The Changing Nature of Government Regulation of Business

The unprecedented expansion in government regulation of business in the United States in recent years has altered fundamental aspects of business-government relations. This article considers some of the implications of that change; it does not attempt to evaluate the worthiness of the regulatory programs themselves. Rather, the impacts are examined from the viewpoint of the business firm. The cost of business compliance with government regulation is a factor that properly enters into any reasonable benefit/cost analysis of regulation, as one factor among many that must be weighed in the policy process. The concept of a regulated industry has, in a way, become archaic. We now live in an economy in which every industry is feeling the rising power of government regulation in each major aspect of its day-to-day operations. Virtually every company in the United States knows the impacts of a vast array of government involvement in its internal decision making. If we could accurately measure the pervasiveness of government intervention, I doubt that we would find the economists' favorites -electric utilities and railroads-at the top of the list. More likely, we would encounter such giants of the manufacturing sector as automobile, aerospace, and chemical companies, with the oil industry not too far behind. Because of the rapid proliferation of govern-