of 34,000 UN soldiers’ lives, it did not become a Great War, such as World War II, nor did it, like Vietnam a generation later, come to divide and haunt history.”
In my words:
Notably, the Korean War was a United Nations operation under the UN flag, just as the later Suez action (1956) and the Congo intervention (1960). The later Vietnam War, however, was a US led operation with international participation but without without UN approval, as were the two Gulf Wars, the Afghan War and the Iraqi War.
The Peace Prize
When industrial magnate Alfred Nobel instituted his series of prizes (administered by the Swedish Academy) he separated out the Peace Prize, and entrusted its administration to Norway’s parliament, the Storting. The Storting appoints the five member of the Norwegian Nobel Prize Committe, usually three previous politicians and two cultural personalities.
Members of the Norwegian Nobel Peace Prize Committee in 1988 were: Egil Aarvik, (formann, Krf), Gidske Anderson, (Ap), Frances Sejersted, (H), Odvar Nordli,(Ap), Gunnar Stålsett, (Sp). In 1988 these Nobel Prize Committee members decided to award the prize for 1988 to “the United Nations Peacekeeping Forces”, a decision that was widely applauded, at least until the fine print became apparent. When Mr. Aarvik presented the award speech on December 10th: It turned out that the text had been carefully worded to exclude UN action in Korea in 1950-53:
(quote) “The original United Nations treaty does mention the possibility of military involvement on the part of the United Nations in the event of hostilities, but, because of the relationship between the great powers, it has never been possible to make use of this part of the treaty – the possible exception being the action in Korea in 1950.
… peace keeping operations were commenced in 1956 (…) in connection with the Suez crisis. The Security Council was unable to act because of a veto from two of the member states. This was solved by summoning the UN General Assembly to a special session, which passed the «Uniting for Peace» resolution that gives the United Nations’ General Assembly the power to intervene in the event of the Security Council being unable to act. This resolution was used to deploy a peacekeeping force …”(unquote) (emphasised text by me – EN)
The “possible exception” referred to happens to be the only time that UN Security Council – UN’s highest operational authority – actually did approve a military action as the Treaty permitted. It so happened that “the relationship between the great powers” at the time prevented a Soviet veto (see footnote 1, page 2).
So, in 1988, the Nobel Committee chose, as the starting point for “UN Peacekeeping Forces”,a clever paper manoeuvre that permitted the bypassing of the Security Council in 1956, rather than the legal, straightforward decision of 1950. That way, they managed to exclude a previous legal UN action that cost 34,000 (non-Korean) UN forces’ lives. Which proves that today, most people (particularly politicians) like to appear in a humanitarian role rather than in a military one.
In a French book from 1902 I found the statement below, which, in my opinion, in admirable simplicity represents the key to the centuries of controversies between France and England – this mixture of envy, jealousy, pride and frustration, which still permeates that volatile relationship …
The author makes this statement in an endeavour to analyse the essential differences of character that sets the population of England apart from that of France.
Utilité des sports ‑
C’est a leurs habitudes sportives, habitudes qui ont pour résultat la régularité de la vie, 1’endurcissement du corps, la santé générale et l’esprit de décision et d’à-propos que nos voisins les Anglais, si critiquables a d’autres points de vue, doivent cet admirable esprit d’endurance, de ténacité et d’entreprise, qui fait toute leur supériorité comme peuple industriel et commerçant, sous toutes les latitudes du globe. C’est donc une idée patriotique qui inspire chez nous les promoteurs de tous les sports et il est du devoir de chacun de contribuer au développement de ce gout en France.
in my translation :
Usefulness of sports:
It is to their sporting habits, habits that result in regularity of life, hardening of the body, health in general, decisiveness and quick-wittedness, that our cousins the English, so criticisable from other points of view, owe their admirable spirit of endurance and tenacity in enterprise that makes them superior as a people of industry and commerce in all parts of the globe. It is, therefore, a patriotic idea that inspires us, as promoters of all kinds of sports, and it is the duty of everyone to contribute to the development of these tastes in France.
The quote is from the book « Les Cerfs-Volants » (The Kites) by J. Lecornu, Ingénieur des Arts et Manufactures, Membre de la Société Française de Navigation Aérienne
US President Jimmy Carter’s sweeping replacement of strict regulatory regimes with free competition completely reformed large portions of US business life. Additionally, US deregulation has had wide ranging international impact. No mean feat for a one-term US president.
