\ Government Intervention
Throughout America's economic and social history there have been scores of arguments advocating and opposing government intervention into the affairs of business. These positions have been promoted by a consortium of public and private institutions, ordinary citizens, as well as a business itself. Many of the arguments in support of constraints against business have resulted in favorable legislation to prevent and eliminate monopoly control of markets and industries.
There have also been positive regulated policies that have addressed issues concerning freedom of speech, false and deceptive advertising, redistributive policies, and regulations to protect the natural environment from abusive business practices. However, government intervention has also produced a significant amount of legislation that has resulted in wasted tax dollars, hindered business growth and development or reduced incentives of newcomers to enter business. Constraints on business have also impeded the advancement of technology, competitive business positioning, and product innovation.
The purpose of this paper is to provide compelling and substantiated positions for government intervention into business affairs, as well as powerful reasons as to why government should exercise restraint into business activities. These arguments will be supported by relevant examinations of U. S. business firms and empirical information. In the United States the complexity of regulatory concerns are intertwined between federal, state, and local governments. However, by virtue of the U. S.
Constitution in Section 8 of Article I , Congress is given the explicit power to collect taxes, duties, imposts, and excises to pay the federal government debts and provide for the general welfare of the nation. The federal government is also given the power to regulate commerce with foreign nations, among the states, provide defense and the authority to coin and distribute money (Todd, 1986-87, 4). This is the authority by which the federal government has exercised its vast influence over business and is known as the "commerce clause" (Steiner and Steiner, 2000, 292).
Therefore, the focus of all regulations in this paper will be from a federal perspective and the appropriate national governing agencies. During the 19th century, expansive economic growth in the U. S. was propelled by the formidable stimulus of industrialization. This time period moved the nation from an entrepreneurial business economy dominated by individualistic farming, to one spearheaded by manufacturing productivity, investment mergers, and banking finance (Steiner and Steiner, 2000, 85). Read about role of extinction in evolution
These business activities provided the synergy that brought extensive control and domination of industries and markets into the control of a few powerful business owners, and corporations (Todd, 1986-87, 7). John D. Rockefeller was one of these forceful elites. Rockefeller turned a $4,000. 00 investment in a petroleum production refinery in 1863 into the Standard Oil Company, which by the 1880's controlled over 90 percent of the oil market and enjoyed monopoly status (Steiner and Steiner, 2000, 69-71). Although, John D. ad a keen aptitude for business and possessed many essential qualities for management of a successful enterprise, he believed it necessary to "rationalize" the complete industry in order to halt its inclination to destructive competition (Steiner and Steiner, 2000, 70). Rockefeller's method for correcting the problem was to monopolize using unscrupulous strategies. Collusive behavior with the flourishing railroads in the form of rebates, secret pacts, bribery, and strong arm tactics with friends and foes became the preferred prescription for success (Steiner and Steiner, 2000, 71-72).
Widespread anger and discontentment reverberated throughout all spheres of the nation, as social attitudes about individual rights and free competition clashed with the predatory monopoly power of Standard Oil. The Supreme Court ordered the breakup of the company in 1911 under the Sherman Antitrust Act of 1890, declaring that its monopoly position was an "undue restraint" on trade that violated the "standard of reason" (Steiner and Steiner, 2000, 76). A glimpse of the Standard Oil Company and John D. Rockefeller provide a profound example of why government intervention will always be a necessary and essential element of commerce.
Despite the fact that Rockefeller's purported reasoning for monopoly control was to eliminate wasteful inefficient competition and maximize product quality, it was a direct assault on the concepts of free markets and trade. In the realm of today's complex marketplace and rapid technological changes, the ability to circumvent regulation is always going to be attractive to business. Many of the business practices of Rockefeller's era are still inherent to the ideologies of increasing market share and maintaining success.
Collusion, bribery, tacit agreements, greed, and the legal manipulation of federal regulatory statutes require a constant evolution of regulations. What role the government should assume is not just an eminently debated issue from the past or never will be. When a business is able to monopolize within a single industry the outcomes can be potentially devastating. The abuse of consumers through price manipulation of supply and demand, and no choice of suppliers in providing products or services is detrimental to the principles of capitalism.
