self-regulating

Examples of self-regulating in the following topics:

• Classical Theory

  • Self-regulating markets: classical theorists believed that free markets regulate themselves when they are free of any intervention.
  • Adam Smith referred to the market's ability to self-regulate as the "invisible hand" because markets move towards their natural equilibrium without outside intervention.

• Reasons for Efficiency Loss

  • Without the presence of market competitors it can be challenging for a monopoly to self-regulate and remain competitive over time.

• The Tragedy of the Commons

  • The tragedy of the commons is the depletion of a common good by individuals who are acting independently and rationally according to each one's self-interest.
  • If individuals have enlightened self-interest, they will realize the negative long-term effects of their short-term decisions.
  • In the absence of enlightened self-interest, the government may step in and impose regulations or taxes to discourage the behavior that leads to the tragedy of the commons.

• Colonization

  • The Pilgrims of Massachusetts were pious, self-disciplined English people who wanted to escape religious persecution.
  • But throughout the colonies, people lived primarily on small farms and were self-sufficient.
  • By 1770, the North American colonies were ready, both economically and politically, to become part of the emerging self-government movement that had dominated English politics since the time of James I (1603-1625).
  • Disputes developed with England over taxation and other matters; Americans hoped for a modification of English taxes and regulations that would satisfy their demand for more self-government.

• Laissez-Faire Versus Government Intervention

  • As long as markets were free and competitive, he said, the actions of private individuals, motivated by self-interest, would work together for the greater good of society.
  • Government regulation of private industry can be divided into two categories -- economic regulation and social regulation.
  • Economic regulation seeks, primarily, to control prices.
  • For the last 25 years, liberals and conservatives alike have sought to reduce or eliminate some categories of economic regulation, agreeing that the regulations wrongly protected companies from competition at the expense of consumers.
  • Political leaders have had much sharper differences over social regulation, however.

• Growth of Government Intervention

  • In the early days of the United States, government leaders largely refrained from regulating business.
  • In 1913, the government established a new federal banking system, the Federal Reserve, to regulate the nation's money supply and to place some controls on banking activities.
  • So they looked to government to ease hardships and reduce what appeared to be self-destructive competition.
  • Many more laws and regulations have been enacted since the 1930s to protect workers and consumers further.
  • Some critics charge that businesses at times have gained undue influence over the agencies that regulate them; agency officials often acquire intimate knowledge of the businesses they regulate, and many are offered high-paying jobs in those industries once their tenure as regulators ends.

• Natural Resource Market

  • Commodity markets are heavily regulated.
  • In the United States, the principal regulator of commodity and futures markets is the Commodity Futures Trading Commission (CFTC).
  • The National Futures Association (NFA) formed in 1976 and is the futures industry's self-regulatory organization.
  • In Europe, commodity markets are regulated by the European Securities and Markets Authority (Esma), based in Paris and formed in 2011.

• Continuity and Change

  • Indeed, government leaders showed a renewed commitment to market forces in the 1970s, 1980s, and 1990s by dismantling regulations that had sheltered airlines, railroads, trucking companies, banks, telephone monopolies, and even electric utilities from market competition.
  • Americans at times have looked to government to break up or regulate companies that appeared to be developing so much power that they could defy market forces.
  • As the sometimes inconsistent approach to regulation demonstrates, Americans often disagree about the appropriate role of government in the economy.
  • Employers are becoming less paternalistic, and employees are expected to be more self-reliant.
  • The two subsequent sections describe the role of government in the economy -- chapter 6 by explaining the many ways government shapes and regulates free enterprise, and chapter 7 by looking at how the government seeks to manage the overall pace of economic activity in order to achieve price stability, growth, and low unemployment.

• Regulation

  • The government can use command-and-control policies to regulate behavior directly.
  • In practice, implementing regulation effectively is difficult.
  • It requires the regulator to have in-depth knowledge of a certain industry or sphere of economic activity.
  • If done incorrectly, regulation can introduce inefficiency.
  • Advocates of market-based policies for reducing negative externalities point to the difficulty of creating and enforcing effective regulation for reasons why the government should create systems of incentives and disincentives instead of using the force of regulation.

• A Mixed Economy: The Role of the Market

  • It regulates "natural monopolies," for example, and it uses antitrust laws to control or break up other business combinations that become so powerful that they can surmount market forces.
  • It provides welfare and unemployment benefits to people who cannot support themselves, either because they encounter problems in their personal lives or lose their jobs as a result of economic upheaval; it pays much of the cost of medical care for the aged and those who live in poverty; it regulates private industry to limit air and water pollution; it provides low-cost loans to people who suffer losses as a result of natural disasters; and it has played the leading role in the exploration of space, which is too expensive for any private enterprise to handle.
  • As the economy has grown more complex, statistics also reveal over the last century a sharp long-term trend away from self-employment toward working for others.