Even if his most important deregulations were initiated, and subsequently completed, by Republican presidents, the fact that they were introduced by a Democrat made them palatable also for the social democrats of Europe, who have since embraced deregulation one after another.A deregulated free market is the political cornerstone of world trade.
Trade and commerce have always been the lifeblood of organised society. Throughout history, both of these activities have been subjected to various forms of control, usually exercised by the sovereign powers of countries or areas. Taxes and duties levied on trade and commerce have been among the governing powers’ main sources of income; they have also proved to be efficient instruments of power.
From about 1700 onward, however, and well into the 1800s, scientific enlightenment opened up for mechanical inventions and the machinery to drive them, while immense new sources of energy were discovered to power it all. The new inventions mechanised manual tasks, creating an industrial revolution, which vastly increased the economic and social importance to civilised society of industry, trade and transportation. This, in turn, forced profound change to the structure of society in the affected countries, transforming them from generally agrarian societies into mainly industrial societies: first in Britain, later in the United States and later again in Western Europe.
In 1776, the breakaway of the American colonies from Britain created a completely new type of civil society, characterised by wide individual and commercial freedom and a reduced role of government – a society that was basically different from its cultural origins in Europe but still embodied parts of the English freedoms and legal heritage. Initially, the independent American industry and commerce evolved with minimal restriction, as it had in England. In Europe in general, governing powers retained control of trade and industry, particularly during the Napoleonic era, leading to strict regulatory regimes and often to direct State participation in industry.
It is a popular misconception, particularly in Europe, that free market economy is a long standing tradition in America. The opposite is the case. The tremendous rate of population expansion and land conquest in the United States in the mid- and late 1800s, especially the advent of new transport modes (railways, riverboats, shipping), created a need for harnessing and regulation to avoid chaos. To establish control and to curb excesses, the US Congress enacted a number of very strict laws controlling interstate commerce and transportation.
As a result, transport, utilities and banking in the United States, while remaining within the domain of private enterprise, became heavily regulated through federal legislation. The basic structure and principles of these regulations remained largely unchanged by the United States well into the 1970s.
The first Federal controls were introduced in 1887 when Congress set up the Interstate Commerce Commission (ICC) with power to regulate interstate transportation and control railroad prices and competition. With the advent of road transportation, ICC’s powers were expanded in 1935 to regulate also trucking, while a Civil Aeronautics Board (CAB) was created in 1938 to control air transport.
In the United States, government control was strictly limited to regulating – no US government has ever operated any form of transport activity except the US Mail. All forms of transportation, communication and utilities in the United States have been, and remain, operated by private, commercial enterprises.
In Europe, socialism and trade unions gradually grew into major forces in society and eventually, in the 1930s, attained government positions. Governments created centrally controlled economies and eventually a plethora of State owned and operated industry, particularly railways, urban transport and utilities such as power and telecom. Essentially, in Europe, all major economic areas became fully unionised and under State control by 1960.
In the US, on the other hand, socialism in its various forms never found fertile ground and never succeeded in gaining power, and the trade union movement never managed to parallel Europe. The US railway unions of 1890-1917 and later AFL-CIO and the Teamsters, established a significant presence in rail and road transport, as did the UAW in the automobile industry, but the major part of American trade and industry remained relatively un-unionised, and all trade, industry and utilities remain firmly in private hands.
President Richard Nixon’s first term (1968-72) saw some substantial economic improvements, including the normalisation of relations with communist China. However, the 1973 Middle East war caused the OPEC oil price rises and the consequent energy crisis. The ensuing US stagflation hit the whole Western world as a shock.
In the US, the effects of a rigid regulatory regime that had lasted for nearly 90 years finally became evident. The strict transport regulations regime, combined with strong trade unions, had rendered the transport industry, in particular the railways, unable to cope with the cost increases, and railway companies went into bankruptcy by the dozen.
In August 1974, Republican President Richard Nixon resigned from office as a consequence of the Watergate scandal. He was automatically succeeded by Vice President Gerald Ford, who inherited the “stagflation” from his predecessor, as well as a transport sector in crisis.
