Regulation and Industry

In analyzing any industry and the need to regulate that industry, it is important to balance the needs of that industry for growth with any real interest on the part of the government for the protection of some larger interest. This is what is involved in the present debate taking place over the Clipper Chip, an encoded device to be placed in all telecomputer products that makes it possible to protect the need of the consumer for privacy while also enabling the government to protect its need for surveillance and for the curtailment of criminal activity. The industry has been resisting any law mandating the use of the Clipper Chip for a number of reasons--it is seen as a governmental intrusion into private business interests, it is considered an added and unnecessary expense for manufacturers and retailers, it undercuts the notion of privacy that is so important in computer communications, and it may not even work as promised.

There is an argument among business leaders and government officials over whether government will or should regulate an industry over the objections of or against the interests of business. Regulation, say many theorists, is primarily designed and operated for the benefit of a given industry, but the situation may be more complex than the paradigm might indicate. While it is true that politicians and business both act out of self-interest, with the one most interested in votes and the other in profits, this is not necessarily the rationale for all r

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needs and interests of government itself are being served. This is an important consideration in examining the politics of regulation. Often, political leaders propose, pass, and implement programs because those programs give government something it wants or because it is simply the easiest course to follow. The Clipper Chip case would make certain procedures easier for government officials, and so their interests are placed above those of the industry being regulated. Even if one side or the other is very interested in a proposal, the fact that the proposal is addressed and passed may be due to the same governmental interests--politicians respond to pressure and take action to relieve that pressure. If it seems to some that the interests of business are most often served in the regulations passed, it may be because business is organized and ready to make its demands known as the public never is. The most important aspect of the politics of regulation is who asks for a change and how loudly they ask. Yet it must also be noted that there are cases such as the Clipper Chip problem where it is the government itself doing the asking. the government is charged with carrying out certain functions, one of which is enforcement of

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