Question

Given the fragmented nature of the U.S. economy and the extensive freedom given to private interests, which sector can be trusted to advance policies that are most likely to create economic growth?

Answer 1

The effects of regulation on economic activity are difficult to measure and thus too often are neglected in the debates over economic policy. The World Bank’s senior vice president and chief economist, Kaushik Basu, explains this is because regulations affect the “nuts and bolts” and “plumbing” in the economy

Regulations affect all sectors of the U.S. economy. Susan Dudley and Jerry Brito’s primer on regulation follows “a day in the life of a regulated American family” to illustrate regulatory policy’s influence on many areas, including telemarketing, utilities, consumer product safety, water quality, food nutritional information, the pricing of produce and meat, automobile safety (air bags), high-occupancy vehicle lanes and highways, workplace safety, employee benefits (both health insurance and retirement savings), and television broadcasting. When one realizes how these rules affect every aspect of how we earn and spend our money and the quantity, quality, and price of all these things we buy and sell it is clear that we all are essentially “stakeholders” in all kinds of regulations.

ome major aspects and sectors of the U.S. economy affected by regulations are:

• Antitrust (or competition) policy and regulation;
• Transportation industries (including airlines, taxis);
• Communications: TV, telephone, internet (including the “net neutrality” issue);
• Utilities (electricity);
• Product quality or consumer safety (including drugs and food);
• Environmental; this is probably the most economically significant category of regulations during the Obama presidency