Project 2

Project 2

Distinguish between Economic Regulation and Social Regulation

Economic Regulation

By the last quarter of the nineteenth century, states increasingly enacted more ambitious regulations to ameliorate the harsh consequences of industrialization. They began to regulate workplace safety and limit the hours of work in hazardous occupations. Growing state regulation of railroads was especially controversial (Stiglitz, 2010, 66-78). It raised fundamental questions about the authority of the states to control prices and the extent to which they could regulate interstate commerce. Although inclined to leave most regulatory activity to the states, Congress in 1887 created the Interstate Commerce Commission to oversee interstate railroad operations. This first major exercise of federal regulatory authority provided a model for the national regulatory bodies that emerged in the twentieth century.

The states exercised broad regulatory authority, but they could not interfere with interstate commerce or infringe on constitutionally protected property rights. The Supreme Court early established the principle that the commerce clause, by its own force, limited state power to obstruct interstate commerce (Stiglitz, 2010, 66-78). In other words, the commerce clause created a national market for goods. At the same time the Supreme Court upheld federal authority over commerce when federal and state laws conflicted.

Social Regulation

Social regulation is a shared competence (i.e., responsibility for it is shared between the EU's institutions and the member states), but the principle of subsidiary provides an uncertain guide to the appropriate activities of each actor. During the 1980s, British Prime Minister Margaret Thatcher forcefully argued against the EC's usurping national prerogatives in social regulation. Jacques Delors, president of the Commission, opposed her with an equally strong argument that Europeans share social values and that the EC must protect and enhance those values (Lave, 1981, 89-97).

Controversy about national and EC prerogatives came to a head at the Maastricht summit in December 1991, when British opposition to the proposed Treaty on European Union's social regulation provisions threatened to wreck the intergovernmental conference. At the last minute, Prime Minister John Major accepted the offer of a British opt out from the treaty's social regulation provisions or, more precisely, a social regulation opt out from the treaty itself, whereby the other eleven member states agreed to a separate protocol on social regulation attached to the treaty (Henriques, Hollway, Urwin, Venn, Walkerdine, 1998, 107-123).

Original Objectives and Historical Factors that Shaped the Regulation

Original Objectives and Development of Economic Regulation

Throughout the nineteenth century, state governments were the primary locus of economic regulation. State legislators relied on police power as the constitutional basis for efforts to protect public health, safety, and morals. Regulations limited the use of private property and the conduct of business enterprises; for example, lawmakers imposed safety requirements, mandated licenses for certain occupations, and imposed rudimentary land-use controls. Even before the Civil War, state legislatures experimented with regulatory commissions to supervise such complex businesses as railroads and banking (Tarullo, 2008, 119-134). Yet antebellum regulations were generally modest in scope and designed to address specific problems. These measurements made little systematic attempt to redistribute wealth, and ...