In 1975, President Ford applied deregulation as the medicine to revive the troubled transport trade sectors, and made several legislative moves. Government regulations and agreements with labour unions rendered the railroads of the 1970s unable to individually change the rates they charged shippers and passengers. Their only option was to reduce costs. But cost-cutting was tightly restricted by union agreements, and the railroad companies were driven into bankruptcy – by 1976 nearly a third of U.S. railroads were in or close to bankruptcy.
Stringent regulations and increased competition from truck and barge transportation had caused a financial and physical deterioration of the national rail network. To rejuvenate the rail sector, President Ford had Congress pass the Railroad Revitalization and Regulatory Reform Act of 1976. This eased regulations on rates, line abandonment, and mergers.
At the 1976 election, Ford ran for the presidency, opposed by Jimmy Carter, a little known Democrat with minimal experience with politics on the national level, a former peanut farmer from a tiny town called Plains. Ford hoped to win, but the fact that he had pardoned Nixon after Watergate proved too much. The election race was very close, but Carter won over Ford with 50 percent of the popular vote to Ford’s 48.
President Carter determined that further action was needed to revive the railway industry, and Congress followed up with the Staggers Rail Act of 1980. The Staggers Act provided the railroads with greater pricing freedom, streamlined merger timetables, expedited the line abandonment process, and allowed confidential contracts with shippers.
During his single term (1976-80) President Carter followed through Ford’s deregulation ideas, applying them to air transport and trucking. Carter not only continued Ford’s work but also pushed for deregulation of several other key sectors of the US economy, particularly banking. It fell on President Reagan, however (who was also a keen promoter of deregulation), to finalise them during 1980-88. Historically, however – and very importantly – it has come to be identified with Jimmy Carter – a Democrat.
The trucking industry was brought under the control of the Interstate Commerce Commission (ICC) in 1935. For nearly 50 years, from 1935 to 1980, it was almost impossible to secure new or expanded authority to transport goods unless no other transporters opposed an application. The ICC held that a certificated trucker who expressed a desire to carry the goods should be given the opportunity to do so – and the new applicant was denied. In effect this stifled competition.
The only practical way to enter the market was by purchasing the rights of an existing trucker. By the seventies a license to carry goods was selling for hundreds of thousands of dollars. In effect ICC regulation reduced competition and made trucking inefficient. In 1975 President Gerald Ford called for reduction of trucking regulation, and appointed to the ICC new commissioners who favoured competition.
President Jimmy Carter followed Ford’s lead by appointing strong deregulatory advocates and supporting legislation to reduce motor carrier regulation. Later, Carter’s initiatives were followed up by Reagan, who enforced the subsequent laws.
The International Brotherhood of Teamsters – the truck drivers’ union – and the American Trucking Association both strongly opposed deregulation and initially headed off efforts to eliminate economic controls. The deregulation supporters were a coalition of shippers, consumer advocates and liberals such as Senator Edward Kennedy, and a series of ICC rulings reduced federal oversight of trucking. Carter had Congress enact the Motor Carrier Act of 1980 (MCA), which limited the ICC’s authority over trucking. Congress reacted by codifying some of the commission changes, so that the reduction of control became only partially effective, but with a liberal ICC, it substantially freed up the industry.
The first major deregulation of Carter’s presidency concerned the airlines. Before the passage of the act, airlines had to receive government approval of routes from the Civil Aeronautics Board (CAB), an exceptionally bureaucratic institution that sometimes kept applicants waiting ten years before getting a decision, and rejected many requests. Technological advances like the jet airliners combined with the 1973 economic climate change placed tremendous pressure on the rigid CAB system. Most of the major airlines favoured the system, which virtually guaranteed their profits, but the travelling public did not, and air transport development in the US suffered.
In 1977, Carter appointed Alfred E. Kahn, a professor of economics at Cornell University, to be chairman of the CAB, who would earn the title «father of airline deregulation». He argued that the CAB was in fact inhibiting growth and encouraging inefficient practices. Kahn also argued that removing regulation would bring a new, efficient equilibrium of price, quantity and quality of air service. Long-haul fares would decline, barriers to entry for new airlines would drop, and airlines could effectively deploy different aircraft for different roles. The Airline Deregulation Act of 1978 removed much of the Civil Aeronautics Board’s control over commercial aviation and greatly improved air transport efficiency.
Another key piece of legislation passed during the Carter presidency was the Depository Institutions Deregulation and Monetary Control Act, passed in 1980. It lessened government control on the interest rates for money deposited and saved in banks, so that with higher interest rates, people would be encouraged to save their money.
