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Abstract

Abstract Disharmony between economic principles and economic policy has persisted for two hundred or more years. The important change that has come about in economics may be put this way. The traditional economic analysis asked only: what is the effect of the economic policy under consideration upon the society as a whole? The verdict upon its desirability was then determined by whether the aggregate effects were beneficial or adverse. The economics of regulation now asks also: what is the effect of the policy upon each important group in the society? And a reasonably full answer to that question helps to tell us why the policy is adopted or rejected. The act of obtaining a favorable economic policy is clearly an investment act, and like other investments it will be governed by prospective costs and returns. By consequence, before one can hope to explain the content of each economic policy it is necessary to estimate its costs to some and its benefits to others. The economists are the ones who are best equipped to make this kind of research, so they have entered into the study of political regulation of economic behavior.