Deregulation

Deregulation

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Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
{{Multiple issues
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{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
{{Multiple issues
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|cleanup=April 2009
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{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
{{Multiple issues
|POV=October 2008
|cleanup=April 2009
|unbalanced=April 2009
|refimprove=February 2008
}}

{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
{{Multiple issues
|POV=October 2008
|cleanup=April 2009
|unbalanced=April 2009
|refimprove=February 2008
}}

{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
{{Multiple issues
|POV=October 2008
|cleanup=April 2009
|unbalanced=April 2009
|refimprove=February 2008
}}

{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.
{{Multiple issues
|POV=October 2008
|cleanup=April 2009
|unbalanced=April 2009
|refimprove=February 2008
}}

{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.{{cite book
| last1 = Sullivan
| first1 = Arthur

{{Multiple issues
|POV=October 2008
|cleanup=April 2009
|unbalanced=April 2009
|refimprove=February 2008
}}

{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.{{cite book
| last1 = Sullivan
| first1 = Arthur

{{Multiple issues
|POV=October 2008
|cleanup=April 2009
|unbalanced=April 2009
|refimprove=February 2008
}}

{{Capitalism}}
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.{{cite book
| last1 = Sullivan
| first1 = Arthur

| first2 = Steven M.
| last2 = Sheffrin
| title = Economics: Principles in Action
| publisher = Pearson Prentice Hall
| date = January 2002
| publication-place = New Jersey

| isbn = 0-13-063085-3}}
Deregulation does not mean elimination of laws against fraud or property rights but eliminating or reducing government control of how business is done, thereby moving toward a more laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....

, free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

. It is different from liberalization
Liberalization
In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. In some contexts this process or concept is often, but not always, referred to as deregulation...

, where more players enter in the market, but continues the regulation and guarantee of consumer rights and maximum and minimum prices. An example of Deregulation would be Financial Deregulation.

Overview


The stated rationale for deregulational is often that fewer and simpler 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, while often having fewer and simpler regulations, can also have regulations to increase efficiency and protect consumers' rights, one example being anti-monopoly legislation
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

. However, the terms are often used interchangeably within deregulated/liberalized industries.

A parallel development with deregulation has been organized, ongoing programs to review regulatory initiatives with a view to minimizing, simplifying, and making more cost effective regulations. Such efforts, given impetus by the Regulatory Flexibility Act of 1980, are embodied in the United States Office of Management and Budget's Office of Information and Regulatory Affairs
Office of Information and Regulatory Affairs
The Office of Information and Regulatory Affairs is an office of the United States Government that Congress established in the 1980 Paperwork Reduction Act. OIRA is located within the Office of Management and Budget, which is an agency within the Executive Office of the President...

, and the United Kingdom's Better Regulation Commission. Cost-benefit analysis
Cost-benefit analysis
Cost–benefit analysis , sometimes called benefit–cost analysis , is a systematic process for calculating and comparing benefits and costs of a project for two purposes: to determine if it is a sound investment , to see how it compares with alternate projects...

 is frequently used in such reviews. In addition, there have been regulatory innovations, usually suggested by economists, such as emissions trading
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....

. Academic research on wedding economic theory with regulatory activity continues.

One can distinguish between deregulation and privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...

. Privatization can be seen as taking state-owned service providers into the private sector. This can result in making the privatized enterprise more subject to market forces than was the state-owned entity. But the degree to which there is freedom to operate in the market and the extent of competitiveness in the market for the goods and services of the privatized entity or entities may depend on other measures taken in addition to privatization.

In some instances, partial privatisation may be selected, where provision of some portion(s) of the state-owned service are provided by private-sector contractors, but the government retains the capacity to self-operate at contract intervals, if it so chooses. An example of partial privatization would be some forms of school bus service contracting
School bus contractor
A school bus contractor is a private company or proprietorship that provides student transport services to a school district or non-public school. Of the 450,000 school buses operating in the United States, it is estimated that approximately 39% are operated by school bus contractors...

, such as arrangements where equipment and other resources purchased with government capital funds are used by the contractor for a period of time in providing services, but ownership is retained by the governmental unit. In such situations the arrangement can be seen as a sort of contracting out of functions for which the government takes responsibility.

One influential measure of worldwide business regulations that has inspired mostly deregulation but also in some instances increased regulations is the Ease of Doing Business Index
Ease of Doing Business Index
The Ease of Doing Business Index is an index created by the World Bank. Higher rankings indicate better, usually simpler, regulations for businesses and stronger protections of property rights...

.

Argentina


Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...

 underwent heavy economic deregulation, privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...