This requires a mandate from government regulation to act as a countervailing power between business and consumers, and also to ensure fair competition and trade between businesses. Many of the laws and regulations of commerce over the years have been written with ambiguous language, such as the anti-trust laws, which have resulted in manipulation of regulations or lawsuits. This also institutes a stalwart necessity for the continuous need of intervention in new forms and with different language.
One cannot think of language in the U. S. without examining influences on freedom of speech or censorship. The First Amendment of the U. S. Constitution forbids the government from curtailing the spoken or printed expression of ideas. This right or law has permitted many forms of expression, such as sexually explicit material or Ku Klux Klan literature (Steiner and Steiner, 2000, 108). Since the advent of rock-n-roll in the 1950's, music has continuously gravitated to a more explicit or open language of expression.
Corporations such as the entertainment giant Time Warner, have drawn much criticism for the marketing and production of the music phenomena called "rap" or "hip-hop". The fact that Time Warner is a corporation and not a government, imposes an obstacle to any government agencies by virtue of the First Amendment, that attempts to prohibit publishing of rap music (Steiner and Steiner, 2000, 109). In March of 1992, Warner Bros. released rap artist, Ice-T's album, Body Count. On April 11 of the same year, a Texas state trooper was shot to death by a 19-year old black man after stopping him in a stolen truck.
Playing on the truck's tape deck was a song by rap artist, Tupac Shakur that spoke of "blasting" a police officer and "dropping the cop" during a traffic stop. The Ice-T album likewise spoke of shooting police and had lyrics about getting weapons to kill police officers in sneak attacks (Steiner and Steiner, 2000, 104-105). Some rap music is also known to be very derogatory, discriminative, and offensive to women. Politicians, civil right groups, and social activists heavily pressured Time Warner to stop the publication of this type of rap music known also as "gangsta rap" but, the company refused.
Corporations continue to enjoy tremendous profits from "gangsta rap" and are allowed to flourish unabated due to a lack of any type of regulations in regard to censorship or codes of conduct in entertainment. The popularity and profitability of violent and degrading music has fueled its business growth and secured the backing of the most successful and prestigious entertainment corporations in America. Producing, promoting, and peddling violent music to the nation is not merely scandalous, it is dangerous to society. Marketing messages of hate and violence sends a false signal about free markets and freedom of speech.
Businesses that publish music must be forced to exercise social responsibility. Corporations that use their resources to perpetuate a belief that is acceptable to abuse women must be forced to reign in their artist. "Gangsta Rap" in music videos and movies depict a perverted glamour in lawlessness. Whatever business glamorizes, it encourages. The fact that certain forms of speech enjoy constitutional protection does not mean they deserve respectability in the realm of business or protection under the law. The right for profits should not be shaded by freedom of speech or lack of legal censorship.
The Federal Communications Commission (FCC) as well as The Federal Trade Commission should receive authorization from the U. S. Congress and Senate, to institute regulations that ensure ethical and moral codes of conduct in the entertainment industry. Although, it is a ginger area for government intervention, the social fabric of American society, necessitates restrictions on the music industry. Music like virtually every product in the marketplace is marketed through advertising. Rampant exploitation of people and products through advertising is another reason for government intervention into business activities.
Alcohol and tobacco products have become the focus of much attention in the U. S. in recent years. Much of this attention has been the result of promotional and marketing techniques employed by these industries. Slick advertising that has associated their consumption with images of a so-called good life, or satisfaction of needs has been achieved by market segmentation and target marketing (Steiner and Steiner, 2000, 582-583). The immense profits enjoyed by these industries are positive evidence that advertising increases consumption.
