Federal Vs. State Regulation Of The Economy Since The New Deal Essay

In my opinion, it was already clear by the 1930s—and arguably even much earlier in the Progressive Era—that the state governments were no longer adequate to regulate and control the giant corporate and financial interests that had come to dominate the American economy. State and local governments may have been adequate to this task back in the house-and-buggy era, back before the time the huge national corporations and industrial combines had come into existence, but from the Civil War up to the 1930s and 1940s the U.S. had become an integrated national economy and an urban industrial society. There was simply no other force powerful enough to deal with all these social and economic problems, including the global depression of the 1930s, except the federal government. In the past, capitalism had been very small-scale and competitive, as is still is in the sector of small and family-owned businesses, but this has long since ceased to be the case in the national and international economy. Even in the 1930s, 500 or 600 large banks and corporations controlled more wealth and economy power than all of the small capitalists combined, and if anything they are much larger today.
In the 1930s, the whole process of globalization had hardly begun and the U.S. still had a protected national market—consuming at home most of what it produced. There were very few global or multinational corporations at that time, but today they are commonplace. That means that state governments have even less ability to regulate them that they did 50 or 100 years ago because they are simply too big and too powerful. Indeed, it is uncertain if even national governments have any real control over them since some of these companies have more wealth than most governments in the world. We have seen, though, in the most recent economic collapse in 2008-09 that the huge banks and corporations did turn to the national governments for bailouts and that new regulations were passed such as the Dodd-Frank Act. No state governments could have handled all these problems, no more than they could have in the 1930s depression, when indeed many of them were facing bankruptcy. In modern times, the federal government has taken over this regulatory role by default, simply because there is no other organization to do it.