, and had a fixed exchange rate
Fixed exchange rate
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.A fixed exchange rate is usually used to...

 during the Menem
Carlos Menem
Carlos Saúl Menem is an Argentine politician who was President of Argentina from 1989 to 1999. He is currently an Argentine National Senator for La Rioja Province.-Early life:...

 administration (1989–1999).

Australia


Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

 was an early leader in deregulation with a broad program of deregulation beginning in the early 1980s. Having announced a wide range of deregulatory policies, Labor
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...

 Prime Minister Bob Hawke
Bob Hawke
Robert James Lee "Bob" Hawke AC GCL was the 23rd Prime Minister of Australia from March 1983 to December 1991 and therefore longest serving Australian Labor Party Prime Minister....

 announced the policy of 'Minimum Effective Regulation' in 1986. This introduced now familiar requirements for 'regulatory impact statements' but it took many years before the policy was complied with by government agencies. Australia experienced deregulation of their labor market during the late 1980s under Hawke/Keating Labor government's. The country saw extensive deregulation of the labor market beginning in 2005 under John Howard
John Howard
John Winston Howard AC, SSI, was the 25th Prime Minister of Australia, from 11 March 1996 to 3 December 2007. He was the second-longest serving Australian Prime Minister after Sir Robert Menzies....

's Liberal Party of Australia
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...

 through their WorkChoices
WorkChoices
The Workplace Relations Act 1996, as amended by the Workplace Relations Amendment Act 2005, popularly known as Work Choices, was a Legislative Act of the Australian Parliament that came into effect in March 2006 which involved many controversial amendments to the Workplace Relations Act 1996, the...

 policy. However it was reversed under the following Rudd Labor government. In 2007, the Rudd Labor Government
First Rudd Ministry
The Rudd Ministry was the 65th Australian Commonwealth ministry. It was led by Kevin Rudd of the Australian Labor Party.The Ministry was sworn in by the 24th Governor-General of Australia Major-General Michael Jeffery on 3 December 2007, following the 2007 election, and it ended on 24 June 2010...

 promised extensive deregulation, particularly in the business sector, appointing Lindsay Tanner
Lindsay Tanner
Lindsay James Tanner is a former Australian member of the House of Representatives representing the Division of Melbourne, Victoria, for the Australian Labor Party, having first won the seat at the 1993 federal election. He was a member of the Australian Government from 3 December 2007, serving as...

 Minister for Finance and Deregulation.

Canada


{{See also|Ontario electricity policy}}

Natural gas is deregulated in most of the country, with the exception of some Atlantic provinces and some pockets like Vancouver Island. Most of this deregulation happened in the mid 1980s.

The province of Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....

 began deregulation of electricity supply in 2002, but pulled back temporarily due to voter and consumer backlash at the resulting price volatility. The government is still searching for a stable working regulatory framework.

The current status is a partially regulated structure in which consumers received a capped price for a portion of the publicly owned generation. The remainder of the price is market price based and there are numerous competitive energy contract providers. There is price comparison service
Price comparison service
On the internet, a price comparison service allows individuals to see different lists of prices for specific products. Most price comparison services do not sell products themselves, but source prices from retailers from whom users can buy...

 operating in these jurisdictions.

The province of Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...

 has deregulated their electricity provision. Customers are free to choose which company they sign up with, but there are few companies to choose from and the price of electricity has increased substantially for consumers because the market is too small to support competition.

Former Premier Ralph Klein based the entire deregulation scheme on the Enron model, and continued with it even after the highly publicized and disastrous collapse of Enron because of illegal accounting practices.

European Union

  • 2003 Corrections to EU directive about software patent
    Software patent
    Software patent does not have a universally accepted definition. One definition suggested by the Foundation for a Free Information Infrastructure is that a software patent is a "patent on any performance of a computer realised by means of a computer program".In 2005, the European Patent Office...

    s
  • Deregulation of the air industry in Europe in 1992 gave carriers from one EU country the right to operate scheduled services between other EU states.

Republic of Ireland


The taxi industry was deregulated in Ireland leading to an influx of new taxis. This was due to the price of a licence dropping overnight. The number of taxis increased dramatically.

United Kingdom


The Conservative
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...

 government of Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...

 started a program of deregulation and privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...

 after the general election of 1979
United Kingdom general election, 1979
The United Kingdom general election of 1979 was held on 3 May 1979 to elect 635 members to the British House of Commons. The Conservative Party, led by Margaret Thatcher ousted the incumbent Labour government of James Callaghan with a parliamentary majority of 43 seats...

. These included express coach (Transport Act 1980
Transport Act 1980
The Transport Act 1980 was a Act of Parliament in the United Kingdom. It introduced deregulation of coach services in the United Kingdom and allow authorities to deregulate bus services on a trial basis. It was introduced by the Conservative government of Margaret Thatcher. The later Transport Act...

