Since the deal was financed with debt, it heightened the pressure on RJR to produce profits by any means necessary. In the musical-chairs game leading up to the deal, businesses involved in the negotiations included corporate giants such as Kellogg’s, Pepsi, Philip Morris, and Pillsbury. During the hostile-takeover boom of the 1980s, nearly one-third of the largest U.S. manufacturers were acquired or merged. If companies were being traded like baseball cards, what executive had to worry about the long-term liability of the company’s products or practices?
Deregulation: “Deregulation” is the dismantling of existing regulations or their lax enforcement. Beginning in the 1970s, businesses argued that government regulations, not changes in the global economy, were a main cause of lower profits, and therefore these regulations should be suspended or “reformed.” In his successful 1980 campaign for president, Ronald Reagan promised business audiences that he would “turn you loose again to do the things I know you can do so well,” and delivered on his promise for regulatory relief by withdrawing, relaxing, or not enforcing dozens of regulations, including many of those passed in the previous two decades. One of Reagan’s contributions was to centralize regulatory oversight in the White House. As James Miller, the head of the newly created Vice President’s Task Force on Regulatory Relief (and an alumnus of the business think tank the American Enterprise Institute) put it, by claiming direct oversight, the president “would not have guerrilla warfare from agencies that don’t want to follow Reagan’s prescription for regulatory relaxation.” In other words, politics, not science, was to inform regulatory decisions.
One example of this deregulation helps explain the growth of marketing of unhealthy food to children. In 1984, the Federal Communications Commission lifted restrictions on television advertising to children that had been in place since the 1970s, opening the door to a flood of ads for fast food, soda, sweetened cereals, and candy targeting young children. That decade marked the beginning of the dramatic rise in child obesity. After the 2008 financial crisis, corporations renewed their war on regulation, charging that it (not their risky speculation) was preventing a return to economic growth.