The Costs Imposed By Economic Regulation Are Falling

WHY IS THIS IMPORTANT? In fast-moving, innovation-based markets, some forms of economic regulation place an undue drag on economic growth. Moreover, the rapid pace of change makes it less likely that government can adapt economic regulations fast enough. For example, the delay of the FCC in licensing cellular telephones in 1982 is estimated to have cost the U.S. economy $83 billion.⁴⁴ New Economy factors have not reduced the need for environmental or social regulation (e.g., worker safety or pollution control), but they have allowed regulation to be more flexible and supportive of innovation.

THE TREND: () Between 1983 and 1997, the inefficiency costs of economic regulation borne by both industry and consumers have fallen almost 70 percent as a share of GDP. The deregulation of transportation, (including trucking and airlines), natural gas and oil, financial services, and telecommunications has meant that, on net, competition and innovation have saved American consumers billions of dollars. However, the costs of regulation still remain high (between $71 billion and $223 billion, depending on the estimate used), suggesting that further economic deregulation (of electric and gas utilities, for example) could produce further benefits.

THE DATA:

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Index Home | Introduction
SECTION I | SECTION II | SECTION III
Productivity Paradox | Knowledge Economy
Nine Myths | Data Sources | Endnotes | The Authors

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