Editing Deregulation (section)

=== United States ===

==== History of regulation ====

One problem that encouraged deregulation was the way in which regulated industries often come to control the government [[regulation|regulatory agencies]] in a process known as [[regulatory capture]]. Industries then use regulation to serve their own interests, at the expense of the consumer. A similar pattern has been seen with the deregulation process itself, often effectively controlled by regulated industries through lobbying. Such political forces, however, exist in many other forms for other [[lobby group]]s.{{citation needed|date=December 2022}}

Examples of deregulated industries in the United States are banking, telecommunications, airlines, and natural resources.<ref>{{cite book |last1=Cutter |first1=Susan L. |last2=Renwick |first2=William H. |title=Exploitation Conservation Preservation: A Geographic Perspective on Natural Resource Use |date=2004 |publisher=Wiley |isbn=978-0-471-15225-5 |oclc=52554419 }}{{page needed|date=December 2022}}</ref>

During the [[Progressive Era]] (1890s–1920), [[POTUS|Presidents]] [[Theodore Roosevelt]], [[William Howard Taft]], and [[Woodrow Wilson]] instituted regulation on parts of the American economy, most notably big business and industry. Some prominent reforms were [[trust-busting]] (the destruction and banning of monopolies), the creation of laws protecting the American consumer, the creation of a federal income tax (by the [[Sixteenth Amendment to the United States Constitution|Sixteenth Amendment]]; the income tax used a [[progressive tax|progressive tax structure]] with especially high taxes on the wealthy), the establishment of the [[Federal Reserve]], the institution of shorter [[working hours]], higher [[wage]]s, better living conditions, better rights and privileges to trade unions, protection of the rights of [[Strike action|strikers]], banning of unfair labor practices, and the delivery of more [[social welfare|social services]] to the working classes and [[social safety net]]s to many unemployed workers, thus helping to create a [[welfare state]].{{citation needed|date=December 2022}}

During the Presidencies of [[Warren Harding]] (1921–23) and [[Calvin Coolidge]] (1923–29), the federal government generally pursued [[laissez-faire]] economic policies. After the onset of the [[Great Depression]], President [[Franklin D. Roosevelt]] implemented many economic regulations, including the [[National Industrial Recovery Act]] (which was struck down by the Supreme Court), regulation of trucking, airlines and communications, the [[Securities Exchange Act of 1934]], and the [[Glass–Steagall Act]] of 1933. These regulations stayed largely in place until [[Richard Nixon]]'s Administration.<ref>http://www.encyclopedia.com/doc/1G1-16514254.html{{Dead link|date=October 2009}}</ref>  In supporting his competition-limiting regulatory initiatives President Roosevelt blamed the excesses of big business for causing an [[economic bubble]].  However, historians lack consensus in describing the causal relationship between various events and the role of government economic policy in causing or ameliorating the Depression.{{citation needed|date=December 2022}}

==== 1970–2000<span class="anchor" id="Deregulation 1970–2000"></span> ====
Deregulation gained momentum in the 1970s, influenced by research by the [[Chicago school of economics]] and the theories of [[George Stigler]], [[Alfred E. Kahn]],<ref name="kahn_obit_nytimes">{{cite news
|url=https://www.nytimes.com/2010/12/29/business/29kahn.html
|title=Alfred E. Kahn Dies at 93; Prime Mover of Airline Deregulation
|first=Robert D.
|last=Hershy Jr.
|date=December 28, 2010
|newspaper=New York Times}}</ref> and others.<ref>{{cite journal |last1=Peltzman |first1=Sam |last2=Levine |first2=Michael E. |last3=Noll |first3=Roger G. |title=The Economic Theory of Regulation after a Decade of Deregulation |journal=Brookings Papers on Economic Activity. Microeconomics |date=1989 |volume=1989 |pages=1–59 |id={{ProQuest|217121225}} |doi=10.2307/2534719 |jstor=2534719 |url=https://www.brookings.edu/wp-content/uploads/1989/01/1989_bpeamicro_peltzman.pdf }}</ref>  The new ideas were widely embraced by both liberals and conservatives. Two leading think tanks in Washington, the [[Brookings Institution]] and the [[American Enterprise Institute]], were active in holding seminars and publishing studies advocating deregulatory initiatives throughout the 1970s and 1980s. Cornell economist Alfred E. Kahn played a central role in both theorizing and participating in the [[Carter Administration]]'s efforts to deregulate transportation.<ref name="kahn_obit_nytimes" /><ref>{{cite journal |last1=Kahn |first1=Alfred |title=Deregulation: Looking Backward and Looking Forward |journal=Yale Journal on Regulation |date=1990 |hdl=20.500.13051/8412 |hdl-access=free }}</ref>