The Michelob beer campaign advocated drinking on weekdays not just on weekends by using the slogan, "Put a little weekend in your week" (Steiner and Steiner, 2000, 584). An estimated 82 percent of smokers start before the age of eighteen and about 90 percent before the age of 21. Therefore, the quest for attracting young smokers is a payoff with big dividends. The Joe Camel cigarette smoker according to researchers was as familiar to six year old school children as the American icon Mickey Mouse (Steiner and Steiner, 2000, 592).
The health consequences of tobacco smoking and alcohol consumption are more apparent than ever. Social concerns such as domestic violence have been directly attributed to alcohol abuse. Decreased productivity and soaring healthcare cost have a direct correlation to usage of these products. These have direct and external cost to the taxpayers of the nation, yet as in the tobacco industry, in a twist of irony, the government often subsidizes the industry. A domino-like effect from these products are hurting the American society, as well as having detrimental unintended consequences to users and other businesses.
Lost time from employment, costly insurance claims due to illness and negative influences on the country's youth can be directed to the influences of advertising of these products. In no manner does this contend that these products should be banned or illegal. However, intervention in the ploys, marketing concepts and glorified images employed in the many forms of advertising of these products are often false and deceptive. This creates a stringent need for more government intervention.
Throughout the history of the United States, numerous groups segmented by age, sex, race, and religion have made appeals to gain losses resulting from some form of discrimination, regardless if intentional or unintentional. The Civil Rights Act of 1964, despite being instituted primarily due to injustices directed towards Black Americans, covers every race, color, religion, sex, or national origin against unlawful employment practices by businesses (Steiner and Steiner, 2000, 648). The Equal Employment Opportunity Commission (EOCC), under Title VII of the law is the regulatory agency that enforces its provisions.
In Draper, North Carolina, The Duke Power Company, had a steam generating plant, where workers had been openly segregated by race for many years. Of the five divisions in the plant, Blacks had been allowed to work only in the lowest paying labor department (Steiner and Steiner, 2000, 650). After passage of Title VII, it rolled back its openly racist policies and opened all jobs to Black workers. But the company also instituted a new policy to move up the ladder of attrition, that required having a high school diploma.
Black workers in Draper were less educated than their White counterparts, which made this requirement frustrate their ambitions (Steiner and Steiner, 2000). In a 1971 Supreme Court Case, Griggs vs. Duke Power, the court ruled that diploma requirements and tests that screened out Blacks were illegal. This gave birth to the 1978 EEOC guideline known as the 80 percent rule. A business adhered to the guidelines of the rule, if it hired minorities at the role of at least 80 percent from the demographic group that provides most of its employees (Steiner and Steiner, 2000, 651).
Many new regulations governing hiring practices and employment issues have been instituted and challenged in U. S. courts since this time. Attempts to redistribute resources of the nation in jobs, business opportunities or government contracts have been supported by regulations of business. There have also been successful challenges to many of these policies that have resulted in new regulations to redistribute resources on the opposite plan of their original intentions (reverse discrimination). Regardless of the purported platform, the need for the end result is not diminished.
Intervening into business procedures is going to always be necessary to right pass or present injustices in American society. The scope of the nation's resources must not only be protected in jobs or business opportunities but also in the impact business produces on the natural environment and the nation's number one resource, people. Toxic dumpsites, chemical brownfields, air and water pollutants have resulted in the creation of many environmental regulations and governing agencies (Steiner and Steiner, 2000, 492).
Industrial pollution has endangered the environment and the health of U. S. residents. In an Indian pueblo in New Mexico, Dr. Daniel Schultz, a surgeon at the Santa Fe India Hospital diagnosed alarming rates of malignant mesothelioma in 1984, 1985, and 1970, 1982 (Steiner and Steiner, 2000, 482). It was later discovered that a 1930 brick-manufacturing plant in the area had a private railroad to shuttle between the plant and the Santa Fe main railroad that used a steam locomotive. Workers discarded insulation made from asbestos, along the railroad tracks, when replacing it on the boiler and pipe of the steam locomotive (Steiner and Steiner, 2000, 483).
