Deregulation
Deregulation is the process by which governments remove
restrictions on
business in order to (in theory) encourage the efficient operation of markets. The stated rationale for deregulation is often that fewer regulations will lead to a raised level of competitiveness, therefore higher
productivity, more
efficiency and lower prices overall. Deregulation is different from
liberalization because a liberalized market, allowing any number of players, can be regulated to protect the
consumer's
rights, especially to prevent
de facto or even legal
oligopolies. However, the terms are often used interchangeably within deregulated/liberalised industries.
Deregulation gained momentum in the 1970s, influenced not only by research at the
University of Chicago and the theories of
Ludwig von Mises,
Friedrich von Hayek, and
Milton Friedman, among others, but more importantly by that of
Alfred E. Kahn. Deregulation in the US was led by President
Jimmy Carter, with Kahn's input. Key legislation that was passed included:
Airline Deregulation Act (24 October, 1978),
Staggers Rail Act (signed 14 October, 1980), and the
Motor Carrier Act of 1980 (signed 1 July 1980). The
Emergency Natural Gas Act (signed 2/2/77) was a mix of regulation in response to
OPEC price hikes and deregulation. The
Airline Deregulation Act is a notable example. It sought to reintroduce market forces to the heavily regulated commercial airline industry. Subsequent deregulation has had a mixed record.
One problem that encouraged deregulation was the way in which the regulated industries often controlled the government
regulatory agencies, using them to serve the industries' interests. Even where regulatory bodies started out functioning independently, a process known as
regulatory capture often sees industry interests come to dominate those of the consumer. A similar pattern has been observed with the deregulation process, itself often controlled by the regulated industries.
Perceived failures of deregulation (such as the failure of the
Savings & Loan sector of the U.S. during the 1980s) have led to limited
re-regulation, and more balanced approaches to regulation that emphasize the
quality of regulation over the
quantity. That is, instead of simply removing (or adding) regulations on business, the point is to regulate business intelligently, using as sophisticated an
economic theory as possible. Many processes labelled deregulation where anyway examples of re-regulation alongside a market liberalisation process taking state-owned service providers into the private sector.
Argentina underwent heavy economic deregulation during the
Menem administration (1989â€"1999). These policies, implemented under advice of international organizations like the
IMF and the
WTO, eventually produced massive de-industralization and unemployment, and became unpopular after the
politico-economic collapse of 2001. Many people, both in Argentina and abroad, blame deregulation for being a factor that caused the crisis.
*
2003 Corrections to EU directive about
software patentsSince the economic bubble in 1990s collapsed, the Japanese government has seen deregulation as an effective way to lift its economy because it has a huge deficit and cannot make a large
tax cut.
New Zealand has had extensive deregulation since
1984. It was instigated by the
Labour Party.
See also:
Economy of New ZealandThe
United Kingdom has developed a programme of
better regulation since 1997. This has developed to include a general programme for government departments to review, simplify or abolish their existing regulations, and a "one in, one out" approach to new regulations. In 2006, new primary legislation is proposed (a Legislative and Regulatory Reform Bill) which is intended to establish statutory principles and a code of practice.
Deregulation was a major trend in the United States in the last quarter of the
twentieth century. A number of major deregulation initiatives were passed. Some of these were withdrawn quickly (but not quickly enough to avoid major problems), including the deregulation of
savings and loans. American savings banks, which were permitted to lend unfettered, had their depositors funds insured by the federal government, creating a
moral hazard. The
California electricity crisis was precipitated by price manipulations by companies such as
Enron after energy industry deregulation in 1996. Other legislation has been considered more widely successful, including deregulation of
transport, and the
gas market. In
1996, the
media market was significantly deregulated.
Related Legislation
*
1976 -
Hart-Scott-Rodino Antitrust Improvements Act PL 94-435
*
1977 -
Emergency Natural Gas Act PL 95-2
*
1978 -
Airline Deregulation Act PL 95-50
*
1978 -
National Gas Policy Act PL 95-621
*
1980 -
Depository Institutions Deregulation and Monetary Control Act PL 96-221
*
1980 -
Motor Carrier Act PL 96-296
*
1980 -
Staggers Rail Act PL 96-448
*
1982 -
Garn - St Germain Depository Institutions Act PL 97-320
*
1982 -
Bus Regulatory Reform Act PL 97-261
*
1989 -
Natural Gas Wellhead Decontrol Act PL 101-60
*
1992 -
National Energy Policy Act PL 102-486
*
1996 -
Telecommunications Act PL 104-104
*
1999 -
Gramm-Leach-Bliley Act PL 106-102
*
Public service company*
Doing Business report @ World Bank*
Jump, Jive an' Reform Regulation: How Washington Can Take a Swing at Regulatory Reform (CEI, 2000) by
Clyde Wayne Crews, Jr.*
Powering a Generation of Change, National Museum of American History
