Deregulation

Liberalization, regulation and regulation

In French, regulation and Régulation are not synonymous. To regulate wants to say to fix an activity with payment S. Réguler wants to say to seek to give a certain stability to a system. The purpose of the regulation can be the regulation, but can also have of all other goals. Conversely, the regulation can be done through payments, but can be also made other ways. For example, the gastronomical guides ensure a certain regulation of the sector of the restoration, by establishing standards of quality de facto and by sanctioning conformity with these standards.

The bond between Liberalization and deregulation is not obvious; the liberals themselves are sometimes in disagreement. On the other hand, the trade unions see there them, an obvious bond.

Déréglementer to impose competition

The dominant economic theory considers that the regulation of the market is necessary to guarantee the maintenance of the Concurrence and to fight the constitution of Monopole S and trusts. However certain schools of thought, the such “school of Chicago” disputed the threat which the monopoly would make plane on competition. According to the theory known as “of the contestable markets”, the company which has a monopoly in a branch of industry is subjected to the competition of the non-existent but potential companies: i.e. if it tends to benefit from its situation (for example as a practitioner of the very high prices or neglecting the quality of its products), it is likely to allow the emergence of concurrent companies hitherto non-existent. Thus it is useless to regulate the market, the more so as any situation of monopoly is provisional and will be brought to be reversed by the force of the market (it is the analysis of Joseph Schumpeter and all the Austrian school).

According to these authors, one absolutely needs on the contrary déréglementer to maintain competition, so that all the obstacles likely to prevent the emergence of companies protestors are eliminated. This policy was sometimes applied during the years 1980 in the sectors which one wished that they be subjected to a more important competition, in the banking environment and of transport in particular.

Disappearance of the monopolies of right

In several sectors with strong economies of scale, the situation of monopoly, then qualified “natural ”, is justifiable. The Railway Mania (“passion for the rail”) generated at the 19th century a generating competition of a dispersion absurdity of the investments in the railway sector: the construction of several ways of railroad in parallel, for each company. The monopoly is thus sometimes justified with the economic plan, but, once established, it is appropriate it Réglementer so that it does not misuse its position.

According to the liberal current of thought , certain monopolies would lose, during the economic evolution, their justification: that of the Telecommunication S (freed from the traditional phone lines), of the Air sector, the Station, and the electricity. The advantages of the maintenance of a monopolistic position would be lower than the defects generated by the absence of competition.

Regulation of competition

Contrary to the a priori , one attends a significant development of the regulations and regulation, and this because of privatization of certain branches of industry. The regulation indeed comes from the liberal point of view to answer a dilemma between the two contradictory objectives which are:

To guarantee the good performance of the services of general interest
Liberalize the economy and subject the majority of the branches of industry to a competition.

It is in fact of the disappearance of the state monopolies that are born the majority from the regulations. Indeed, the monopoly offered advantages which could not be found in a competition without a lawful intervention of the State. Thus, the regulation accompanies liberalism in order to allow:

the harmonization
the defense of the interests of the consumers
the control of the monopolies which would remain in spite of the opening of the sector to competition.

Thus within the framework of a competitive market, the State is constrained with certain regulating tasks:

Creation of standards necessary to the good walk of the sector (for the harmonization and of the control of the end products)
Attribution of license and of access to the infrastructures
possible Control of tariffings
Management of the litigations related to competition and generally opposing the former monopolist to the new entrants.

The regulation thus has the role of providing a Legislative framework to the liberalization of certain services. The regulation seeks as for it to apply this legislative framework as well as possible, to make proposals and studies sectoral. Contrary to the regulation, which remains the responsibility of the State, the regulation is generally entrusted to independent authorities (like Regulatory agencies).

To liberalize the services thus does not mean déréglementer and even less déréguler. Finally, the vision of a general deregulation of the economy is erroneous. The deregulation is limited to certain sides of the economy where liberalism does not recognize a role in the State, while other sectors are regulated more and more.

The criticized deregulation

For Joseph E. Stiglitz, the deregulation has good, but it is necessary to know to handle it with precaution. Its theoretical objective is to maintain competition on the markets where to guarantee to prevent the dominating firms from benefitting from their position when they benefit from a natural monopoly. It notes however that during the years 1990, “the deregulation turns to is delirious”.

