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16 - Government Regulation of Business

Published online by Cambridge University Press:  28 March 2008

By
Richard Vietor
Edited by
Stanley L. Engerman  and
Robert E. Gallman
Richard Vietor
Affiliation:
Harvard University
Stanley L. Engerman
Affiliation:
University of Rochester, New York
Robert E. Gallman
Affiliation:
University of North Carolina, Chapel Hill
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Summary

Government regulation of business in America has reflected a unique mix of ideas, policies, and institutional arrangements. In Europe, Japan, Canada, and Latin America, combinations of state-owned enterprise and discretionary administrative supervision were the normal forms of governmental control of business. In the United States, by contrast, semi-autonomous bureaucracies, with formalized procedures and close judicial oversight, developed detailed control over a substantial segment of private enterprise.

Government regulation in the United States has generally not been an affirmative public act, primarily because the citizenry has been so suspicious of central government authority. In political debate, proponents of regulation have felt compelled to argue that some sorts of market or managerial failure justified regulatory intervention. These include what economists call externalities (such as environmental effluents), informational problems (such as consumer-product labeling), public goods (airwaves or the banking system), the presence of natural monopoly (in which one firm has lower unit costs than two or more firms at any level of output), and anticompetitive behavior (leading to price discrimination or collusion). Yet, quite often the impetus for federal regulation came from business managers seeking to mitigate “excessive” domestic or international competition, macroeconomic instabilities, perceived structural problems (such as depleting resources), or even political interference (from state and local legislatures or popular movements).

Type
Chapter
Information
The Cambridge Economic History of the United States , pp. 969 - 1012
Publisher: Cambridge University Press
Print publication year: 2000

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