Even if one fully grants the needto regulate, say, the safetyof nuclear plants,
or to require examination of the environmental impact of a new utility-if
process (including challenges in court) takes severalyears, the cost of regulation
Suggestions for "fast tracking"
failed, and up to the late 70s,
deregulation was largely an idea in some intellectual's mind, tried out in a few areas.
By far the largest part of the cost to businessof paperwork, estimated in 1977 at $25 to $32 billion a year, seemsto have been caused by regulatory compli- ance. A study of this costwas conducted by Arthur Andersen& Co. for the Busi- nessRoundtable. Forty-eight Roundtable memberfirms provided information on the incremental costs generated by six regulatory agencies or programs. These coststotaled $2.6 billion in 1977, equivalent to about 16 percentof the compa- nies' after tax income, 10 percent of their capital expenditures, or 43 percent of their R&D costs (Arthur Andersen and Co., 1979, p. 14).
To complete the picture one would have to compare the role played by mone- tary policy (presided over by the Federal Reserve Board) and fiscal policy (formed by Congress and the various administrations) in this era to their role in the first industrialization of America; all by itself that would require a very major study. It is widely agreed that in the last decade,budget deficits and expansionist monetary policies contributed to rising inflation, which in turn undermined the sources of investment (by undermining the motivation to save, the bond and stock markets, and public confidence, and by encouraging extensive credit use by consumers). But it does not necessarily follow that between 1820and 1920 either the banking system or Congress and the Presidents of the time followed wiser economic policies. Indeed, severe bouts of inflation and of recessionary bust were far from unknown. That over the century the economy did so well is probably more because the interests committed to industrialization had a freer hand in those days than after World War II, and becausethe government, being much smaller in size, scope, andpowers, causedlessdamageeven when its eco- nomic policies were no wiser.
As to the changes that occurred gradually from the 1950sto the early 1980s in the financial and legal framework of the American economy, they seemto have turned less accommodating, either because they increasingly promoted other values than economic growth and efficiency, or becausethe government grew bigger, more bureaucratic, and more restrictive.
III. AGENDA FOR REBUILDING AMERICA
Of the sevenelementsthat accountedfor the successfudevelopmenof the infrastructure and the capital goods sector in the first industrializationof America, we havefound that by the early 1980sonly one is still in vigorous health,thecommunication sector(with thenotableexceptionof theU.S. Postal Service). The transportationsectoris particularly run down, with railroads,