Deregulation describes the leniency in application of regulations on industries either through reduction or complete elimination with an intent of creating a friendlier environment to do business. An example is removal of a regulation that curtails a firm’s ability to compete overseas. In the 1950s, Reagan campaigned for virtues of unregulated capitalism to promote economic freedom though removal of regulations (Foner, 2013). During President Reagan reign, businesses complained about unfair interference precipitated by environmental protection and workplace regulations. The president gave regulatory agencies orders to cut back on the regulations. Since the 1900s, deregulation has existed through government intervention, consequently creating a free market. In the 1970s and 1980s, deregulation became more necessary after some businesses lobbied the government to introduce regulatory reform to allow them make more profit (Foner, 2013). Deregulation is necessary since in instances where there has been elimination of regulations, businesses have flourished, thereby implying that deregulation has a positive impact on American lives.
First, deregulation helps Americans by making their industries more competitive. This is beneficial to both consumers and the businesses. Such an example of deregulation that has had a positive impact on Americans is the removal of regulation in the banking sector which had placed restrictions on interest’s rates. Today, the removal of lending and deposits limitations have helped Americans borrow more and the banks have experienced growth in lending leading to flourished businesses.
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In 1978, during Ronald Reagan administration, the deregulation act of 1978 was passed. The original deregulation helped Americans at that time by averting unreasonable concentrations which would have given carriers a leeway to increase air ticket prices or reduce services. The deregulation shielded Americans from paying unreasonable prices and instead exposed them to quality air services. The implemented deregulation impacted the citizens positively by lowering prices to consumers and achieved lowered operational costs for the Arline carriers. An example of such markets where deregulation works, include telecoms and airlines ( Amadeo, 2019) . Removal of regulatory framework leads to an increase in number of service providers consequently achieving price decrease which stands to benefits consumers in the American Market. Low costs airlines have emerged coupled with decreased telephone call rates.
Elimination of regulations is imperative in spurring growth of new and existing companies. In addition, deregulation makes companies efficient while eliminating the firms that offer substandard service or product quality or those which charge exorbitant prices. Deregulation paves way for new competition whose resultant outcome is creation of new jobs and driven down prices which is advantageous to consumers. The Council of Economic Advisors has estimated that deregulation approach adopted by the Federal government results to a rise in household real income by $3,100 every year, broadened choice and improved productivity (Porter, 2018). Through increased choice and productivity, the deregulation efforts cuts businesses red tape and gives them latitude to create additional job opportunities (Foner, 2013). Deregulation would not only benefit consumers but also the government through savings consequently leading to economic growth.
Deregulation gives organizations the latitude to determine operational processes and strategic moves without the government’s interference. The non-interference implies more liberty to launch new products, diversify into new market niches (Foner, 2013). Without regulations, businesses freely interact with consumers directly without the participation of the government in setting the agenda. Americans can benefit from such an environment, through having a broadened pool of products to choose from coupled with reduced product prices. Busineses are able to understand the consumer needs better from the increased interactions thereby leading to production of line of goods and services that satisfactorily addresses consumer’s needs. Deregulation exposes American consumers to more choices which affects demand for products through switching from organizations whose products are inferior and pricey. The Americans reap from the active participation though efficient consumer behaviour and purchase decisions. Organizations reward consumers for demonstrated superior customer service and loyalty.
Deregulation by the government leads to reduction of regulatory costs that would otherwise be incurred by government agencies. Regulation results in costs associated with compliance paper work hours which are incurred to the tune of 10 billion annually. The elimination of regulation frees up billions of dollars in resources which the government can redirect to other constructive projects that directly benefits the Americans (Porter, 2018). For example, the government can invest the freed resources into building hospitals and funding Medicare, setting up disease research centers, constructing roads and boosting the education sector which has an eventual positive impact on American Lives.
Elimination of regulations by the state agencies would spur innovation in various sectors. According to Porter (2018), the regulated industries tend to show stagnancy in maintaining the status quo thereby leading to inefficiencies. Decontrol sparks innovation in respect to new technologies, machines and new ways of doing things which impacts the American lives positively.
Efficiencies for the businesses are created when the state through deregulation gives full play to market forces thereby implying reduced centralized planning. Decontrol is needed in more sectors to bring in synergies that lead to realization of win-win situation to the consumers and the businesses. Deregulation in the energy sector would create savings on power and gas bills, give consumers choice for greener energy and reduce likelihood of service interruption (Porter, 2018). Consumers can enjoy improved customer service and take advantage of alternative loyalty programs and suppliers discount. The arguments point to the conclusion that deregulation is necessary due to the multiple positive impacts that would be realized by Americans.
References
Amadeo, K. (2019). Deregulation Pros, Cons, and Examples, Why Airline Travel Is So Miserable, and Other Effects of Deregulation, https://www.thebalance.com/deregulation-definition-pros-cons-examples-3305921
Foner, E. (2013). Give Me Liberty! An American History: Seagull Fourth Edition (Vol. 2). WW Norton & Company.
Porter, M. E. (2018). On thinking about deregulation and competition. In The telecommunications revolution (pp. 39-44). Routledge.