), British Telecom (completed in 1984), privatisation of London bus services
Privatisation of London bus services
The privatisation of London bus services was the progressive process of the transfer of operation of London Buses from public bodies to private companies....

 (1984), local bus services (Transport Act 1985
Transport Act 1985
The Transport Act 1985 was a Act of Parliament in the United Kingdom. It introduced deregulation of bus services throughout Great Britain, although a different system of franchised routes was applied in Greater London. It was introduced by the Conservative government of Margaret Thatcher.Bus...

) and the railways (1993).

Since 1997 the Labour
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...

 governments of Tony Blair
Tony Blair
Anthony Charles Lynton Blair is a former British Labour Party politician who served as the Prime Minister of the United Kingdom from 2 May 1997 to 27 June 2007. He was the Member of Parliament for Sedgefield from 1983 to 2007 and Leader of the Labour Party from 1994 to 2007...

 and Gordon Brown
Gordon Brown
James Gordon Brown is a British Labour Party politician who was the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. He previously served as Chancellor of the Exchequer in the Labour Government from 1997 to 2007...

 developed a programme of better regulation
Better regulation
The Better Regulation Commission is as non-departmental public body of the British government, independent of any government department but under the oversight of Department for Business, Enterprise and Regulatory Reform...

. This included 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 (the Legislative and Regulatory Reform Act 2006) was introduced to establish statutory principles and a code of practice.

The Labour governments did not privatise any public services, although some other government-owned businesses such as QinetiQ
QinetiQ
Qinetiq is a British global defence technology company, formed from the greater part of the former UK government agency, Defence Evaluation and Research Agency , when it was split up in June 2001...

 were privatised. But a great deal of infrastructure and maintenance work was contracted to private enterprise under the Public-Private Partnership
Public-private partnership
Public–private partnership describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies...

, with competitive bidding for contracts within regulatory framework. This included large projects such as building new hospitals for the National Health Service
National Health Service
The National Health Service is the shared name of three of the four publicly funded healthcare systems in the United Kingdom. They provide a comprehensive range of health services, the vast majority of which are free at the point of use to residents of the United Kingdom...

, building new state schools, and maintaining the London Underground
London Underground
The London Underground is a rapid transit system serving a large part of Greater London and some parts of Buckinghamshire, Hertfordshire and Essex in England...

.

Japan


Since the Japanese asset price bubble
Japanese asset price bubble
The was an economic bubble in Japan from 1986 to 1991, in which real estate and stock prices were greatly inflated. The bubble's collapse lasted for more than a decade with stock prices initially bottoming in 2003, although they would descend even further amidst the global crisis in 2008. The...

 of the 1990s collapsed in the early 2000s, the Japanese government has seen deregulation as an effective way to lift its economy, because it has a huge budget deficit and cannot make a large tax cut
Tax cut
A tax cut is a reduction in taxes. The immediate effects of a tax cut are a decrease in the real income of the government and an increase in the real income of those whose tax rate has been lowered. Due to the perceived benefit in growing real incomes among tax payers politicians have sought to...

.

New Zealand



{{See also|Economy of New Zealand}}
New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

 has had extensive deregulation since 1984. Originally instigated by the Labour Party
New Zealand Labour Party
The New Zealand Labour Party is a New Zealand political party. It describes itself as centre-left and socially progressive and has been one of the two primary parties of New Zealand politics since 1935....

, it was later continued by the erstwhile opposition National Party. As a result, New Zealand, from having a reputation as an almost socialist country, is considered one of the most business-friendly countries of the world, next to Singapore. However, critics charge that the deregulation has brought little benefit to some sections of society, and has caused much of New Zealand's economy (including almost all of the banks) to become foreign-owned.

Russia


Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...

 went through wide-ranging deregulation (and concomitant privatization) efforts in the late 1990s under Boris Yeltsin
Boris Yeltsin
Boris Nikolayevich Yeltsin was the first President of the Russian Federation, serving from 1991 to 1999.Originally a supporter of Mikhail Gorbachev, Yeltsin emerged under the perestroika reforms as one of Gorbachev's most powerful political opponents. On 29 May 1990 he was elected the chairman of...

, now partially reversed under Vladimir Putin
Vladimir Putin
Vladimir Vladimirovich Putin served as the second President of the Russian Federation and is the current Prime Minister of Russia, as well as chairman of United Russia and Chairman of the Council of Ministers of the Union of Russia and Belarus. He became acting President on 31 December 1999, when...

