Deregulation

Deregulation is the removal or reduction of the demands of regulation. It often takes the form of eliminating a regulation entirely (e.g., government deregulation of airline routes and fares in 1977) or altering an existing regulation in a way that scales it back (e.g., telecommunications in 1996). One important issue with regard to deregulation is which level of government (multinational bodies, national, state, local) makes the decision to deregulate in different circumstances. Different countries will resolve this issue differently. In the United States, some deregulatory matters are within the purview of the federal government (generally when there is interstate commerce involved) and other matters will be decided by states and localities. Other countries have a different mix of local- and national-level regulatory decision making, and in still other contexts—such as the European Union—decisions about deregulation will be made by multilateral bodies.

There are a number of sources of deregulation. The most common source comes when a legislative body (with or without the concurrence of the executive branch) passes legislation that has deregulatory effects. Regulatory bodies, including government agencies, are also sources of deregulation—through the deletion or modification of the rules that enact a piece of regulatory legislation, one practical effect may be deregulation. Finally, courts may strike down a regulation as illegal or unconstitutional and such an action would also have a deregulatory effect.

In general, we should expect businesses and industries to support deregulation when a particular regulation is costly and limits their autonomy. (Some regulations are favorable to business and industries, and we should not expect deregulatory pressures in such cases.) Deregulation will almost always be in the interests of individual businesses, industries, and the institution of business. Whether the interests and desires of business will lead to regulation or deregulation depends in large part on the broader social climate and the prevailing political ideologies that have power at any given moment.