Today I write my response paper on How does the nature of the relationship between government and business in the U.S. affect the stakeholders of business and government such as consumers, community, employees, natural environment and so forth?
This paper is examining the nature of the relationship between government and business in the U.S. as the two establishments affect the stakeholders such as consumers, community, employees, and natural environment. The main thesis of the paper is that interconnections between the two institutions are intricate and inseparable and the activities of each tend to have significant impacts on the stakeholders. The intricate connections of the two are broad and encompass the financial, subsidy, regulation, and policy making functions. This complex interplay has been evident throughout the financial crisis that broke out in 2006, especially through the solutions implemented by the US government in bailing out some large companies during the said period. Aside from these scenarios, there are cases that the federal and local governments have aided or favored certain large corporations in their pursuit of backing their profitable interests.
Democracy, Capitalism, and Federalism
In order to understand the nature of the relationship between government and business in the U.S. it is important to discuss critically the political and economic frameworks of the country. First and foremost importantly, U.S. is a democratic country, which is why its political framework strongly adheres to democratic principles. Democracy is supposed to determine the true interests of the people, as well as formulate policies that would protect and uphold the true interest of the people. The main principle of democracy is electing people for the good of the whole society. However, in reality, the officials in congress are not elected because of their intellectual acuity and integrity. This feature manifests major flaw of the American democracy, which only serves the elite (Reich, 2007).
On the other hand, U.S. has a capitalistic economy wherein business interests are not only protected but also supported by governmental policies. There is less intervention in the activities of business entities by the government in said economic system. Thus, the economy and political systems of U.S. are guided by the fundamental schemes of democracy and capitalism.
In addition, U.S. has a federal system of government. In a federal government, the check and balance of powers rest on the idea that the federal states are accountable to the people. The various institutions, on the other hand, are directly accountable to the federal states. Thus, all institutions including the national government would have to be responsible for the welfare of the people and sovereign power is supposed to be founded on the decision of the people.
The Issues of Transparency and Accountability
Transparency and accountability are two concepts that are integral in the execution of policy by government institutions as they would affect not only business activities, but also the public welfare. In terms of transparency, the power of the people is manifested through the use of media. Media connects the government to the people.
Unfortunately, officials in Congress may not totally agree with such an idea since it is not their actual interest to be held accountable to the people. In reality, politicians act on the basis of self-interest. There may be few officials who would really perform for certain altruistic acts because most of them have political and economic interests in some business areas. This conflict of interests is a major problem in a democratic system because officials are just running for certain political positions due to personal ambition, fame, or economic interests.
Subsequently, the ratification of any laws is expected to be processed by the Congress and the national congress but with the full consent of the people. Moreover, the true interest of the people should have to be debated and seriously considered by the officials of Congress. Subsequently, the perceived gap between the public officials and the people can be resolved through the mechanism in adhering with transparency.
Essentially, effective governance is directly related to transparency. The performance of the stakeholders highly depends on the profundity of the information that they possess about the workings of the state or an institution. People need to be fully aware of the conditions of the government and how the policy is formulated and implemented. Transparency will only be possible if the prime concern of the officials is the common welfare, and not their own interest. Authorities at the top should be concerned with honor and integrity of their public service. In this perspective, their pride and integrity are highly reliant on the overall performance of the institution. These ideas are the basic understanding of the concepts that would make the officials in Congress accountable to the people whom they serve.
US Government Supports Large Corporations
The strong connection of business and politics in U.S. can also be proven through the support by the government of large corporations. For instance, the bailout strategy offered by the government to large corporations during the 2006 crisis has attracted relevant criticisms. The government has extended financial assistance through credit to selected corporations during that time, in order to salvage the condition of the whole economy (Investopedia, 2009).
Moreover, the U.S. Supreme Court had even declared that it would secure the rights of the corporations at any situations. This decision was done when American Express was charged with alleged monopolistic practices by the small merchants. Another large corporation, Comcast, was supported by the Supreme Court, as well, although the said company was charged by the workers for violating certain civil rights. These two cases demonstrate that the U.S. government has strongly favored business interests in exchange for the welfare of other stakeholders such as the workers and consumers (Political Forums).
