Deregulate What?

Deregulation is one of those terms people often use as a rallying cry, rather than in a thoughtful discussion.  It has come to be associated with Ronald Reagan and Thatcherism of the 1980s, and people’s opinions on whether deregulation was a welcome freeing of the markets, or government’s abdication of responsibility, generally coincides with their opinion of those leaders.

Note however that in the US, deregulation did not begin under Reagan, but under Jimmy Carter.  Yesterday, we celebrated the 40th anniversary of years of the Staggers Rail Act of 1980, the highly successful deregulation of the rail freight industry. This was sandwiched by airline deregulation in 1979 and the breakup of AT&T’s telecom monopoly in 1984, also considered big successes.

Not all regulation is bad.  But neither is all regulation good.  Many regulations are made in response to crises: for instance the Jones Act (World War I), or the World War II mohair subsidy.  When the crisis is done, they become obsolete.  Other regulations are made by fallible humans who don’t anticipate unintended consequences.  And many regulations are made very intentionally with special interests in mind.  These last should never be made in the first place, but often are.  

The world is ever-changing. Recognizing this, industries such as software make refactoring, and removing obsolete pieces of a system, part of the development process. Similarly, deregulation should not be viewed as a bugaboo, but part of the process to make sure government uses social resources efficiently.

When the world changes, our institutions and laws must change too.


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