Issues in Free Enterprise - Essay Example

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On the one hand, from an internal corporate perspective a megamerger may be beneficial in terms of the increased economic returns, tax advantages and increased spending opportunity for…
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1. Are megamergers beneficial or harmful? It is submitted that the benefit or advantage of megamerger ultimately depends on the context. On the one hand, from an internal corporate perspective a megamerger may be beneficial in terms of the increased economic returns, tax advantages and increased spending opportunity for business development (Davidson xiii). Furthermore, a mega merger can assist in retaining jobs in ailing industries, which is clearly beneficial particularly in the current economic crisis.
Alternatively, a significant disadvantage is the monopolistic nature of megamergers in increasing market share and barriers to market entry for competitors, along with the potential risk of losing employment opportunities. Ultimately, the benefit of a megamerger will intrinsically be related to context, socio-economic factors and the impact on all relevant stakeholders affected by a merger proposal such as stockholder profits, economic base of communities, and the new capital investment plans of area impacted, technological innovation, consumer choice (Davidson 1).
2. Is Social Security Working, or does the US need a new system?
Matthews and Berman (1999) comment that the US social security system “was initially intended to provide financial security” (p2). However, the current system is suffering from funding challenges due to the pressures of the dedicated payroll tax system and it is estimated that by 2016 the expenses of the social security will exceed revenues (Matthews & Berman 2). This is further compounded by the reality of an aging population and lower ratio of paying workers (Matthews & Berman).
Additionally, whilst the current system is not in crisis, in the long term the social security system is unsustainable (Boyberg, 2005). Moreover, the US government has borrowed and spent the accumulated surplus funds and therefore reform needs to be considered now to address the future lack of sustainability of the system going forward.
3. Is current economic activity putting the earth at risk?
Economic activity and expansion rates particularly in third world countries are changing the face of natural environmental systems and Michael posits that “human pressures on the environment are damaging the world’s biophysical and ecological systems” (Michael 2008). This argument would point in favour of the assertion that current activity is placing the earth at risk.
However, on other hand some commentators argue that the earth is going through various cycles and denounce the climate change aegis as an excuse to implement politically motivated agendas (Wodak & Meyer 114). Nevertheless, it is submitted that the balance of evidence would appear to tip in favour of economic industrialisation risking the earth’s natural resources, however Pearson highlights the point that a balance needs to be struck between environmental risk and free trade to prevent environmental regulations operating as covert trade barriers (Pearson 1).
4. Is the income gap a serious economic problem or is it overblown?
The period of economic boom prior to the current economic crisis deflected attention from the income gap issue, with some commentators suggesting that the problem is exaggerated. However, it is submitted that academic studies consistently demonstrate that since the 1970s there has been a rising dichotomy in wealth inequality.
Indeed, since the 1990s Sundsrom charts economic growth since 1970 and argues that appurtenant to increased economic growth has been the increase in income inequality since 1975. Moreover, Sundsrom highlights that the income gap is growing in both the US and the UK in particular, a proposition that is further supported by leading studies of Frank (2005) and Stonecash (2006).
5. Should the US work to abolish child labor in developing countries?
Studies into the use of child labor in developed countries highlights the negative impact on a child’s health, education and future prospects. Additionally, the risk of abuse clearly raises a moral question as to the role of the US in preventing child labor in developing countries. On the one hand, there is currently no international legal system to adequately address child labor and it is arguable that the US does not have a sole moral responsibility to work to abolish the problem.
However, the economics of a child labor workforce are inherently complex with many developing countries arguing that they cannot afford to ban child labor. Additionally, many such developing countries rely on the US for their export trade (Weisbrot, 2004). As such, it is submitted that part of the child labor issue is dependant on US external product demand from such developing countries and therefore as the importing country, the US should clearly consider imposing elimination initiatives as a condition of market access (Weisbrot, 2004).
6. Should the US increase foreign aid?
The United States’ international relations have been negatively impacted in recent years as a result of the foreign policy initiatives of the Bush administration. This in turn has fuelled the argument that an increased commitment of the US to foreign aid would assist its reputation abroad.
On the other hand, US foreign aid initiatives have not necessarily been commensurate with increased popularity of the United States within the international relations paradigm. Additionally, the current economic state of the US clearly presses the importance of the national agenda over foreign aid initiatives. Moreover, it is argued that a continued increase in foreign aid can unwittingly provide as a disincentive to certain developing countries in become self sustainable on grounds of presumed bailouts from the West (Lancaster, 2007, p.25).
Therefore it is submitted that the US should not increase foreign aid and that indeed refusal to do so forces the hand of other nations to implement aid initiatives, which moves towards an international collective committed to the provision of humanitarian relief on a long term basis.
Davidson, K. Megamergers: Corporate America’s Billion Dollar Takeovers. Beard Books, 2003.
Bovbjerg, B. Social Security Reform: Answers to Key Questions. Diane Publishing, 2005
Frank, R. The Income Gap Grows. Retrieved at, 2005 accessed October 2009
Lancaster, C. Foreign aid: diplomacy, development, domestic politics. University of Chicago Press
Matthews, J., & Berman, D. M. (2002). Social security, medicare and pensions. Publishing
Michael, A. Global Environment change and health: impacts, inequalities and the health sector. British Medical Journal, 2008: 336, 191-194, 2008
Pearson, C. Economics and the Global Environment. Cambridge University Press, 2000.
Stonecash, J. The Income Gap. Retrieved at, 2006 accessed October 2009
Sundstrom, W. The Income Gap. Retrieved at, 2006 accessed October 2009
Weisbrot, W. Can developing countries afford to ban or regulate child labor? At accessed November 2009-11-04
Wodak, R., & Meyer, M. (2009). Methods for Critical Discourse Analysis. Sage Read More
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