Political Actors and Institutions in Businesses - Coursework Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : Political actors and institutions in businesses Tutor : xxxxxxxxxxx @2010 Introduction Government business relation is the stable relationship between government institutions and businesses within the society relative to the economy. Government plays an important role in the control and regulation of business. It deals with regulation of both local and international trade and manages the finances. In addition to the strength of the legal system and security offered to investors, the intervention of government acts as an important way of determining the financial system structure. The essay will examine the government’s involvement in the operations of free market and the level of involvement (Mike, 2008). The US government intervention protects small business and regulates competition so that small businesses are not exploited by big businesses. Government ensures that the goods delivered to consumers are of excellent quality and do not pose any harm to human health. For instance there are laws that ensure food and drugs are clearly labeled and inspected before sale. The US government has systems that control the nation’s financial supply and banking activities and laws that govern the economy and sale of manufactured goods. How the US government regulates business The US government imposes taxes on manufactured goods and custom duty on imported goods. As information and globalization revolution raises government business relationships are need to be to be diversified. The US government has enabled large companies with higher number of workers can to form unions which can easily benefit from services offered by the government. The small companies are then encouraged to adopt the measures employed by the large companies to ensure that the services of the government are within the reach (Henry, H,. 1979). The US government regulates foreign competition and this reduces pressure from the foreign market competition. The corporate managers are attached to government officials and this ensures that the particular corporations are able to access business services offered by the government. The corporations are in turn expected to carry businesses in accordance to the business laws set by the government. The US government issues import permits to enable companies import their goods and services to foreign countries and this ensures free and fair market (McGillivray, 2001,). A number of regulatory bodies in the USA are structured in a way that they are insulated by the president and from political pressures. These agencies are managed by independent boards and their members are appointed by the government and confirmed by the senate. Through law the boards are supposed to include commissioners and from political parties who serve in the government for a fixed period of time. Although the regulatory agencies are officially independent, congress members always have an influence on commissioners when airing the interests of their constituents (Sloman, 2002). The laws set by the US government ensure that companies carry out business in the appropriate way without exploiting their fellow businessmen and foreign business partners. The US government has efficient knowledge in the mechanisms used in regulation of business activities and this enables it to regulate business corporations effectively. Government intervention in the free Market Economies In the current market economy firms must operate within government regulations and taxation rules. Since the corporations in US must comply with the government policies they have become an essential element of the corporate business policy. The US government regulates both private and government business firms. Industries which face strong competition from foreign industries are protected from this stiff competition by the government through the trade policy. Several other industries receive government aid ranging from tax breaks to outright subsidies (Barbara, 2005).The US government regulates the private business sector through social regulation and economic regulation. Economic regulation is through the price control on the locally manufactured and imported goods. Social regulation is through protection of consumers and small businesses from the powerful big companies and this ensures that there is full competitive market in spite of the size of the business. The US government uses the Anti trust policy as a consumer protection measure, promote competition and free enterprise by breaking up monopolies. In US businesses are wholly dependent on the government for protection from legal fiction of corporate personhood and protection of corporate contracts and property. The system of the US courts is well designed to adjudicate contract disputes and property rights and determines where justice lies. The US government regulates the market system and this has improved the market scenario. The government enforces policies that help in the smooth functioning of the market system. Government intervention in the market system had improved the market structure, market facilities, roads and several desired infrastructures in the market. The government plays a crucial role in regulating violence and corruption within the market system and prevents excessive rise in prices by the market leaders. The market leaders and marketing boards hold meetings with the government to make decisions on the current market issues. The US government gives incentives to government employees who work within the market system and increase efficiency of their work in the market system. The government pays significant salaries to the members of the marketing board and this reduces corruption in the market system. The government does not greatly intervene in the market system and this enables transmission of crucial information that is necessary for smooth operation of the market system. Government regulation of the market system reduces inflation and avoids deflation, recessions and economic depressions (Manuel, 1998). The US government works with the existing market system other than implementing policies that may lead to great changes in the market system since when government intervention causes inefficiencies that are greater than rationalizing the whole market system, there is a risk of causing damage to the economy. A distorted government regulation of the market system can lead to higher costs and consumer dissatisfaction. Most economists argue that regulation on the market system must facilitate the nature rather than possessing a direct control over the market system. The government reduces self destructive competition by regulating the sale of stock. It has also recognized the rights of workers to form unions, has set rules