The Success of Deregulation
Deregulation – the ending of a regulatory regime that had lasted for nearly 90 years – from the 1890s to the 1980s – has worked well in all modes of transport. Both the American Trucking Associations and the major airlines predicted that service would decline and that small communities would find it harder to get any service at all. In fact, service to small communities improved both by air and by road.
Between 1977 and 1982, rates for full truckload truck shipments fell about 25 percent in real, inflation-adjusted terms. “Less-than-truckload” rates fell as much as 40 percent. A survey of shippers indicated that 77 percent of surveyed shippers favoured deregulation of trucking.
The railroad deregulation of 1976 and later President Reagan’s tax revisions of 1981-82 restored the railroads’ financial health. Container cars and other new technologies also helped to transform inefficient railroads into vibrant enterprises. Corporate strategies varied on the road to success, but the railroads’ resurgence and growth has continued.
Deregulation has also made it easier for non-union workers to get jobs in the transport industry. This new competition has sharply eroded the strength of the unions. By 1985, the International Brotherhood of Teamsters – the truck drivers’ union – was organising only 28 percent of the trucking work force, down from around 60 percent in the late seventies.
The number of new trucking firms and new airlines has increased dramatically. By 1990 the total number of licensed trucking carriers exceeded forty thousand, considerably more than double the number authorized in 1980. The ICC had also awarded nationwide authority to about five thousand freight carriers. The value of operating rights granted by the ICC, once worth hundreds of thousands of dollars, is now close to zero.
Energy & Inflation
A second wave of oil price hikes during the Carter administration caused inflation to skyrocket to as much as 12 percent per year. A widening trade deficit also contributed to the inflation. With five laws passed in 1978, collectively known as the National Energy Plan, Carter created a Department of Energy, allotted money for alternative energy research and created tax incentives to encourage domestic oil production and energy conservation.
In March 1979, nuclear power became part of the nation’s energy crisis. Nuclear power made up more than ten percent of the nation’s electricity supply. A partial meltdown at Three Mile Island in Pennsylvania released radiation into the environment, alerting the nation to a potential hazard. The protest movement against nuclear power spread, but even if no further nuclear power plants were ordered in the United States, those already in operation continued in operation and most of those under construction at the time eventually went into operation.
Hostage Crisis in Iran
In 1979, after the Shah had been forced to leave the country and Islamic fundamentalists led by Ayatollah Khomeini took control of Iran, militants stormed the US Embassy in Tehran, taking seventy Americans hostage. This triggered the most profound crisis of the Carter presidency. The hostage ordeal lasted for 444 days, until finally a negotiated release of the hostages was secured on 27 January 1981. The affair greatly lowered the public’s opinion of Carter, and resulted in Ronald Reagan winning one of the most crushing presidential election victories in US history: 489 to 49 Electoral votes in the 1980 elections.
President Jimmy Carter’s epitaph has been much tainted by the Iran hostage affair, by his watering down of the US’ intelligence capabilities (which hit him badly in Iran) as well as by the economic situation in the US during his presidency: rising unemployment, high inflation and tripling of oil prices. It is wrong to say hat his economic policies failed – most of his initiatives were right, but took time to take effect, and did not create measurable improvements until after his presidency. All this has, unfortunately, combined to overshadow his most important contribution.
Even if several of his most important deregulation moves were initiated by President Ford – a Republican president – and several more followed up and implemented by Reagan, another Republican – Carter’s sweeping replacement of strict regulatory regimes with free competition completely reformed large portions of US business life.
Perhaps even more important is the fact that these measures have since served as models for most of the Western world. That they were introduced by a Democrat US president made them palatable also for the social democrats of Europe, who have since embraced deregulation one after another.A deregulated free market is the political cornerstone of the European Union.
All in all, the deregulation reforms in the US had, in the end, wide ranging international impact. No mean feat for a one-term US president.
Norway’s follow up
In Norway, the man who broke throgh the mass of Government regulations was Kaare Willoch, who was elected prime minister of Norway in 1981.
He was subsequently succeeded by Gro Harlem Bruntland, who, albeit a social democrat out of Norway’s Lbour party, continued deregulating and privatising the norwegian economy with enthusiasm throughout her two long stints as prime minister – 1986-89 and 1990-96.