==== Transportation ====

===== Nixon administration =====
The first comprehensive proposal to deregulate a major industry, transportation, originated in the [[Richard Nixon]] Administration and was forwarded to Congress in late 1971.{{sfn|Rose|Seely|Barrett|2006|p=154}} This proposal was initiated and developed by an interagency group that included the Council of Economic Advisors (represented by [[Hendrik S. Houthakker|Hendrik Houthakker]] and Thomas Gale Moore<ref>{{cite web
 | title = Thomas Gale Moore
 | publisher = The Hoover Institution, Stanford University
 | url = http://www.stanford.edu/~moore/Bio.html
 | access-date = 2012-06-11}}{{self-published inline|date=December 2022}}</ref>), White House Office of Consumer Affairs (represented by Jack Pearce), Department of Justice, Department of Transportation, Department of Labor, and other agencies.{{sfn|Rose|Seely|Barrett|2006|pp=152–60}}

The proposal addressed both rail and truck transportation, but not air carriage. (92d Congress, Senate Bill 2842)  The developers of this legislation in this Administration sought to cultivate support from commercial buyers of transportation services, [[consumer organization]]s, economists, and environmental organization leaders.{{sfn|Rose|Seely|Barrett|2006|pp=154–56}} This 'civil society' coalition became a template for coalitions influential in efforts to deregulate trucking and air transport later in the decade.

===== Ford administration =====
After Nixon left office, the [[Gerald Ford]] presidency, with the allied interests, secured passage of the first significant change in regulatory policy in a pro-competitive direction, in the [[Railroad Revitalization and Regulatory Reform Act of 1976]].{{citation needed|date=December 2022}}

===== Carter administration =====
President [[Jimmy Carter]] &ndash; aided by economic adviser Alfred E. Kahn<ref name="kahn_obit_nytimes" /> &ndash; devoted substantial effort to transportation deregulation, and worked with Congressional and civil society leaders to pass the [[Airline Deregulation Act]] on October 24, 1978 &ndash; the first federal government regulatory regime, since the 1930s, to be completely dismantled.<ref name="jimmy">{{cite journal |last1=Brown |first1=John Howard |title=Jimmy Carter, Alfred Kahn, and airline deregulation: anatomy of a policy success |journal=Independent Review |date=22 June 2014 |volume=19 |issue=1 |pages=85–100 |id={{Gale|A377778767}} {{ProQuest|1541534529}} |jstor=24563260 |url=https://digitalcommons.georgiasouthern.edu/econ-facpubs/80/ }}</ref><ref name="kahn_cornell">Lang, Susan S. [https://news.cornell.edu/stories/2010/12/alfred-kahn-father-airline-deregulation-dies-93 "Economist Alfred Kahn, 'father of airline deregulation' and former presidential adviser, dies at 93,"]
 December 27, 2010, ''[[Cornell Chronicle]],'' retrieved April 9, 2020</ref>

Carter also worked with Congress to produce the [[Staggers Rail Act]] (signed October 14, 1980), and the [[Motor Carrier Act of 1980]] (signed July 1, 1980).

===== 1970s deregulation effects =====
These were the major deregulation acts in transportation that set the general conceptual and legislative framework, which replaced the regulatory systems put in place between the 1880s and the 1930s. The dominant common theme of these Acts was to lessen [[barriers to entry]] in transport markets and promote more independent, competitive pricing among transport service providers, substituting the freed-up competitive market forces for detailed regulatory control of entry, exit, and price making in transport markets. Thus deregulation arose, though regulations to promote competition were put in place.{{citation needed|date=April 2020}}

===== Reagan administration =====

U.S. President [[Ronald Reagan]] campaigned on the promise of rolling back environmental regulations. His devotion to the economic beliefs of [[Milton Friedman]] led him to promote the deregulation of finance, agriculture, and transportation.{{sfn|Kleinknecht|2010|p=}} A series of substantial enactments were needed to work out the process of encouraging competition in transportation. Interstate buses were addressed in 1982, in the [[Bus Regulatory Reform Act]] of 1982. Freight forwarders (freight aggregators) got more freedoms in the [[Surface Freight Forwarder Deregulation Act of 1986]]. As many states continued to regulate the operations of motor carriers within their own state, the intrastate aspect of the trucking and bus industries was addressed in the [[Federal Aviation Administration Authorization Act of 1994]], which provided that "a State, political subdivision of a State, or political authority of two or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier." {{usc|49|14501}}(c)(1) (Supp. V 1999).

