Economic Deregulation in the United States: Lessons for America Lessons forChina

Over the past decade, the federal government of the United States has eliminated or substantially reduced the regulation of price and entry in domestic aviation, trucking, railroads, interstate buses, ocean shipping, long-distance communications, energy, and financial insti-tutions. In addition, the federal government eliminated the general controls or guidelines on prices and wages throughout the economy. The focus ofthis paper is on the lessons thatmight be learned from the U.S. experience with economic deregulation. For the United States, deregulation has caused certain problems but, in general, the net benefits have been higher than first expected. Although the polit-ical and economic system in China is very different from that in the United States, the American experience with economicderegulation may also provide some important general lessons for China. Political Lessons Fora political economist, the political lessons from the U.S. expe-rience with deregulation are the most intriguing, seeming to defy much of the conventional wisdom. The processes that led to dereg-ulation of most of the above industries shared the following five general characteristics. First, deregulatory actions were initiated by the regulatory agen-cies. About the same time that economists concluded that the regu-latory commissions were “captive ” of the regulated industries, the commissions began to prove them wrong. The Federal Communi