Federal Regulations of a Business
To what extent should the government intervene in the economy?
The notion of government intervention in the economy is fundamental to mitigate the shocks and externalities that may negatively affect economic performance. The control of the market monopoly power and prices of products and services is essential to create a sense of fairness in the economy. The intervention of government is critical for enhanced capacity to maximize the social welfare of a country, impacting on the capacity to create equal opportunities and potential to thrive for all companies. Three crucial aspects dictate the extent to which government intervention is significant in the economy.
First, the creation of greater equality is essential for wealth and income redistribution in the country (Labonte, 2010). Companies and regions that lag in the economic performance can access a fair market based on equality for access to opportunities without being surprised by well-established companies and access to equality of outcomes that they can generate in the economy. Despite government intervention, competition is essential, and a crucial part of the economy.
Second, the aspect of market failure places government interventions as crucial to mitigating externalities. The government’s swift action in the management of subsidies is critical to respond to market failures.
Third, the intervention on macroeconomic aspects is vital to resolve the problems of unemployment and prolonged recessions. A free market where companies operate with any form of government intervention is bound to succumb to the enormous effects of prolonged recessions on the economy (Belsky & Wachter, 2010). Thus, government intervention introduces key measures vital to overcoming the recession period, as well as reduce the rate of unemployment in a country that adversely affects the economy.
Are there limits to government oversight of corporations?
The government oversight of corporations is limited to the aspect where potential bias may prevail, undermining the functionality of the corporations. The government’s oversight is designed to ascertain accountability, ascertain the protection of the employees, as well as, protection of the environment in which the corporations operate (Coglianese et al., 2004). However, government oversight has no mandate to control the operations of the corporations or determine the direction they take so long it complies with the regulations set. The legal limits posit the main limitation of the government’s oversight role on corporations. Thus, the optimum limit in which governments can operate is based on regulations set by the Congress legislations.
Does regulation diminish the ability of businesses to thrive and compete in the global marketplace?
The existence of stringent government regulations may adversely affect the business potential to thrive and compete in a global marketplace. The diminishing of the potential of businesses varies from regulations in different countries. For instance, the United States stipulates strict regulations on the workplace environment and the rights of the employees. This may differ with the regulations of emerging markets that run rampant and highly unregulated with strict measures. With a company require to pay $18 per hour in the U.S. to meet the minimum wage cannot compete equally with a company paying $4 per hour in the production labor in emerging markets (Bishop, 2018). The products in one country are bound to be cheap – diminishing the capacity of the businesses in developed countries such as the U.S. to compete equally (Passaris, 2006).
Belsky, E. S., & Wachter, S. (2010, February). The need for government intervention to protect and advance the public interest in consumer and mortgage credit markets. In a National Symposium (Vol. 18, pp. 2010-19).
Bishop, J. (2018). The Effect of Minimum Wage Increases on Wages, Hours Worked, and Job Loss| Bulletin–September Quarter 2018. Bulletin (September).
Coglianese, C., Keating, E. K., Michael, M. L., & Healey, T. J. (2004). The role of government in corporate governance. NYUJL & Bus., 1, 219.
Labonte, M. (2010). The size and role of government: Economic issues. DIANE Publishing.
Passaris, C. E. (2006). The business of globalization and the globalization of business. Journal of Comparative International Management.
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