Regulation

From the very earliest times, communities have always regulated some activities in order to prevent harms and abuses to community members. Regulations have not always been wise; often they have gone too far, toward oppressive and intrusive controls. But usually they serve important and valuable purposes.

Nowadays most people are familiar with regulations for safety and public health. Even small towns apply such rules, but in the larger cities and metropolises, and even regional communities, regulation grows complicated and extensive. Such regulation often involves highly systematic guidance and controls over an unexpectedly wide array of conditions.

In modern societies, “social” regulation (e.g., for public health, clean air, safety on the job) is often controversial. “Economic” regulation goes on more quietly, even though it has enormous range and variety (e.g., regulating utility prices, business accounting, and service quality). “Protective” regulation, even more quietly, sets standards for honest business practices.

To understand local-community regulation, it is important to know about the large-scale versions that states and national governments have developed. In this entry, large-scale regulations are reviewed first, with some emphasis on the United States. But even larger-scale regulation tries to achieve results that will reach down into local communities throughout the country.

Regulation can mean several things. A regulation is a rule (e.g., “each house must be set back 30 feet from the road,” or “motorists must not exceed the speed limit”). However, a regulation is also a process (e.g., if the cable company wants to raise monthly fees, it must go through a regulatory hearing by the regulatory commission, which then decides what fee to set).

Regulation is almost always a means of compromise among all of the interests (consumers, citizens, producers, investors, suppliers) with a stake in the outcome. It may rely on clear guidelines (such as water purity or minimum profit levels), but usually there are conflicting interests.

Regulation is therefore usually controversial, often intensely so, as each group presses its own interests. Regulation tries to prevent harmful things, so it has to prevent businesses from doing a lot of things that would otherwise make them money. The businesses naturally object, saying that government interference is ruining “free markets” and even hurting consumers. Many of those claims are just empty talk, which is false or misleading.