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Regulation

Government Spending
August 2, 2017
Elizabeth Warren's CFPB: This Is Progress?
For a century now, American law has recognized the freedom of the parties to a contract to agree to submit disputes to arbitration.
Alcohol & Tobacco
July 27, 2017
Oklahoma Gives Voters Power to Roll Back Blue Laws
A new law will allow Oklahoma voters to vote to roll back local government restrictions preventing sales of wine and liquor on Sundays.
Health Care
July 26, 2017
Socialized Medical System Deprives Child of Possible Lifesaving Treatment
In the United Kingdom, the parents of 11-month-old Charlie Gard have been fighting for the right to obtain treatment for their son in the United States.
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Health Care
July 26, 2017
Current Proposals to Reduce Drug Prices Are Hit-and-Miss
Policy Advisor Devon Herrick parses free-market policies from unsound proposals.
Health Care
July 26, 2017
Senate Considers ‘Skinny’ Repeal of Obamacare
The Senate has rejected a full repeal of Obamacare twice in two days.
Health Care
July 26, 2017
FDA Publishes List of Off-Patent Drugs Ripe for Competition
The federal agency has published the list to enhance competition.
 

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.

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