After resisting efforts to impose new fuel-economy standards on automobiles for years, the Bush administration now plans to toughen requirements. Average fleet efficiency will be required to rise from 25 miles per gallon today to 32 mpg in 2015 -- a one-mile improvement each year for seven straight years. The move is supposed to reduce dependence on overseas oil and limit greenhouse gases.

With the finance industry facing problems reminiscent of the Reagan-era savings and loan debacle, federal regulators are asserting greater oversight. Federal Reserve officials say the regulatory system needs to be streamlined to detect problems sooner. That means less innovation in a sector that has turned indebtedness into a core feature of national life.

Heavier regulation of other industries will follow, from housing to healthcare to higher education. It isn't hard to see why faith in market forces has waned: The U.S. economy has made a weak start to the new millennium, with sub-par growth rates, weak job creation -- at least in the private sector -- and staggering trade deficits. The cost of just about everything has risen faster than wages, from food to energy to education to medical coverage. So proponents of regulation in academia and government are gaining the upper hand against advocates of market forces.

But it's an open question whether more regulation can solve any of these problems. And we'll see how all the academic critics of free enterprise feel when the government tells them their colleges are charging too much for an education.

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(Loren B. Thompson is chief executive officer of the Lexington Institute, an Arlington, Va.-based think tank that supports democracy and the free market.)