Government and Markets: Toward a New Theory of Regulation

Edward J. Balleisen; David A. Moss

Book | 2010

Government and Markets: Toward a New Theory of Regulation

by Edward J. Balleisen and David A. Moss

Abstract

After two generations of emphasis on governmental inefficiency and the need for deregulation, we now see growing interest in the possibility of constructive governance, alongside public calls for new, smarter regulation. Yet there is a real danger that regulatory reforms will be rooted in outdated ideas. As the financial crisis has shown, neither traditional market-failure models nor public-choice theory, by themselves, sufficiently inform or explain our current regulatory challenges. Regulatory studies, long neglected in an atmosphere focused on deregulatory work, is in critical need of new models and theories that can guide effective policy-making. This interdisciplinary volume points the way toward the modernization of regulatory theory. Its essays by leading scholars move past predominant approaches, integrating the latest research about the interplay between human behavior, societal needs, and regulatory institutions. The book concludes by setting out a potential research agenda for the social sciences.

Keywords: Governing Rules, Regulations, and Reforms; Government and Politics; Markets; Business and Government Relations; Research;

Format: Print

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Citation:

Balleisen, Edward J., and David A. Moss, eds. Government and Markets: Toward a New Theory of Regulation. Cambridge: Cambridge University Press, 2010.

Case | HBS Case Collection | February 2016 (Revised March 2018)

Labor, Capital, and Government: The Anthracite Coal Strike of 1902

David Moss and Marc Campasano

In late October 1902, President Theodore Roosevelt felt relieved after months of anxiety and uncertainty. Workers in Pennsylvania's anthracite coal industry had been on strike for five months, threatening to leave eastern cities in the cold without enough heating fuel for the winter. Anthracite workers and business owners had finally reached an agreement after months of stalemate, and anthracite production resumed on October 23. The agreement—the first of its kind—put decision-making power in the hands of a federal commission, appointed by the president and empowered to determine terms of employment and various operational questions in the anthracite region. After a week-long investigation in the mines, the commission began hearing testimony from hundreds of representatives of the workers and their employers, the mine operators. The hearings finally closed in February 1903, after which the commission began formulating its final judgments. Members of the commission knew that their work would set an important precedent for industrial governance in the years ahead. Past U.S. presidents had helped put down strikes that threatened federal property or public safety, but the anthracite strike of 1902 marked the first time the government acted to resolve a strike both without force and without such a clear legal justification. The decisions of the commission would therefore have important ramifications not only for the anthracite industry, but potentially for American business–labor relations more generally. With copious amounts of data, testimony, and research to inform them, the commission members began the process of deciding how an American industry should, and would, operate.

Keywords: Governance; Agreements and Arrangements; Labor; Mining; Mining Industry; Pennsylvania;

Citation:

Moss, David, and Marc Campasano. "Labor, Capital, and Government: The Anthracite Coal Strike of 1902." Harvard Business School Case 716-046, February 2016. (Revised March 2018.) View Details

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On Election Day in 1918, Massachusetts voters would have to decide not only on their preferred candidates for governor and U.S. Senator, but also whether or not to approve 19 proposed amendments to the state constitution. By far the most controversial of these would establish a state process of initiative and referendum. The initiative would empower private citizens to write both laws and constitutional amendments, and pass them, even over the opposition of a majority of the state legislature. The referendum would allow voters to rescind laws that the legislature had passed. Behind this proposed amendment lay nearly three decades of agitation, both in the state and nationally, for “direct democracy” in America.
The initiative and referendum—or “I&R” for short—had become a key demand of progressivism, the diverse movement for economic, social, and political reform that swept the nation for nearly two decades after 1900. By 1918, 19 states, mostly in the West, and hundreds of counties and municipalities, including a number of cities in Massachusetts, had adopted some form of I&R. Opposition to a statewide I&R provision in Massachusetts, however, remained fierce. Opponents claimed it would threaten the rights of minorities, give undue influence to small but well organized interest groups, and place needless burdens on voters. Proponents urged the people to empower themselves and take back control of the state from the “invisible government” of party bosses and corporate lobbyists. Now, with the election approaching, Massachusetts voters would have to decide.

By the mid-1830s, the U.S. Government and the State of Georgia had for years been pushing the Cherokees to turn all of their territory over to white settlers and move west, yet it appeared that most Cherokees wanted to keep their ancestral homeland. In October 1835, the Cherokee General Council had named a committee of leaders to work out a mutually agreeable solution with the federal government in Washington. At about the same time, however, U.S. Indian Commissioner John Schermerhorn had called a meeting at New Echota, Georgia with a separate committee of Cherokees who he believed would be more willing to “remove” the entire tribe to the West. This separate committee ultimately agreed to the Treaty of New Echota on December 29, 1835. Under the treaty, the Cherokees would cede all of their eastern territory in exchange for $4.5 million, land in the West, and other sundry benefits.
U.S. President Andrew Jackson, who had battled Native American tribes during much of his former military career, was eager to oust the Cherokees from the eastern states. However, several members of the Senate criticized the Treaty of New Echota as a “phantom treaty,” claiming that it was signed by an illegitimate council without the consent of the Cherokee people. Approving the treaty, they insisted, would be a grave wrong against the Cherokee Nation and its official government, which the United States had long recognized.
On May 18, 1836, the U.S. Senate finally put the Treaty of New Echota to a vote. If ratified, the treaty would bind all Cherokees to the decisions of the committee at New Echota, and the Cherokee Nation would have to leave its native land.

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