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Regulation

Economy
April 24, 2017
Indiana Lawmakers Approve Bill Standardizing Local Airbnb Rules
The Indiana Senate approved a bill blocking local governments in the state from preventing homeowners from using Airbnb and other peer-to-peer economy companies.
Constitutional Reform
April 21, 2017
Kansas Calls for Regulation Reform Amendment Convention
The Kansas Legislature officially approved a resolution calling for a national convention to draft and enact checks on federal agencies’ authority to create costly regulations without lawmakers’ approval.
Economy
April 21, 2017
Trump Administration Submits Wish List for Trade Bloc Reform
President Donald Trump’s advisors have released a list of changes Trump would like lawmakers to make to the North American Free Trade Agreement (NAFTA), a trilateral trade bloc agreed to in 1994 by the United States, Canada, and Mexico.
More News
Transportation
April 21, 2017
Mobile, Alabama Lawmakers Uber Mad Over State Ridesharing Bill
The Mobile, Alabama City Council passed a resolution opposing a state lawmaker’s proposal to standardize government licensing regulations on peer-to-peer transportation network companies (TNC) such as Uber and Lyft.
Employment
April 20, 2017
FTC Chief Unveils Occupational Licensing Reform Task Force
The Federal Trade Commission (FTC) has created a new task force dedicated to reforming government hurdles to job growth, including occupational licensing.
Health Care
April 10, 2017
Analysis: Real Health Care Reforms Pass the ‘Calendar Test’
Robert Graboyes argues state and national health care reform efforts fall short of true reform when they fail to pass this litmus test.
 

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