. The main thrust of deregulation has been the electricity sector (see RAO UES), with railroads and communal utilities tied in second place.{{Citation needed|date=September 2007}} Deregulation of the natural gas sector (Gazprom
Gazprom
Open Joint Stock Company Gazprom is the largest extractor of natural gas in the world and the largest Russian company. Its headquarters are in Cheryomushki District, South-Western Administrative Okrug, Moscow...

) is one of the more frequent demands placed upon Russia by the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 and European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

.

History of regulation


{{See also|Great Depression|Causes of the Great Depression}}

Many industries in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 became regulated by the federal government in the late 19th and early 20th century. Entry to some markets was restricted to stimulate and protect the initial investment of private companies into infrastructure to provide public services, such as water, electric and communications utilities. With entry of competitors highly restricted, monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

 situations were created, necessitating price and economic controls to protect the public. Other forms of regulation were motivated by what was seen as corporate abuse of the public interest by businesses already extant, such as occurred with the railroads following the era of the so-called robber barons
Robber baron (industrialist)
Robber baron is a pejorative term used for a powerful 19th century American businessman. By the 1890s the term was used to attack any businessman who used questionable practices to become wealthy...

. In the first instance, as markets matured to where several providers could be financially viable offering similar services, prices determined by competition were seen as more desirable than those set by regulatory process.

One problem that encouraged deregulation was the way in which the regulated industries often controlled the government regulatory agencies
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...

, using them to serve the industries' interests. Even where regulatory bodies started out functioning independently, a process known as regulatory capture
Regulatory capture
In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...

 often saw industry interests come to dominate those of the consumer. A similar pattern has been observed with the deregulation process itself, often effectively controlled by the regulated industries through lobbying the legislative process. Such political forces, however, exist in many other forms for other special interest groups.

During the Progressive Era
Progressive Era
The Progressive Era in the United States was a period of social activism and political reform that flourished from the 1890s to the 1920s. One main goal of the Progressive movement was purification of government, as Progressives tried to eliminate corruption by exposing and undercutting political...

 (1890s–1920s), Presidents Theodore Roosevelt
Theodore Roosevelt
Theodore "Teddy" Roosevelt was the 26th President of the United States . He is noted for his exuberant personality, range of interests and achievements, and his leadership of the Progressive Movement, as well as his "cowboy" persona and robust masculinity...

, William Howard Taft
William Howard Taft
William Howard Taft was the 27th President of the United States and later the tenth Chief Justice of the United States...

, and Woodrow Wilson
Woodrow Wilson
Thomas Woodrow Wilson was the 28th President of the United States, from 1913 to 1921. A leader of the Progressive Movement, he served as President of Princeton University from 1902 to 1910, and then as the Governor of New Jersey from 1911 to 1913...

 instituted regulation on parts of the American economy, most notably in regulating big business and industry. Some of their most prominent reforms are trust-busting (the destruction and banning of monopolies), the creation of laws protecting the American consumer, the creation of a federal income tax (by the Sixteenth Amendment
Sixteenth Amendment to the United States Constitution
The Sixteenth Amendment to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results...

; the income tax used a progressive tax structure
Progressive tax
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. "Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate...

 with especially high taxes on the wealthy), the establishment of the Federal Reserve, and the institution of shorter working hours, higher wages, better living conditions, better rights and privileges to trade unions, protection of rights of strikers
Strike action
Strike action, also called labour strike, on strike, greve , or simply strike, is a work stoppage caused by the mass refusal of employees to work. A strike usually takes place in response to employee grievances. Strikes became important during the industrial revolution, when mass labour became...

, banning of unfair labor practices, and the delivery of more social services to the working classes and social safety net
Social safety net
Social safety nets, or "socioeconomic safety nets", are non-contributory transfer programs seeking to prevent the poor or those vulnerable to shocks and poverty from falling below a certain poverty level. Safety net programs can be provided by the public sector or by the private sector...

s to many unemployed workers, thus helping to facilitate the creation of a welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...

 in the United States and eventually in most developed countries.

During the Presidencies of Warren Harding (1921–23) and Calvin Coolidge
Calvin Coolidge
John Calvin Coolidge, Jr. was the 30th President of the United States . A Republican lawyer from Vermont, Coolidge worked his way up the ladder of Massachusetts state politics, eventually becoming governor of that state...

 (1923–29), the federal government generally pursued laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....

 economic policies After the onset of the Great Depression, President Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...

 implemented many economic regulations, including the National Industrial Recovery Act
National Industrial Recovery Act
The National Industrial Recovery Act , officially known as the Act of June 16, 1933 The National Industrial Recovery Act (NIRA), officially known as the Act of June 16, 1933 The National Industrial Recovery Act (NIRA), officially known as the Act of June 16, 1933 (Ch. 90, 48 Stat. 195, formerly...