Indians from the pueblo would pick it up and found many uses for it in their homes and rituals, which resulted in sickness (mesothelioma) (Steiner and Steiner, 2000, 483). Often time workers and communities have limited information or knowledge concerning the effects of industries operating in communities. Although, the workers discarding the insulation in 1930 were more than likely not aware of its adverse affects, many businesses because of cost will attempt to deliberately ignore environmental concerns to people and nature.
In fact, businesses are often reluctant to provide information to employees concerning materials used in manufacturing or associated health risk. Government regulations prohibiting contamination of the environment is crucial to the health and prosperity of the nation. Businesses must not be allowed to sacrifice the health of employees, neighborhoods, or waterways for the sake of economic growth or increased productivity. When considering cost-benefit ratios the value of human life should be the chief concern of any and all government intervention.
The business advantage of knowledge and information, over an unknowing public should be greatly reduced by regulations. A variety of examples have provided strong arguments for why government must always intervene in the activities of business. By the same token there are strong arguments as to why government should not intervene into business activities. Government regulation can require a delicate balancing act between real costs and expected benefits. Business firms often know from experience that left of center policies won't work satisfactorily.
They often can lead to excessive spending, waste, inefficiency, and ineffectiveness in government itself and businesses. Total cost of the burdens of regulations on the private sector in recent years, ranged in the $600 to $700 billion dollar area. The scope of regulations is said to be so huge that no corporation could faithfully comply with all of the laws and policies to which it is subject (Steiner and Steiner, 2000, 309). The fate of the Northern Spotted Owl, the logging industry and excessive regulations provide an optimum reason against government intervention.
To keep saw mills running in the Pacific Northwest wood products industry, the harvesting of some old growth timber is essential. A forest that has developed undisturbed through stages is considered old growth (Steiner and Steiner, 2000, 508). The Northern Spotted Owl prefers old growth for habitats, and early studies suggested that they lived in old growth forests but, subsequent studies have shown that they have the ability to live and breed in younger forest and forest that have been logged (Steiner and Steiner, 2000, 510).
The Owl was even living in a maple tree in downtown Everett, Washington between a fitness club and local pub (Steiner and Steiner, 2000, 511). In the 1980's, environmentalist groups concerned about the extinction of the bird and dwindling old growth forest began to invoke the Endangered Species Act. Their concern was to propel the thought of forest preservation over the interests of timber companies, lumber mills, and logging communities. In the U. S. virtually all old growth is on federal land managed by the U. S.
Forest Service and the Bureau of Land Management. Companies bid for the right to log on selected lands of timber (Steiner and Steiner, 2000, 513). In 1990, the Northern Owl was listed as a "threatened species" by the Department of Interior, and the total region of the U. S. experienced the consequences. Furthermore, logging was banned within 70 acres of a nest, and sharply restricted within a 2,000 mile radius. A three year ban was also instituted, even when a nest was found empty, to ensure that it was abandoned (Steiner and Steiner, 2000, 515).
Halted timber sales had an adverse effect on small town economies, mills, trucking, and shipping businesses. Companies were even forced to import lumber from foreign companies. Government programs paid over $1 billion dollars to retrain jobless workers, and landowners sued the government successfully for loss of land use (Steiner and Steiner, 518-519). There is no doubt that old growth forest has intrinsic value and the spotted owl is a value to nature. But the cost of the regulations in this case far exceeds the benefits.
Total towns were economically decimated, businesses were overwhelmingly harmed and private citizens suffered financially as well. In fact, the lawsuits required the federal government to pay millions of dollars to damaged claimants. These regulations are hurting taxpayers because it is their dollars being paid out. These policies also were detrimental to the concepts of competition and fair trade, considering companies were seeking foreign suppliers in order to continue operations.
A classic example of government inefficiency and ineffectiveness can be seen, as the government attempted to pacify certain interest groups (environmentalist) at the expense of business and citizens (humans) over wildlife that could actually survive in other environments. Government regulation should be created with the intent of increasing business opportunities and competition not destructive to these concepts. Government intervention into the activities of business should be predisposed to making for more efficiency, and modifying situations, not causing a pernicious economic atmosphere.
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