Since the years of presidency of Jimmy Carter, certain large companies pushed the government with déréglementer their branch of industry, because they hoped to be able to dominate the market and to thus draw benefit from it. This Lobbying was in particular carried out by the large companies of Télécommunication S, the Banque S and the industrial companies obstructed by the legislation Environnement ale. Not only the deregulation would often harm the general interest with the profit of certain firms, but it would be especially causes of economic instability and crises (one will refer to the example of telecommunication and the Finance).

In telecommunications

In the sector of telecommunications, the companies claimed that new technologies (development of the satellite , of the wireless networkings, the Fiberoptic,…) would allow to increase competition and that, consequently, the official regulation was not useful any more. According to Stiglitz, this request by was not absolutely justified by the preoccupation with a competition favorable to the consumers and vermin with the profits. The already existing companies hoped to benefit from their length to take a lead in advance in the market. Following the deregulation of the sector installation in the middle of the years 1990, the investors saw occasion of profits for the company which would succeed in being essential on it.

“The companies thought of being in a play where gaining raid the setting, and each one thus spent furiously to be ensured to be the dominating one”.

These furious investments, accompanied by the multiplication of the companies “.com”, contributed according to Stiglitz to the appearance of a Speculative bubble, in the real economy initially, but especially in purse. Its bursting in 2000 accompanied the entry by the US economy in the recession and caused the disappearance of many companies of High technology.

In the air sector

In the air sector, the deregulation undertaken by Jimmy Carter allowed durable emergence only little of new companies. The overhead grid was restructured: multiple secondary lines radiate around a principal airport (a “hub”) including one large company secured control: TWA with Saint-Louis, American Airlines with Dallas,… If a small company tried to develop on their territory, the monopoleuses companies practiced very low prices temporarily in order to drive out it and to show the example with any possible protestor. One however noted since the years 1970 a downward trend of the price of the tickets.

August 1st

In Argentinian

The Argentine knew many deregulations during the government of Carlos Menem, in the years 1990. This policy, impelled by the councils of the Fonds international currency E (the IMF) finally became unpopular in 2001, when Argentina knew a major Economic crisis. The deregulation was then shown finger, by some, like one of the main causes of this crisis.

Deregulation in France

The trade unions endeavor to show the total coherence of the movement of deregulation, privatization and liberalization. The unit is perceived like a tendency which threatens the employees, and who increases the Précarité work.

They think that the opening to competition in sector-keys, like air transport or railway, can increase the accident risks. They think that the experiment of the the United Kingdom in the railway sector, in particular, should encourage the States with prudence. Indeed, the goals announced (punctuality, tariffs) at the time of privatization are far from to be reached. Four serious accidents (Southall (1997), Ladbroke Grove (1999), Hatfield (2000) and Potters Bar (2002)) also seriously started the confidence of the British. In other countries, the Libéralisation of the rail-bound Transport was held better (in Germany for example).

In the sector of telecommunications, the opening to concomitant competition with new technologies cause a drop in certain tariffs of communications, while other tariffs such as the European mobile communications require interventions public to undergo a fall of the prices. The fall in the prices of the communications is generally related to a modification of the business model of the company of telecom Aujourd'hui, the communications are cheap, but the more expensive fixed prices and subscriptions. France Telecom remained owner of her network and had to increase the price of its subscription, to compensate for the fall of the cost of the communications (disappearance partial of Péréquation). With final, the arrival of the offers " triple play" made that for the most modern consumers, the budget communication of the private individuals increased. This evolution was also accompanied by a reduction of the number of phone boxes - the State however imposing a minimal density of cabins.

The Privatization of State enterprises and the Libéralisation should not however be comparable with any deregulation. On the contrary, it was accompanied by the creation of many regulations and regulating authorities, like the Regulatory agency of telecommunications (ART) in 1997, become Regulatory agency of the electronic communications and the stations (ARCEP).

Sectors concerned in France

In France, the principal sectors concerned are, between brackets the name of the state enterprises or public in the past concerned: {between accodances the Regulatory agency}

air transport (Air France)
the rail-bound transport of passenger and freight (the SNCF)
the postal service (postal and telecommunications authorities and La Poste) {ARCEP}
télécoms (postal and telecommunications authorities then France Telecom) {ARCEP
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