Deregulation is the reduction of government rules regulating business activities; it is a response to previous government decisions to regulate certain industries in the economy. Deregulation and PRIVATIZATION were popular political-economic policies in the United States during the latter half of the 20th century. In the United States, a variety of industries have undergone deregulation, including airline, railroad, banking, and trucking industries. Advocates of deregulation call for further action in such industries as helium, power PRODUCTION, and the U.S. Postal Service. The debate over regulation and deregulation centers on the COSTS and benefits associated with government intervention into markets. Free-market economists argue that government intervention creates inefficiencies and that competitive markets will adjust and eliminate market problems. Most economists agree that one role of government is to correct for MARKET FAILURE—situations where there is a lack of COMPETITION, a misallocation of resources, and economic PROFITs. In the late 19th century, the social costs of living in an unregulated market environment were visible to all citizens. Large CORPORATIONs used their market power to extract higher prices from consumers, drive out competitors from markets, gain concessions from workers and suppliers, and procure support from the political establishment. Defective and dangerous products were sold to the public, and MONOPOLY profits concentrated in the hands of a few who became known as the “robber barons.” With a loss of trust in market solutions, public calls for business regulation became louder. The INTERSTATE COMMERCE COMMISSION (ICC), established in 1887, became the first in a series of government regulatory agencies. Earlier government subsidies had resulted in over-expansion of some rail routes and monopoly control in communities serviced by only one railroad. Some railroad owners colluded to fix prices in markets in which they were, in theory, competing, while in other markets competition drove prices to below operating costs. In response to the proposal to create a regulatory commission, railroad owners supported price stabilization at profitable levels, while grain shippers and small communities supported control over monopoly service. The ICC was seen as the solution to market failure at both extremes. In Europe, rather than regulate private companies, many countries created government monopolies. Like regulation, the goal was to provide services on a least-cost basis. It clearly did not make sense to have two railroads connecting the same destinations or to have multiple sets of telephone lines in a community. In many industries where ECONOMIES OF SCALE exist, providing an ability to produce at a lower cost per unit as output expands, political leaders chose to either regulate existing firms or create government-run monopolies. With greater numbers of government monopolies, in recent decades European governments have expanded privatization efforts rather than deregulation. When railroads were first regulated in the United States, there were few alternative means of transportation. Automobiles and trucks did not exist, and waterways were limited by seasonal changes. With the advent of trucking, the monopoly power of railroads declined. Initially interstate trucking was included in ICC regulation. Similarly, AT&T; was a regulated monopoly in the longdistance telephone market until the development of microwave technology created new sources of competition in long-distance communication. In the 1960s and 1970s, critics of regulation cited the cost of huge regulatory bureaucracies, the slowness of regulators in approving changes, and the need to compete on a global basis, many times with firms that faced less regulation than U.S. firms, as reasons for government to deregulate. The ICC was disbanded, deregulating trucking and railroad transportation. The CIVIL AERONAUTICS BOARD (CAB) was dissolved, deregulating airline markets, and interstate banking restrictions were reduced and/or eliminated. Supporters of deregulation often point to the airline example citing lower fares that resulted from deregulation. Critics of deregulation point to increased airline overbooking practices, elimination of service to some communities, and increased safety problems. In 2000 California experimented with deregulation of electrical power production. Prices power producers could charge were deregulated, while distribution fees and, more importantly, retail prices remained regulated. When, in 2000-2001, wholesale prices rose and retail prices were not allowed to also rise, a crisis occurred, severely challenging the financial survival of the power companies in California.