 (which was struck down by the Supreme Court), regulation of trucking, airlines and the communications industry, the institution of the Securities Exchange Act of 1934
Securities Exchange Act of 1934
The Securities Exchange Act of 1934 , , codified at et seq., is a law governing the secondary trading of securities in the United States of America. It was a sweeping piece of legislation...

, and the Glass–Steagall Act, which was passed in 1933. These 1930s regulations stayed largely in place until Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...

's Administration.http://www.encyclopedia.com/doc/1G1-16514254.html{{Dead link|date=October 2009}} In supporting his competition-limiting regulatory initiatives President Roosevelt blamed the excesses of big business for causing an economic bubble
Economic bubble
An economic bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values"...

. However, historians lack consensus in describing the causal relationship between various events and the role of government economic policy in causing or ameliorating the Depression.

Deregulation 1970-2000


Deregulation gained momentum in the 1970s, influenced by research at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...

 and the theories of Ludwig von Mises
Ludwig von Mises
Ludwig Heinrich Edler von Mises was an Austrian economist, philosopher, and classical liberal who had a significant influence on the modern Libertarian movement and the "Austrian School" of economic thought.-Biography:-Early life:...

, Friedrich von Hayek, and Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...

, among others. Two leading 'think tanks' in Washington, the Brookings Institution
Brookings Institution
The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., in the United States. One of Washington's oldest think tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and...

 and the American Enterprise Institute
American Enterprise Institute
The American Enterprise Institute for Public Policy Research is a conservative think tank founded in 1943. Its stated mission is "to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and...

, were active in holding seminars and publishing studies advocating deregulatory initiatives throughout the 1970s and 1980s. Alfred E. Kahn
Alfred E. Kahn
Alfred Edward Kahn was an American professor, an expert in regulation and deregulation, and an important influence in the deregulation of the airline and energy industries...

 played an unusual role in both publishing as an academic and participating in the Carter Administration's efforts to deregulate transportation.
Transportation

The first comprehensive proposal to deregulate a major industry in the United States, transportation, originated in the Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...

 Administration and was forwarded to Congress in late 1971.{{cite web
| last = Rose, Seely and Barrett
| first = Tracey
| authorlink =
| coauthors =
| title = The Best Transportation System in the World
| work = from the selected National Archive White House Files
| publisher = University of Ohio State Press
| year = 2006
| url = http://www.ohiostatepress.org/index.htm?books/book%20pages/rose%20best.html
| doi =
| accessdate = 2008-01-12 }}
This proposal was initiated and developed by an interagency group that included the Council of Economic Advisors (represented by Hendrik Houthakker and Thomas Gale Moore), White House Office of Consumer Affairs (represented by Jack Pearce), Department of Justice, Department of Transportation, Department of Labor, and other agencies.{{cite
|author=Rose, et al.
|pages=152–160
}}


The proposal addressed both rail and truck transportation, but not air carriage. (92d Congress, Senate Bill 2842) The developers of this legislation in this Administration sought to cultivate support from commercial buyers of transportation services, consumer organizations, economists, and environmental organization leaders.{{cite
|author=Rose, et al.
|pages=154–156
}}
This 'civil society' coalition became a template for coalitions influential in efforts to deregulate trucking and air transport later in the decade.

After Nixon left office, the Gerald Ford
Gerald Ford
Gerald Rudolph "Jerry" Ford, Jr. was the 38th President of the United States, serving from 1974 to 1977, and the 40th Vice President of the United States serving from 1973 to 1974...

 presidency, with the allied interests, secured passage of the first significant change in regulatory policy in a pro-competitive direction, in the Railroad Revitalization and Regulatory Reform Act of 1976. President Jimmy Carter
Jimmy Carter
James Earl "Jimmy" Carter, Jr. is an American politician who served as the 39th President of the United States and was the recipient of the 2002 Nobel Peace Prize, the only U.S. President to have received the Prize after leaving office...

 devoted substantial effort to transportation deregulation, and worked with Congressional and civil society leaders to pass the Airline Deregulation Act
Airline Deregulation Act
The Airline Deregulation Act is a United States federal law signed into law on October 24, 1978. The main purpose of the act was to remove government control over fares, routes and market entry from commercial aviation...

 (October 24, 1978), Staggers Rail Act
Staggers Rail Act
The Staggers Rail Act of 1980 is a United States federal law that deregulated the American railroad industry to a significant extent, and replaced the regulatory structure that existed since the 1887 Interstate Commerce Act.-Background:...

 (signed October 14, 1980), and the Motor Carrier Act of 1980
Motor Carrier Act of 1980
The Motor Carrier Regulatory Reform and Modernization Act, more commonly known as the Motor Carrier Act of 1980 is a United States federal law which deregulated the trucking industry.-Background:...

