Government Regulations

Thesis Statement

The potential role of government regulations in adversely affecting a most basic economic variable, the rate of growth of economic productivity. If regulations can be blamed for bad economic performance, it is through their effect on this engine of economic growths.

Introduction

In this paper we are going to analyze government regulations of United States. The paper discusses the Government Regulations and its impact on the consumer economy sector in its section one. The section two comprises over an annotated bibliography which is placed in Appendix A.

Government Regulations

During the decade of the 1970s the performance of the U.S. economy in terms of its key macro-economic indicators was extremely disappointing. Statistics on the growth rate of output, unemployment, capital formation, productivity growth, and inflation combined to paint a gloomy picture (Greenley, 7).

During the previous decade there was no year in which real gross national product (GNP) declined, and the average annual growth rate was 4.12 percent.' In the 1970s, however, real GNP showed a decline in three years-1970, 1974, and 1975- and the average annual rate of real GNP growth was only 2.87 percent.

As one might expect, the growth in output during the 1960s was accompanied by lower rates of unemployment. From 1960 to 1969 the nation's unemployment rate averaged 4.78 percent. The corresponding figure for 1970-79 was 6.19 percent. The rate of inflation was also lower during the 1960s, with the Consumer Price Index rising at an average annual rate of 2.33 percent. The average inflation rate for the 1970s was 7.11 percent.

A declining rate of capital formation has been another source of concern. Real gross private domestic investment advanced at an annual rate of 4.78 percent during the 1960s, but increased at a rate of only 2.49 percent during the 1970s (Mierzwinski, 4).

The gloomy economic experience of this decade was accompanied by rising popular concern that government regulations were impeding economic performance and thereby contributing to inflation and unemployment.

The Importance Of Economic Growth

Statistics can be misleading, and some observers question the relevance of oft-cited macroeconomic variables as indicators of an economy's performance. Almost all of these variables refer to output or inputs, but not to both at the same time. The efficiency, with which an economy performs, however, is reflected in its output per unit of input-both output and inputs must be considered. Thus measures of the rate of growth of productivity-output per unit of input-are crucial in explaining an economy's performance.

In concept, a nation's productivity can be defined simply as its aggregate final output per unit of input. However, because of difficulties in aggregating the diverse outputs and inputs of a modern economy, the measurement of productivity performance is not a straightforward matter. The most common procedure has been to measure productivity by obtaining an estimate of final aggregate private-sector output divided by the number of person hours of labor input used in producing this output. This concept could be called a single-factor productivity measure, and because it does not ...