Skip Navigation

Regulation

Economy
June 20, 2017
Economic Ideas: Jean-Baptiste Say and the “Law of Markets”
Whatever economic freedom we enjoy in the world today is due, to a great extent, to the ideas and efforts of the classical liberals and economists of the first half of the nineteenth century.
InfoTech & Telecom
June 19, 2017
Reverse Obama’s Net-Neutrality Power Grab
The Federal Communication Commission’s (FCC) recent vote to begin the process of undoing an Obama-era power grab is the right solution for putting consumers—not lobbyists and lawmakers—in the innovation driver’s seat.
Regulation
June 15, 2017
PRESS RELEASE: Heartland Institute Experts React to Wisconsin Passing REINS Act
"One small step for legislative responsibility, one giant leap for constitutional restraints on executive authority in Wisconsin." - H. Sterling Burnett
More News
FIRE
June 12, 2017
House Approves Dodd-Frank Rollback Bill
The U.S. House of Representatives has approved a bill that would ease federal restrictions on banks, reduce the cost of regulatory compliance, and relax some federal government controls over banks and financial services.
Health Care
June 12, 2017
Senate Confirms Gottlieb as New FDA Commissioner
FDA Commissioner Dr. Scott Gottlieb has written in support of curtailing FDA overreach.
Regulation
June 11, 2017
Congress Considers Outer-Space Regulation Reforms
After a congressional hearing on how federal regulations block private individuals and businesses from operating in Earth’s orbit and beyond in April, U.S. Sen. Ted Cruz (R-TX) launched a follow-up hearing.
 

The Issue

How governments regulate businesses in their jurisdictions has a major effect on economic growth and individual liberty. Along with taxes and government spending, regulation is one of the three principal levers policymakers can move to shape the business climate of their nation, state, or city.

Most policymakers are relatively uninformed about why governments regulate in the first place. Regulations are only rarely justified by the “public interest.” Experience suggests they are often proposed and lobbied for by interest groups who stand to benefit from less competition or higher prices. Over time, regulators are captured by the industries they are supposed to over-see, with the result that the cost of regulations falls disproportionately on consumers.

Regulation aimed at preventing monopolies or altering their behavior is called antitrust. But natural monopolies are actually extremely rare, while many competitive industries are regulated. Distinguished economists have pointed out that neither the number of firms in a particular market nor their pricing behavior is reliable evidence of market power, so regulators have no way to identify monopolies even if they wanted to regulate them. In fact, regulation is probably the leading cause of monopolies by erecting barriers to entry.

Economist James L. Johnston observe that industries are most often regulated when three conditions are present: the product or service is subject to substantial shifts in supply and demand, supply reliability cannot be achieved through precautionary stocks or other market techniques, and substantial social costs are incurred when supplies are interrupted. The intended effect of regulation in such cases is to improve the stability of supply by encouraging extra investment in reliability.

Regulations impose enormous costs on consumers: approximately $1.5 trillion per year in the U.S. alone. Annual rankings of countries by their “economic freedom” also find close correlations between economic growth and indices of freedom, with regulations being an important part of the indices.

Consumer protection is often cited as the reason regulations are necessary, and few would argue against having some safety standards. But calls for such regulations are increasingly out-of-step with sound science and economics. In his book Give Me a Break, John Stossel critiques false alarms he reported over the years concerning (in alphabetical order): airbags, ambulance service, asbestos, Aspen lead poisoning, breast implants, cigarette lighters, crack babies, dioxin, domestic violence, Erin Brockovich, ergonomics, forest fires, global warming, Love Canal, McDonald’s coffee, milk price-fixing, organic food, private toilets, rent control, second-hand smoke, Times Beach, and vaccines.

Our Stance

Regulatory reform is a promising area for bipartisan cooperation. At the national level, deregulation of trucking, airlines, and other major industries started as a Democratic initiative and was carried on by Republican administrations. Paul London, who served in the Clinton administration from 1993 to 1997, says bipartisan support for free trade, judicious use of antitrust laws, and the repeal of price and entry regulation in key sectors of the economy “made the prosperity of the 1990s possible.” More recent examples of deregulation, though, are more difficult to find.

Featured Subtopics

Antitrust law book
Regulation aimed at preventing monopolies or altering their behavior is called antitrust. But natural monopolies are actually extremely rare, while many competitive industries are regulated.
Man with head down on stack of regulatory binders
How governments regulate businesses in their jurisdictions has a major effect on economic growth and individual liberty. Along with taxes and government spending, regulation is one of the three principal levers policymakers can move to shape the business climate of their nation, state, or city.
Woman cutting red tape from man
Regulatory reform is a promising area for bipartisan cooperation. At the national level, deregulation of trucking, airlines, and other major industries started as a Democratic initiative and was carried on by Republican administrations.

Additional Subtopics

  • Product Safety

Videos

Title: Know Your Second Amendment Rights
Description: Have you lost enough control to government forces? Know your Second Amendment rights and learn to recognize who is trying to take away your weapons … and why. The Second Amendment states, "A well-regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." So why is your government interfering with your constitutionally protected right to own guns?

Regulation Experts Team

The Heartland Institute's experts on regulatory issues are available for legislative testimony, speaking engagements, and media interviews.

Staff & Fellows Policy Experts