If government regulation increases price and thus decreases supply, why does the government regulate any goods and services?

The reason why the government regulates goods and services is because there are certain business practices that aren't allowed by the law. In order to protect the general population from small groups like bankers, stockholders or big corporations, the government is to protect both the general public and workers from illegal practices like monopolies, bad working conditions or the selling of dangerous products to people.

they united the colonies in their fight against the british.

during world war ii