It would be foolhardy to declare that campaign contributions and the efforts of lobbyists are the sole factor in why Wall Street has tumbled from its lofty heights in recent months. But neither can we discount the way in which contributions and lobbying stacked the deck to precipitate the growth of the bubble and the subsequent meltdown. The pattern of industry deregulation in the financial sector over the past thirty years has advanced due in large part to the work that the financial industry as a whole has performed in swaying legislators to their way of thinking.
Once a wider range of providers were able to muscle their way into the business of providing mortgages and other loans, the sheer size of the field requiring oversight ballooned. But rather than increasing the number of regulators to keep tabs on the legitimacy of the business being conducted, legislation was continually pushed through that severed the oversight power of governmental institutions, castrating their ability to effectively police those who play with the very foundation of our capitalist economy. The American system may have outlived the Soviets, but that does not make it infallible to its own inherent weaknesses.
The principal weakness is the fact that a true laissez-faire economy cannot count on businesses to police themselves - especially those which handle the largest sums of money. The larger the stakes, the greater the incentive to push forward to ever-higher profits. Risk comes with its rewards, and when businesses grow and prosper, the economy as a whole benefits. But at the same time, when a government sits back and allows its financial institutions to play Russian roulette with the nation's resources, it is either frighteningly foolish or blatantly self-destructive.
The same can be said of a government which allows its very legal fabric to be dictated by the businesses which are to be governed. As the nation teeters on an economic base balanced on the thinnest of spires, we must realize that a large reason the foundation is so brittle is that the government has allowed it to become this way. Either through negligence or outright corruption, the result is the same. Lobbyists undoubtedly play a large role in the daily routine on Capitol Hill, and legislators only get to where they are in this day and age with copious fistfuls of cash. Oftentimes it is those who will ostensibly benefit the most from an intimate audience with the political movers and shakers that also have those wads of seed money.
So yes, we can undoubtedly contend that campaign contributions and lobbying by the financial sector have contributed to the current demise of Wall Street. But we must also realize that the true measure of an economy's health is not just what speculative numbers tell us but whether or not the government can protect us from the follies of big finance. Unfortunately, the answer to that has increasingly become drowned in a sea of kickbacks and fundraisers.