Deregulation

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Deregulation,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 by research at the University of Chicago and the theories of Ludwig von Mises, Friedrich von Hayek, and Milton Friedman, among others. A notable early example of deregulation in the United States is the Airline Deregulation Act, which 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.

1 Argentina
2 European Union
3 Japan
4 New Zealand
5 United States
- 5.1 Related Legislation
6 See also
7 External links

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Argentina

Argentina underwent heavy economic deregulation during Menem's government, during the 1990s. These policies, implemented under advice of international organizations like the IMF and the WTO, eventually became unpopular after the year 2001, when the Argentine economy entered in crisis. Many people, both in Argentina and abroad, blame de-regulation for being a factor that caused the crisis.

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European Union

2003 Corrections to EU directive about software patents

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Japan

Since 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.

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New Zealand

New Zealand has had extensive deregulation since 1984. It was instigated by the Labour Party.

See also: Economy of New Zealand

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United States

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.

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