for working hours and wages, established farm subsidies and insured bank deposits and has also created huge regional business development authorities in several states. The US government imposes trade restrictions such as quotas and tariffs on competing imports so as to protect local industries. The government gives loans to businesses so that they are able to invest and plan their businesses so that they can easily access the local and foreign market. As a result of government intervention businesses are supposed to amend their plans and strategies in order to grow and survive in the current market economies (William, 1993). The government enforces several regulations on the grounds of dealing with market failures and eliminates market barriers such as bribes which hinder free and fair business activities. Companies are able to swiftly adjust their enterprise plans and strategies so as to cope with government preferences in regulating the business sector. The intervention of US government in the market aims to achieve social efficiency and equity goals. Social efficiency is attained at the region where the society’s marginal benefits for either consumption or production are equal to the marginal costs of either consumption or production (Kenneth, 1999). In the case of equity the government makes sure there is fair distribution of resources and business funding. The government ensures that goods are sufficiently provided by the market and without government regulation people will be prevented from easily accessing the goods within the market which might make the manufactures escape their production cost. Government regulation prevents monopoly power which may lead to output which is below the socially efficient level which in turn leads to a deadweight welfare loss, a loss of producer surplus consumer. Lack of government intervention may lead to uncertainty and ignorance which might hinder people from consuming or producing at levels of their choice. The market may at times provide a price which is imperfect or the price may not be available at all. The US government regulates demand and supply chains and without this regulation markets respond slowly to changes in supply and demand. The time lags in adjusting to these changes can lead to a problem of instability and a permanent state of disequilibrium. A regulated free market ensures adequate provision of dependants and adequate production of high quality goods. Subsidies and taxes are a major means of correcting market deformations. The government correct externalities through imposition of taxes that are equal to the size of the marginal external cost, and through offering subsidy rates that are equal to marginal external benefits. Subsidies and taxes can be used to influence output, profit and monopoly price. The US government uses subsidies to persuade monopolists to increase output to the competitive degree and taxes to decrease monopoly profits without having an impact on output and price. (Maunder, 1997). Subsidies and taxes helps in absorbing foreigners into the market and proving of incentives in order to decrease external cost. The government protects the property rights and these enable businesses from preventing others from imposing costs on them. The US government has business laws that are used to regulate business activities that inflict external costs, regulate oligopolies and monopolies. The legal controls are usually easier and simpler to enforce than taxes and are safer when there is a greater business danger. The government regulatory bodies are set up to control and monitor business activities that are against the public interests and market policies such as anti competitive behavior of oligopolists. The government provides information where there is no adequate information from the private sector. It supplies services and goods directly without the use of intermediate suppliers. These goods can be either public goods or other goods that the government feels market provision is not adequate (Susan, 2009). The government influences the production of goods and services in publicly owned business firms. A free market contributes to automatic adjustment to shift in economic conditions and the view of oligopoly and monopoly profits can stimulate risk taking by these businesses.     Conclusion In conclusion, it is important to note that the level upon which the government interferes in the operation of free market is moderate and is indeed necessary. Free market is important but without the involvement of the government, the participants can easily take advantage of the loop holes to exploit the public. The government should therefore provide the checks and balances to ensure smooth running of the operations. The general public should be protected by the government. Bibliography Barbara, P., 2005, Introduction to globalization and business: relationships and responsibilities, SAGE Press, London. Mike, W., 2008, Global Business Cengage Learning Press, London. Manuel, G., 1998, Business ethics: concepts and cases 3rd Edition, Prentice Hall Press California William, G., 1993, Understanding business 3rd Edition, Random House, New York. Kenneth, J., 1999, Business and government in United States, 2nd Edition, University of California Press, California Maunder, P., 1997, Government intervention in the developed, Taylor & Francis Press, Chicago. Sloman, J., 2002, Economics for Business Cambridge University Press, Cambridge. Susan, W., 2009, Understanding American Government, Cengage Learning Press, London. Henry, H., 1979, Economics in one lesson, Crown Press, New York. McGillivray, F., 2001, International trade and political institutions: instituting trade in the long nineteenth century, Edward Elgar Publishing. London. Bibliography Stigler, G. J., 2000, “The Theory of Economic Regulation", in Paul L. Joskow ed. Economic Regulation, Edward Elgar Publishing Limited. Stulz, R. M. & Williamson, R., 2003, "Culture, Openness, and Finance", Journal of Financial Economics, 70(3): 313-49. Swank, D., 2002, Global capital, political institutions, and policy change in developed welfare states. Cambridge University Press, Cambridge. Katz, R. S., 2007, Political institutions in the United States: Comparative political institutions, Oxford University Press, Oxford. Kingstone, P. R., 1999, Crafting coalitions for reform: business preferences, political institutions, and neoliberal reform, Penn State Press, 1999 Nugent N., 2006, The government and politics of the European Union Edition6, Duke University Press, McNair, B. 2003, An introduction to political communication, Routledge, London. Spero, J. E., 2009, The Politics of International Economic Relations, Cengage Learning, London. Tsebelis, G., 2002, Veto players: how political institutions work, Princeton University Press, Princeton. . Read More