 (signed July 1, 1980).

These were the major deregulation acts in transportation that set the general conceptual and legislative framework, which replaced the regulatory systems put in place between the 1880s and the 1930s. The dominant common theme of these Acts was to lessen barriers to entry
Barriers to entry
In theories of competition in economics, barriers to entry are obstacles that make it difficult to enter a given market. The term can refer to hindrances a firm faces in trying to enter a market or industry - such as government regulation, or a large, established firm taking advantage of economies...

 in transport markets and promote more independent, competitive pricing among transport service providers, substituting the freed-up competitive market forces for detailed regulatory control of entry, exit, and price making in transport markets. Thus deregulation arose, though regulations to promote competition were put in place.

U.S. President Ronald Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....

 campaigned on the promise of rolling back environmental regulations. His devotion to the economic
beliefs of Milton Friedman led him to promote the deregulation of finance, agriculture, and transportation.
A series of substantial enactments were needed to work out the process of encouraging competition in transportation. Interstate buses were addressed in 1982, in the Bus Regulatory Reform Act of 1982. Freight forwarders (freight aggregators) got more freedoms in the Surface Freight Forwarder Deregulation Act of 1986
Surface Freight Forwarder Deregulation Act of 1986
The Surface Freight Forwarder Deregulation Act of 1986, Public Law 99-521, is a federal law of the United States which eliminated federal regulation of prices, services and entry as to general commodities surface 'freight forwarders' This Act was a follow on to a sweeping program to free up...

. As many states continued to regulate the operations of motor carriers within their own state, the intrastate aspect of the trucking and bus industries was addressed in the Federal Aviation Administration Authorization Act of 1994, which provided that "a State, political subdivision of a State, or political authority of two or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier." {{usc|49|14501}}(c)(1) (Supp. V 1999).

Ocean transportation was the last to be addressed. This was done in two acts, the Ocean Shipping Act of 1984 and the Ocean Shipping Reform Act of 1998. These acts were less thoroughgoing than the legislation dealing with U.S. domestic transportation, in that they left in place the "conference" system in international ocean liner shipping, which historically embodied cartel mechanisms. However, these acts permitted independent rate making by conference participants, and the 1998 Act permitted secret contract rates, which tend to undercut collective carrier pricing. According to the United States Federal Maritime Commission, in an assessment in 2001, this appears to have opened up substantial competitive activity in ocean shipping, with beneficial economic results.

The Airline Deregulation Act
Airline Deregulation Act
The Airline Deregulation Act is a United States federal law signed into law on October 24, 1978. The main purpose of the act was to remove government control over fares, routes and market entry from commercial aviation...

 is an example of a deregulatory act whose success has been called into question.{{cite
|url=http://www.nytimes.com/2006/04/03/opinion/03iht-edpfaff.html
|newspaper=New York Times
|date=3 April 2006
|title=Deregulation Gone Mad
|last=Pfaff |first=William
|publication-place=Paris
|accessdate=2009-08-17
}}

Energy

The Emergency Natural Gas Act (signed February 2, 1977) was a mix of regulation in response to OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...

 price hikes and deregulation and the 1973 oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...

 in the U.S. As a result of this legislation Natural Gas Choice
Natural Gas Choice
Natural Gas Choice programs in United States of America allow residential consumers and other small volume gas users to purchase natural gas from someone other than their traditional utility company. With Natural Gas Choice programs, customers can either purchase from their natural gas utility or...

 programs have sprung up in several states. Natural Gas Choice programs allow residential and small volume natural gas users to select a natural gas supplier other than the traditional utility. There are hundreds of unregulated natural gas suppliers operating in the United States.
Communications

{{See also|Telecommunications Act of 1996|Concentration of media ownership}}

Communications in the United States (and internationally) are areas in which both technology and regulatory policy have been in flux. Rapid development of computer and communications technology – particularly the Internet – have increased the size and variety of communications offerings. Wireless, traditional landline telephone, and cable companies increasingly invade each others' traditional markets and compete across a broad spectrum of activities. The Federal Communications Commission
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...

 and Congress appear to be attempting to facilitate this evolution. In mainstream economic thinking, development of this competition would militate against detailed regulatory control of prices and service offerings, and hence favor deregulation of prices and entry into markets.{{cite
|last=Crandall
|first=Robert W.
|title=Competition and Chaos – U.S. Telecommunications Since the 1996 Telecom Act
|publisher=Brookings Institution
Brookings Institution
The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., in the United States. One of Washington's oldest think tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and...


|isbn=978-0815716174
|date=1 December 2004
}}
On the other hand, there exists substantial concern about concentration of media ownership resulting from relaxation of historic controls on media ownership designed to safeguard diversity of viewpoint and open discussion in the society, and about what some perceive as high prices in cable company offerings at this point.
Finance

