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Book Review: Regulation and the Reagan Era

Regulation and the Reagan Era, Edited by Roger E. Meiners and Bruce Yandle, is a candid insiders’ account of the successes and failures of federal regulatory reform efforts commencing with the administrations of Gerald Ford and Jimmy Carter and culminating during the early years of Ronald Reagan’s presidency. The book’s seventeen contributors were closely associated with Reagan administration efforts to reduce regulatory over-sight, and they have personal experience in several government agencies, academia, and private business.

The book reviews and evaluates deregulatory activities across a broad range of agencies. Central conclusions are that the regulatory hand of government has been far too heavy, that regulations have been created and administered for the benefit of regulated firms, and that regulation has impaired social welfare.

Although their tone is a bit strident at times, the book’s contributors are objective and most of their conclusions will be accepted by most economists. Regulation and the Reagan Era is a well-written account and, given its wide-ranging coverage and multiple authorship, an exceptionally coherent and well-organized product.

A foreword by the Brookings Institution’s Robert W. Crandell provides a broad and useful overview of the place of regulation in the larger scheme of economic issues. The body has three sections, the first a brief review of the theoretical and political roots of the deregulation initiative. Chapter 1, by editors Roger Meiners and Bruce Yandle, is an excellent survey of the major deregulatory efforts and lessons learned in the process. Chapter 2, a synopsis of regulation economics and of the political process by which regulation is created, reviews literature from which an “economic theory of regulation” has emerged. “Real political clout,” the chapter concludes, “is one of the most important, if not the most important, determinants of regulation” (pp. 29—30).

The second section (chapters 3—9) details agency-by-agency accomplishments and failures of major deregulatory activities through year six of the Reagan administration. The appropriateness and effectiveness of these activities are weighed in terms of “public choice theory” as developed by George J. Stigler, “The Theory of Economic Regulation,” Bell Journal (1971); Richard A. Posner, “Theories of Economic Regulation,” Bell Journal (1974); and James M. Buchanan, et al., eds., Towards a Theory of the Rent-Seeking Society (1980). The “New Learning” joined in these theoretical roots rejects the “public interest” view of regulation as a guardian against the threat of market failure. The economic theory of regulation portrays government not as a high-minded and impartial servant of the public at large but as an assemblage of rent-seekers. The politicians who draft the regulations and the various pressure groups that lobby for the laws creating them, as well as the regulators who administer the results, are all economic rationalists who seek to maximize their own self-interest.