Deregulation

Paul A. Swanson

Deregulation is the easing or elimination of governmental restrictions on economic activity. In the past century, in advanced capitalist economies such as that of the United States, governments instituted many rules restricting business behavior. As these rules always seemed onerous to businesses, businesses have always been in opposition to them. This opposition became effective in the past 30 years, leading to deregulation policies to remove the fetters on market activity and let markets determine economic outcomes. From this point of view, regulation stifles the economy, creating inefficiencies and lowered output. The Interstate Commerce Commission (ICC), created in 1887, was the first federal regulatory agency in the United States. At that time the railroad industry was fixing rates, controlling markets, and favoring large customers, that is, acting in noncompetitive ways. The federal government tried to reintroduce competition into this industry by setting rules and regulations concerning fares and routes. However, these ...

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