Ocean transportation was the last to be addressed. This was done in two acts, the [[Shipping Act of 1984]] and the [[Ocean Shipping Reform Act of 1998]]. These acts were less thoroughgoing than the legislation dealing with U.S. domestic transportation, in that they left in place the "conference" system in international ocean liner shipping, which historically embodied cartel mechanisms. However, these acts permitted independent rate-making by conference participants, and the 1998 Act permitted secret contract rates, which tend to undercut collective carrier pricing. According to the [[United States Federal Maritime Commission]], in an assessment in 2001, this appears to have opened up substantial competitive activity in ocean shipping, with beneficial economic results.{{citation needed|date=December 2022}}

==== Energy ====
The [[Emergency Petroleum Allocation Act]] was a regulating law, consisting of a mix of regulations and deregulation, which passed in response to [[OPEC]] price hikes and domestic price controls which affected the [[1973 oil crisis]] in the United States.  After adoption of this federal legislation, numerous state legislation known as [[Natural Gas Choice]] programs have sprung up in several states, as well as the District of Columbia. Natural Gas Choice programs allow residential and small volume natural gas users to compare purchases from natural gas suppliers with traditional utility companies.  There are currently hundreds of federally unregulated natural gas suppliers operating in the US. Regulation characteristics of Natural Gas Choice programs vary between the laws of the currently adoptive 21 states (as of 2008).

{{anchor|U.S. electricity}} Deregulation of the electricity sector in the U.S. began in 1992. The [[Energy Policy Act of 1992]] eliminated obstacles for wholesale electricity competition, but deregulation has yet to be introduced in all states.<ref>{{cite web | url = https://www.en-powered.com/blog/the-bumpy-road-to-energy-deregulation | title = The Bumpy Road to Energy Deregulation | publisher = EnPowered | date = 2016-03-28 | access-date = 2017-05-01 | archive-date = 2017-04-07 | archive-url = https://web.archive.org/web/20170407145323/https://www.en-powered.com/blog/the-bumpy-road-to-energy-deregulation | url-status = dead }}</ref> As of April 2014, 16 U.S. states ([[Connecticut]], [[Delaware]], [[Illinois]], [[Maine]], [[Maryland]], [[Massachusetts]], [[Michigan]], [[Montana]], [[New Hampshire]], [[New Jersey]], [[New York (state)|New York]], [[Ohio]], [[Oregon]], [[Pennsylvania]], [[Rhode Island]], and [[Texas]]) and the [[District of Columbia]] have introduced deregulated [[electricity market]]s to consumers in some capacity. Additionally, seven states ([[Arizona]], [[Arkansas]], [[California]], [[Nevada]], [[New Mexico]], [[Virginia]], and [[Wyoming]]) began the process of electricity deregulation in some capacity but have since suspended deregulation efforts.<ref>
  {{cite web
  | url = http://www.electricitylocal.com/resources/deregulation/
  | title = Electricity Deregulation Map of the United States
  | publisher = Electricity Local
  | access-date = 2014-04-23}}</ref>

==== Communications ====
{{See also|Telecommunications Act of 1996|Concentration of media ownership}}

Deregulation was put into effect in the communications industry by the government at the start of the [[Multi-Channel Transition]] era.{{sfn|Lotz|2007|p=47}} This deregulation put into place a division of labor between the studios and the networks.{{sfn|Lotz|2007|p=82}} Communications in the United States (and internationally) are areas in which both technology and regulatory policy have been in flux. The rapid development of computer and communications technology&nbsp;– particularly the Internet&nbsp;– have increased the size and variety of communications offerings. Wireless, traditional landline telephone, and cable companies increasingly invade each other's traditional markets and compete across a broad spectrum of activities. The [[Federal Communications Commission]] and Congress appear to be attempting to facilitate this evolution. In mainstream economic thinking, development of this competition would militate against detailed regulatory control of prices and service offerings, and hence favor deregulation of prices and entry into markets.<ref>{{citation
|last=Crandall
|first=Robert W.
|title=Competition and Chaos – U.S. Telecommunications Since the 1996 Telecom Act
|publisher=[[Brookings Institution]]
|isbn=978-0-8157-1617-4
|date=1 December 2004
}}{{page needed|date=December 2022}}</ref> On the other hand, there exists substantial concern about concentration of media ownership resulting from relaxation of historic controls on media ownership designed to safeguard diversity of viewpoint and open discussion in the society, and about what some perceive as high prices in cable company offerings at this point.{{citation needed|date=December 2022}}