The financial sector in the U.S. has evolved a great deal in recent decades, during which there have been some regulatory changes and the creation of new financial products such as the securitization
Securitization
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation , to...

 of loan obligations of various sorts and credit default swap
Credit default swap
A credit default swap is similar to a traditional insurance policy, in as much as it obliges the seller of the CDS to compensate the buyer in the event of loan default...

s. Among the most important of the regulatory changes was the Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
The Gramm–Leach–Bliley Act , also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress...

 in 1999, which repealed the parts of the Glass–Steagall Act which had not already been repealed. This 1999 Act took down barriers to competition between traditional banks, investment banks, and insurance companies, and allowed firms to participate in all three markets in some circumstances.

Some believe that this deregulation contributed to the U.S. financial crisis of 2007-2009 and the Global financial crisis of 2008-2009.{{cite
|url=http://www.rollingstone.com/politics/story/26793903/the_big_takeover
|date=19 March 2009
|newspaper=Rolling Stone
Rolling Stone
Rolling Stone is a US-based magazine devoted to music, liberal politics, and popular culture that is published every two weeks. Rolling Stone was founded in San Francisco in 1967 by Jann Wenner and music critic Ralph J...


|accessdate=2009-08-17
|last=Taibbi |first=Matt
|title=The Big Takeover!
}}
However, others dispute this assertion, and a lively debate on the causes of financial crisis is still under way as of August, 2009.See for example the Wall Street Journal Opinion Page, March 21, p. A13, which discusses various contentions that a global capital excess, poor bond raters, mortgage fraud, regulators disinclined to regulate, poor decisions by the Federal Reserve, and/or the Community Reinvestment Act
Community Reinvestment Act
The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods...

 led to the crisis.

Related legislation

  • 1976 - Hart-Scott-Rodino Antitrust Improvements Act
    Hart-Scott-Rodino Antitrust Improvements Act
    The Hart–Scott–Rodino Antitrust Improvements Act of 1976 is a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. The HSR Act was signed into law by President Gerald R. Ford on September 30, 1976...

     PL 94-435
  • 1977 - Emergency Natural Gas Act PL 95-2
  • 1978 - Airline Deregulation Act
    Airline Deregulation Act
    The Airline Deregulation Act is a United States federal law signed into law on October 24, 1978. The main purpose of the act was to remove government control over fares, routes and market entry from commercial aviation...

     PL 95-50
  • 1978 - National Gas Policy Act PL 95-621
  • 1980 - Depository Institutions Deregulation and Monetary Control Act
    Depository Institutions Deregulation and Monetary Control Act
    The Depository Institutions Deregulation and Monetary Control Act, a United States federal financial statute law passed in 1980, gave the Federal Reserve greater control over non-member banks.* It forced all banks to abide by the Fed's rules....

     PL 96-221
  • 1980 - Motor Carrier Act
    Motor Carrier Act of 1980
    The Motor Carrier Regulatory Reform and Modernization Act, more commonly known as the Motor Carrier Act of 1980 is a United States federal law which deregulated the trucking industry.-Background:...

     PL 96-296
  • 1980 - Regulatory Flexibility Act PL 96-354
  • 1980 - Staggers Rail Act
    Staggers Rail Act
    The Staggers Rail Act of 1980 is a United States federal law that deregulated the American railroad industry to a significant extent, and replaced the regulatory structure that existed since the 1887 Interstate Commerce Act.-Background:...

     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
    Energy Policy Act of 1992
    The Energy Policy Act is a United States government act.It was passed by Congress and addressed energy efficiency, energy conservation and energy management , natural gas imports and exports , alternative fuels and requiring certain fleets to acquire alternative fuel vehicles, which are capable of...

     PL 102-486
  • 1996 - Telecommunications Act
    Telecommunications Act of 1996
    The Telecommunications Act of 1996 was the first major overhaul of United States telecommunications law in nearly 62 years, amending the Communications Act of 1934. This Act, signed by President Bill Clinton, was a major stepping stone towards the future of telecommunications, since this was the...

     PL 104-104
  • 1999 - Gramm-Leach-Bliley Act
    Gramm-Leach-Bliley Act
    The Gramm–Leach–Bliley Act , also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress...

     PL 106-102

Controversy


{{See also|neoliberal|globalization|anti-globalization}}

The deregulation movement of the late 20th century had substantial economic effects and engendered substantial controversy. As preceding sections of this article indicate, the movement was based on intellectual perspectives which prescribed substantial scope for market forces, and opposing perspectives have been in play in national and international discourse.

