Regulatory Reform

January 16, 1976

Report Outline
Debate Over Federal Role
Background of Government Regulation
Prospects for Regulatory Reform

Debate Over Federal Role

Extent of Regulation and Consensus of Criticism

The role of government in the American economy has grown steadily over the past century, and has generated public policy problems which only now are receiving widespread attention. The economic difficulties of the 1970s have led to increasing criticism of the effects of government regulation on businesses and consumers alike. The shortcomings of government supervision long have been apparent in certain industries, and in certain regulatory agencies. But the debate now extends to the most basic political question of all: how much government do the American people want, and what do they want it to do for them?

Some regulations deal with public welfare; these aim to protect the health and safety of people as workers or as consumers. Such regulations complement the existing market system. Welfare regulation must be distinguished from economic regulation, which serves to replace the market system in industries where, for a variety of reasons, it may be unsatisfactory. By controlling prices and competition, economic regulation aims to compensate for instances of market failure such as monopoly (see pp. 38–39).

While the proper amount of welfare regulation still is the subject of heated debate, the shortcomings of much economic regulation now appear a matter of consensus across the political spectrum. For example, while consumer advocate Ralph Nader and conservative ex-Gov. Ronald Reagan strongly disagree about the value of much food and drug regulation, both have attacked the rationale and the structure of economic regulation in the transportation industries.

ISSUE TRACKER for Related Reports
Regulation and Deregulation