==== Finance ====
The [[financial sector]] in the U.S. has been considerably deregulated in recent decades, which has allowed for greater [[financial risk]]taking. The financial sector used its considerable political sway in [[U.S. Congress|Congress]] and in the political establishment and influenced the ideology of political institutions to press for more and more deregulation.{{sfn|Johnson|Kwak|2010|pp=20, 133, 150}} Among the most important of the regulatory changes was the [[Depository Institutions Deregulation and Monetary Control Act]] of 1980, which repealed the parts of the [[Glass–Steagall Act]] regarding interest rate regulation via retail banking. The [[Financial Services Modernization Act]] of 1999 repealed part of the Glass–Steagall Act of 1933, removing barriers in the market that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company.

Such deregulation of the financial sector in the United States fostered greater risktaking by finance sector firms through the creation of [[financial innovation|innovative financial]] [[financial instrument|instruments]] and practices, including [[securitization]] of loan obligations of various sorts and [[credit default swap]]s.{{sfn|Johnson|Kwak|2010|pp=88-90}} This caused a series of financial crises, including the [[savings and loan crisis]], the [[Long-Term Capital Management]] (LTCM) crisis, each of which necessitated major bailouts, and the derivatives scandals of 1994.<ref>{{cite news|newspaper=[[Financial Times]]|place=London|date=March 19, 2013|url=https://www.ft.com/content/32cca748-8fe8-11e2-9239-00144feabdc0 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/32cca748-8fe8-11e2-9239-00144feabdc0 |archive-date=2022-12-10 |url-access=subscription|title=Markets: The Ghosts of '94 Veteran bond traders fear the omens point to a repeat of the catastrophic collapse of the mid-nineties}}</ref><ref name="pbs.org">{{cite web|publisher=PBS |series=[[Frontline (U.S. TV program)]]|date=October 20, 2009|url=https://www.pbs.org/wgbh/pages/frontline/warning/etc/warnings.html|title=The Warning: Two Early Derivative Blowups}}</ref> These warning signs were ignored as financial deregulating continued, even in view of the inadequacy of [[industry self-regulation]] as shown by the financial collapses and bailout. The 1998 bailout of LTCM sent the signal to large "[[too-big-to-fail]]" financial firms that they would not have to suffer the [[moral hazard|consequences of the great risks]] they take. Thus, the greater risktaking allowed by deregulation and encouraged by the bailout paved the way for the [[2008 financial crisis]].{{sfn|Johnson|Kwak|2010|pp=147-148}}<ref name="pbs.org"/>

==== Related legislation ====
* 1976 – [[Hart-Scott-Rodino Antitrust Improvements Act]] PL 94-435
* 1977 – [[Emergency Natural Gas Act]] PL 95-2
* 1978 – [[Airline Deregulation Act]] PL 95-50
* 1978 – [[National Gas Policy Act]] PL 95-621
* 1980 – [[Depository Institutions Deregulation and Monetary Control Act]] PL 96-221
* 1980 – [[Motor Carrier Act of 1980|Motor Carrier Act]] PL 96-296
* 1980 – [[Regulatory Flexibility Act]] PL 96-354
* 1980 – [[Staggers Rail Act]] PL 96-448
* 1982 – [[Garn–St. Germain Depository Institutions Act]] PL 97-320
* 1982 – [[Bus Regulatory Reform Act]] PL 97-261
* 1989 – [[Natural Gas Wellhead Decontrol Act]] PL 101-60
* 1992 – [[Energy Policy Act of 1992|National Energy Policy Act]] PL 102-486
* 1996 – [[Telecommunications Act of 1996|Telecommunications Act]] PL 104-104
* 1999 – [[Gramm-Leach-Bliley Act]] PL 106-102