Regulation. In its simplest form the concept "consists of requirements the government imposes on private firms and individuals to achieve government's purposes." For some, government regulation is a benefit which protects the public from health risks, pollution, and predatory corporations. For others, government regulation discourages innovation, encourages waste, diminishes job growth, increases corruption, and in general, exercises an unnecessary amount of control over an individual's personal life.
In recent years Americans have raised numerous complaints about their increasingly regulated society. Regulation, however, has a history that dates back to the ancients, particularly in the area of wage and price controls. According to famous ancients such as Plato, government regulation was needed, but excessive control over commerce and other matters was unwise and unnecessary.
Although the American Founders allowed government regulation of commerce and money in the Constitution, their personal writings suggest their support for only a limited amount. For example, Thomas Paine noted that the American colonies had flourished before the British began to enact stricter regulations. John Adams declared that "regulation of prices will produce ruin sooner than safety." James Madison warned against excessive legislation because it could promote government corruption. Lastly, Adam Smith, a man whose economic insights heavily influenced the Founders, stated:
No regulation of commerce can increase the quantity of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society than that into which it would have gone of its own accord.
The Founders' ideas of limited regulation began to wane soon after the country's birth in light of the problems of the new Industrial Age (e.g. working conditions), the emergence of the so-called "Robber Barons", and Big Business. Inspired by socialist ideas coming out of Europe, American Progressives argued for greater government intervention in the market on the grounds that businesses' quest for profit must be prevented from creating harm for individual consumers and society as a whole. In that vein, some of the first major federal regulatory solutions were the Sherman Anti-Trust Act (1890) and the establishment of the Interstate Commerce Commission (1887).
The decades following saw continued growth in government. Franklin D. Roosevelt's vision of a society based on "freedom from want" in light of the economic effects of the Great Depression formed the philosophical basis of the The New Deal, creating hitherto unprecedented amounts of government intervention. The National Recovery Act (NRA) alone, according to one source, "established government controls over most manufacturing industries." Other laws created during this time regulated most of the agriculture, banking, and utility sectors. By the end of WWII, government was tasked with guaranteeing a new Bill of Rights, an "economic" one:
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education.
But it was Lyndon Johnson's vision of a Great Society that solidified the progressive vision of government taking a fundamental role in providing for economic and social needs, with programs such as Medicare, the Elementary and Secondary Education Act, Head Start, and the development of the Housing and Urban Development agency.
In recent years federal regulation has continued to expand and grow. Some examples of this include the Sarbanes-Oxley Act of 2002, passed in an attempt to increase corporate accountability in the wake of scandals such as Enron; the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, passed in response to the financial crisis of 2008 and attempting to "empower… regulators to aggressively pursue financial fraud, conflicts of interest and manipulation of the system..."; and Obamacare, passed in response to rising numbers of uninsured and health care costs, the 2010 law which enacted a variety of health care regulations on the American public.
As mentioned above, regulations such as these are enacted in order to protect the public from predatory corporations or harmful practices. Some argue, however, that government regulation actually promotes corruption in the form of crony capitalism, for it encourages corporations to lobby for political regulation to stifle their competition, rather than relying on hard work and innovation to outdo their competitors. It is also believed that regulators face the possibility of being "'captured' by the industries they regulate," which in turn results in regulations "that favor the industry."
Because government regulations such as Dodd-Frank and Obamacare are often lengthy and highly-specific, Congress typically delegates regulatory enforcement to bureaucratic agencies known as the "fourth branch of government." As a consequence, considerable law-making is carried out by unelected officials who cannot be held accountable at the ballot box for their actions.
Today, regulatory costs absorb 12 percent of total GDP, prompting many economists to question if regulations cost far more than they are worth. Though by no means a flawless measure of the scope of the regulatory state, the Federal Register--which includes all proposed and final federal regulations--has grown 7-fold in size since the 1940s. In 2010, the Federal Register actually hit a record-high of 81,405 pages; in 2011 it was only slightly below that with 81,247 pages. Total regulatory costs reached $1.75 trillion in 2008, exceeding both Canada's and Mexico's gross national income.
Acknowledging conservatives' concerns over excessive regulation, politicians from both sides of the aisle have been vocal about the need for regulatory reform. Over the years, various forms of legislation have been enacted to overhaul the government regulatory process. A past example of this is the Regulatory Flexibility Act of 1980, which sought to eliminate some regulations for small businesses. More recently, attempts to curb the growth of regulation can be seen in the REINS Act, the Regulatory Accountability Act of 2011, and the Regulatory Freeze for Jobs Act of 2012. President Obama has also pledged to reduce regulatory measures; however, recent research suggests that his administration has actually increased the size and scope of government regulation rather than reduced it.
As contentions increase over the growing regulations Americans face, this topic takes a look at the history and philosophical ideas behind government regulation. Additionally, the topic traces the growth, cost, and types of regulation in government today.
U.S. Department of Agriculture Study Guide
U.S. Food and Drug Administration Study Guide
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