Deregulation Definition – Deregulation History and it’s Status Today


Most claim deregulation leads to prosperity and growth, while history tells us otherwise.

What is deregulation, and is it good for everyone or just business and the economy? It is also a hot topic for most government officials as well as big businesses. Like most government policies, you can’t please everyone all the time. Republicans are the first to complain about regulations in the name of ‘less government’, dating back to Ronald Reagan, although Carter and Clinton also played a role in rolling back regulations. This process may be true for a small number of instances and at certain times, but in most cases, it usually turns into a disaster.

Deregulation Definition

First of all, deregulation, by definition, means the removal or simplification of any government rules and regulations that constrain the normal operations of market forces. In most industries, there are certain rules and regulations which a business must abide by, which are created and monitored by industry associations and watchdogs, the government, and in some cases, ethics committees. Deregulation is when the government eases back on certain rules and regulations. The rationale for it is that fewer and simpler regulations lead to raised levels of competitiveness, which results in higher productivity, improved efficiency and generally speaking, lower prices.

When deregulation works as it is intended, it provides advantages to the consumer in the form of lower prices, more providers and better products. It is believed that with less red tape, a company not doing so well under regulation could emerge from deregulation more successful than it was before with the regulations in place. Some of the disadvantages to this are that companies doing well with regulations in place see it as a downside, by giving it’s competitors an unfair advantage by giving it a fairer shot at competing. It can also lead to a breakdown within the entire industry as different businesses use the new deregulation’s to their own advantage. This would be in a perfect world I would imagine where everyone has an ethical business model and ‘plays well with others’, and ‘plays by the rules of business’ so to speak.

Finance and Energy Deregulation

Now with that out of the way, the concept may look good on paper, but unfortunately, not all businesses have an ethical or moral concern about customers or the environment for that matter. In fact, finance deregulation was the primary suspect in the U.S. financial meltdown of 2007-2009 and the global financial meltdown of 2008-2009. Electricity and energy deregulation led to the California electricity crisis of 2000 and 2001. There were energy shortages that were manipulated by energy companies, primarily Enron, which was a major player in the energy industry, manipulated the market by creating a demand supply gap, which in turn created an artificial shortage. Enron later was charged with accounting fraud in the Enron scandal and went bankrupt in late 2001. Enron’s influence over the government led to a blind faith which led to the looting of billions of dollars from American citizens.

The new Dodd-Frank financial regulatory reform bill is now under heavy attack by the Republicans and they plan to limit controls on Wall Street, which are more than likely being motivated by lobbyists from JPMorgan, Chase, and Bank of America, according to Bloomberg News. They also are attempting to limit or eliminate the Volcker rule, which limits the banks’ ability to make any trades with their own money. According to Congressman Barney Frank, (D-MA), whom is a co-creator of the financial reform legislation, told the Boston Globe that the “regulators were already underfunded, and that the Republicans are attempting to cripple legislation by failing to fund it.”

While some, perhaps even most businesses may operate with everyone’s best interests in mind and exercise corporate responsibility towards the community, society, and environment, and still maintain profitability, others apparently don’t quite see it that way. They think they are entitled to do as they please, with little or no concern over the consequences for their actions to their fellow man, animals, and environment. They cut corners to save a buck, to put it mildly, and most of the time those corners wind up being the environment or customers, or both. Take for example the BP Oil Spill in April of 2010, it is documented that BP made a series of money-saving shortcuts to save the company time and/or money.

Deregulation is often the cry of the term ‘less government’, which was begun during the Reagan era. The industry is more or less responsible for policing themselves. The Energy Policy Act of 2005, which was based on the recommendations of Dick Cheney’s secret energy policy task force which promoted deregulation and made regulation a dirty four letter word. However, the financial crisis has led to revised thinking on that, and in some circles it is not so much anymore. But, as we are now finding out, regulation to this day is still perceived by many to be a business killer, job killer, and a waste of monies spent versus profits. That is, of course, according to the GOP and business ends of the equation for which they try and sell it to the general population.

Environmental and Mining Deregulation

Mining is another industry that has been plagued by disasters, and although those regulations have improved somewhat, the rope-a-dope regulatory process has let the coal mining companies avoid enforcement and penalties through years of violations appeals. The mine accident in Montcoal, VA on April 5, 2010 which killed 29 miners was investigated and in May 2011, an independent team of investigators placed the blame solely on Massey, concluding that it had made life difficult for miners who had tried to address safety and built a culture in which wrongdoing became acceptable. OF course, two weeks later, Massey Energy’s Ex-Chief rejected those findings.

And for those that think coal is still cheap and doesn’t need regulations, the true cost of coal is roughly $500 billion US dollars a year. Another factor when several coal companies complain about regulation costs, coal industry insiders admit that the technologies that clean smokestacks are available and affordable, and capturing pollutants adds jobs.

While deregulation becomes a must have for businesses to survive, or so they say, at what cost do we put on the consumers, environment, and nature. While economics and job creation is the main topic today for many these days, deregulation also becomes more popular in hard economic times. This should not, however, be a time to give business a free pass to do as they please and rape and pillage the planet for anything they can grab in the name of free enterprise and profits. Another rising problem from deregulation is phone deregulation, which would hurt low income families and cut protections for the consumer.

With the ‘Tea Party’ takeover of state and local governments, as well as gaining more power in Washington, the Republicans are pushing for environmental deregulation at the state level. Not only that, but the new GOP agenda in Washington D.C. appears to be headed towards blocking the new EPA climate change rules, not to mention the Clean Water Act.

So, with all of these new ground shaking events on the horizon, at this point, and our current business and political atmosphere, I see it as a very bad thing. Maybe if there ever comes the time or place where we can fully trust business to accommodate everyone, and not just shareholders, and place social, environmental, and community needs as high as profits in their business model, I have to say no to deregulation in any form at this time. For some reason I just do not trust the current business model which is ongoing and prevalent in most battles over deregulation today. Peace my friends and keep fighting the good fight!

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