How Government Policy Killed An Entire Industry

Government economic policies determine asset prices because policies set the “rules of game” that investors, companies, industries and countries must follow. A change in policy changes the rules of the game, thus changing how the players in the game act. Of all the government policy domains regulatory policy most clearly demonstrates this phenomenon, and of all the regulatory policy changes in history we are currently living through one of the most dramatic. Let’s refresh what we know about the power of policy by examining regulatory policy’s impact on a large, powerful and important U.S. industry, coal.