The movement toward greater reliance on market forces has been closely related to the growth of economic and institutional globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

 between about 1950 and 2010.

Critics of economic liberalisation and deregulation cite the benefits of regulation, and believe that certain regulations do not distort markets and allows companies to continue to be competitive
Competition (economics)
Competition in economics is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services...

, or according to some, grow in competition. Much as the state plays an important role through issues such as property rights, appropriate regulation is argued by some to be "crucial to realise the benefits of service liberalisation".

Critics of deregulation often cite the need of regulation to:
  • create a level playing field and ensure competition
    Competition
    Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...

     (e.g. ensuring new energy providers have competitive access to the national grid);
  • maintain quality standards for services (e.g. by specifying qualification requirements for service providers);
  • protect consumers (e.g. from fraud);
  • ensure sufficient provision of information (e.g. about the features of competing services);
  • prevent environmental degradation
    Environmental degradation
    Environmental degradation is the deterioration of the environment through depletion of resources such as air, water and soil; the destruction of ecosystems and the extinction of wildlife...

     (e.g. arising from high levels of tourist development);
  • guarantee wide access
    Access (economics)
    Access is a catalytic process that enables interactions, contacts and exchanges among people, businesses and nations. An analytical framework to define the drivers and benefits of Access and to quantify the impact of Access on economic growth and personal well-being was created in 2006 by the...

     to services (e.g. ensuring poorer areas where profit margins are lower are also provided with electricity and health services); and,
  • prevent financial instability
    Financial crisis
    The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these...

     and protect consumer savings from excessive risk-taking by financial institutions.


For deregulation


Adam Thierer wrote, "The first step toward creating a free market in electricity is to repeal the federal statutes and regulations that hinder electricity competition and consumer choice."{{cite
|url=http://www.heritage.org/research/energyandenvironment/bg1169.cfm
|title=A Five-Point Checklist For Successful Electricity Deregulation Legislation
|first=Adam D.|last=Thierer
|publisher=Heritage Foundation
Heritage Foundation
The Heritage Foundation is a conservative American think tank based in Washington, D.C. Heritage's stated mission is to "formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong...


|issue=1169
|date=13 April 1998
|accessdate=2009-04-26
}}

Against deregulation


Sharon Beder, a writer with PR Watch, wrote "Electricity deregulation was supposed to bring cheaper electricity prices and more choice of suppliers to householders. Instead it has brought wildly volatile wholesale prices and undermined the reliability of the electricity supply."{{cite
|url=http://www.prwatch.org/prwissues/2003Q3/dereg.html
|title=The Electricity Deregulation Con Game
|first=Sharon|last=Beder
|journal=PR Watch
PR Watch
PR Watch is a web site, and until 2008 a quarterly newsletter, whose stated mission is to expose deceptive and misleading public relations campaigns. It particularly covers US environmental issues, but also covers topics ranging from labor rights to world affairs...


|volume=10
|issue=3
|date=3rd quarter 2003
|publisher=Center for Media and Democracy
Center for Media and Democracy
The Center for Media and Democracy is a non-profit investigative reporting group. The CMD gives analysis and opinion on policies such as the economy, environment and national security...


|accessdate=2009-04-26
}}

See also

  • Economic liberalization
    Economic liberalization
    Economic liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities; the doctrine is associated with classical liberalism...

  • Public service company
    Public service company
    A public service company is a corporation or other non-governmental business entity which delivers public services - certain services considered essential to the public interest...

  • Electricity provider switching
    Electricity Provider Switching
    Electricity provider switching is the ability of power consumers to have an option—or the "power to choose" -- their electricity provider in a deregulated electricity market as permitted by a state public utilities governing body.-Australia:...

  • Michael H. Belzer
    Michael H. Belzer
    Michael H. Belzer, Ph.D., is an internationally recognized expert on the trucking industry, especially the institutional and economic impact of deregulation. He is an associate professor, in the economics department at Wayne State University. He is the author of Sweatshops on Wheels: Winners and...

  • Political economy
    Political economy
    Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

  • Rule according to higher law
    Rule according to higher law
    The rule according to a higher law means that no written law may be enforced by the government unless it conforms with certain unwritten, universal principles of fairness, morality, and justice...

  • Stranded costs
    Stranded costs
    In discussions of electric power generation deregulation, the term 'Stranded Costs' represents the existing investments in infrastructure for the incumbent utility which may become redundant in a competitive environment....


External links

{{Dead link|date=September 2010|bot=H3llBot}}. This comprehensive study indicating, among other things, that transport deregulation reduced distribution costs in the United States from about 14% of gross domestic product to under 11% (If this measure is selected, current dollar savings can be calculated by multiplying current GDP by @3%).[Misplaced in article]