The U.S. textile industry may serve as a classic study on regeneration through market forces. The industry has recently made a turnaround in profits after having been recognized as an industry that was losing most of its profits to overseas producers. The reasons for the emerging strength of the industry is that it began to innovate after a protectionist measure was vetoed by President Reagan. New production techniques and applications of computers have been developed, inventory and quality controls have been re-evaluated and new arrangements have been developed with labor at the bargaining table and on the shop floor. Marketing efforts have been changed. The industry has been restructured as mills closed or changed hands and companies merged. Emerging from this process were companies with renewed vigor and discipline. Economic lessons to be learned from the recent textile situation are that: (1) industries try to enlist the aid of the federal government to pass inefficiency to the consumer; (2) special interest groups ask for legislation that benefit themselves at the expense of others in society; (3) the political process is not efficient enough to respond quickly to the economic environment; and (4) government may worsen the plight of the industry it is trying to help. (SM)