In 2013, the U.S. government awarded almost $110 billion in taxpayer’s money to 1,000 large corporations. Among the companies that benefitted from the said bailout program were Boeing ($13.2 billion), Alcoa ($5.6 billion), Intel ($3.9 billion), General Motors ($3.5 billion) and Ford Motor ($2.5 billion), and Good Jobs First. The help was rendered through subsidies that were given in various forms such as cash giveaways, building and land transfers, tax abatements and discounts on electric and water bills (Johnston, 2014).
Worse still than the above cases is the practice of the government’s backing and tolerance related to large corporations’ manufacturing and sales of food products that are harmful to the people. The help is rendered not only through subsidies, but worse still, these corporations can get away with their manufactured or processed products without receiving any regulatory advice from the government institutions. Fast food products, liquor drinks and sodas, cigarettes and other commodities that promote unhealthy lifestyle tend to proliferate in the local market with the approval of the regulatory government institutions (The New York Times, 2014).
Indeed, the corporate welfare is prioritized by the U.S. government while sacrificing the interests of the public as observed in various cases mentioned above in this paper. The most unfortunate part is that transparency and accountability are being ignored since the transactions are typically done without the consultation with the public and the proper authorities, thus violating the basic principles of democracy.
Root Causes of 2006 U.S. Economic Crisis
There is an explicitly clear evidence of the intricate connection between business and politics in U.S. relating to 2006 economic crisis. As one can see, the several factors for the downfall of the economy of U.S. in the said year were related to business and political activities. The major factors were market instability, greediness, the decline of the housing market, and credit problems. This development falls in line with the principle that capital liberalization is not good if not properly monitored and regulated by the state.
The government had allowed the credit companies to give finances to the consumers without checking if there was enough cash available. Unfortunately, the credit system and the extravagant attitude of the American consumers were left unchecked in the recent years before the crisis. In other words, it went out of control. As expected, loans and credits were granted in the amounts higher than money that the consumers could repay. Credit responsibilities were bloated more than they could handle. Consequently, people did not know where to get the payments for those accountabilities while the economy has been gradually declining (Visco, 2009).
In conclusion, politics and business have significant impacts on various stakeholders as shown in the case of the United States. It has been emphasized that politicians are accountable for the growth of the economy depending on their ability to analyze and decide on a course of country’s development within a democratic framework.
Sadly, the entanglement of democracy, capitalism and federalism in the United States has indeed benefitted the interests of large corporations. Though these systems in terms of political and economic organization of the country can contribute to the growth of the society, in reality, they have been abused by greedy politicians and business tycoons in the United States. Politicians tend to put their interest first and neglect the welfare of the people.
It may be convincing theoretically that the politicians should agree to the will of the people in a democratic framework, yet it may be problematic in its application. Accordingly, it is expected that the rich and popular would run for public office not to protect and be accountable to the public but because they have certain political and economic interests. The principle that officials should be responsible for the people is sound in theory, but is difficult to implement.
Democracy is being abused by those who are in power contrary to what is expected of their public service. It is a political concept that is supposed to uplift the lives of the poor. However, contrariwise, it has become the tool of the rich especially owners of large corporations for their own economic benefits. Instead of helping the poor, the affluent sector is able to control the government through democracy.
Investopedia (2009). Top 6 U.S. Government financial bailouts. Retrieved from http://www.investopedia.com/articles/economics/08/government-financial-bailout.asp
Johnston, D. (2014). The shocking numbers behind corporate welfare. Retrieved from http://america.aljazeera.com/opinions/2014/2/corporate-welfaresubsidiesboeingalcoa.html
Political Forums. In major blow to consumers, Supreme Court protects mega-corporations from liability. Retrieved from http://www.spurstalk.com/forums/archive/index.php/t-217868.html
Reich, R. (2007). How capitalism is killing democracy. Retrieved from http://www.thechicagocouncil.org/UserFiles/File/Events/FY08%20Events/11_November%2007%20Events/111407%20Reich%20Article.pdf
The New York Times (2014). The opinion pages. Rethinking our ‘rights’ to dangerous behaviors. Retrieved from http://www.nytimes.com/2014/02/26/opinion/bittman-rethinking-our-rights-to-dangerous-behaviors.html?nl=opinionemc=edit_ty_20140226
Visco, I. (2009, December 4). Global imbalances in the financial crisis and the international monetary system. Retrieved from http://www.bis.org/review/r091211d.pdf