IN the eyes of some Americans, George Bush's promise of a ``kinder, gentler nation'' can be fulfilled, in part, by the reintroduction of government controls on a number of areas that affect public health and safety. For them, the bloom is off the rose of deregulation. President Reagan came into office eight years ago pledging to ``get government off the backs of the American people.'' He slashed government red tape that in his view entangled the productive energies of American enterprise. Along with supply-side tax cuts, deregulation was part of a strategy to stimulate growth by lowering production costs.
Now, some critics contend that the process has gone too far. They point to crowded skies and rising fares in the airline industry, the threatened collapse of the savings and loan industry, merger mania in the corporate world, acid rain and coastal pollution, and reports of safety lapses in the workplace as evidence that government must reassert itself as a protector of the public interest. It is unrealistic, these critics say, to expect the free market to be both the power train and the brakes in the US economy.
Before the drumbeat for ``reregulation'' grows too loud, it may be well to recall some basic considerations.
First, deregulation wasn't invented by Ronald Reagan and a cabal of pro-business economists. Deregulation of the airline and trucking industries began under President Carter. For a decade there has been a degree of bipartisan recognition that government can, indeed, dampen initiative and misallocate resources.
Next, government controls, like politics, make for strange bedfellows. In the airline, trucking, and other industries, some of the fiercest opponents of deregulation were industry executives themselves, many of whom were queasy over the prospect of vigorous competition. A regulatory environment, every bit as much as laissez faire, can foster monopoly, price fixing, and sweetheart deals.
Finally, American consumers unquestionably have benefited from deregulation in lower prices and a wider array of services, and American workers have benefited to the extent that deregulation has contributed to sustained growth.
There may well be a need for stricter government oversight in certain economic spheres. For instance, airlines must not, under competitive pressures, take shortcuts on aircraft maintenance or crew readiness. And there is manifold evidence that government must give a higher priority to protecting the environment.
But the imposition or enforcement of government regulations should, in general, be done with a light and deft touch, in observance of a few guidelines:
The government's role in the marketplace should be limited to safeguarding against genuine threats to public health and safety, and should not be aimed at the achievement of a vague economic, still less political, agenda.
Regulatory decisions should be made on a case-by-case basis, not in response to a general preference for public over private decisionmaking, or vice versa.
There should be, in each instance, a compelling case for government action and clear proof that a regulation is the best means to achieve the desired goal.
Regulators should be mindful of the ``law of unintended consequences,'' recognizing that all regulation imposes economic costs that ultimately are passed along, often to consumers.
Above all, members of Congress and regulatory officials should bear in mind that, throughout the world, there is an inverse correlation between economic growth and heavy-handed government intervention in the marketplace.