3.9: The Role of Government Flashcards
What is the role of government in a capitalist system?
The government regulates and oversees the economy to ensure things like national security, welfare, law and order, employment insurance, and currency systems are in place.
Government regulation is essential for creating a lawful framework that enables businesses to operate.
What types of regulation exist in business?
Self-regulation: Businesses monitor their own behavior.
Private regulation: Non-governmental organizations set standards.
Market forces: The marketplace itself enforces competition.
Government regulation: The state sets and enforces rules.
How does the Canadian government regulate business?
In Canada, governments regulate competition policy, bankruptcy laws, and intellectual property.
The government also controls labor laws, distribution and sale of goods like alcohol, and even introduces new regulations such as those governing online transactions and organic food.
What roles does government play in business?
Architect of economic growth
Major purchaser of goods and services
Promoter and subsidizer of business
Provider of financial capital (loans and grants)
Rescuer of failed businesses
Owner of business enterprises
How does government protect business interests?
Governments impose tariffs and non-tariff barriers to shield domestic industries from foreign competition.
Canadian industries like textiles and furniture have long benefited from such protections, although critics argue these measures reduce efficiency.
What are the four key areas of government influence on business ethics and responsibilities?
Legal rules of conduct
Protection of business interests
Protection of stakeholder interests
Regulation of large areas of business activity (e.g., pricing, services)
What is deregulation, and what are its effects?
Deregulation reduces government influence on business operations to create a freer, more competitive marketplace.
It leads to higher productivity and lower prices but can also result in reduced environmental standards and financial instability.
What is privatization, and how does it impact business?
Privatization is the process of transferring public services to private sectors, allowing businesses to deliver services once provided by the government.
This can increase competition and efficiency but may also require businesses to adhere to specific government standards.
How is the taxi industry regulated in Canada?
The taxi industry is heavily regulated with strict rules on driver qualifications, vehicle conditions, and operating licenses, which limit competition and increase prices.
The arrival of ride-sharing companies like Uber has challenged these regulations.
What is self-regulation?
Self-regulation is when corporations or industries regulate themselves, not through government or market forces.
This type of regulation is voluntary, often seen as more efficient and effective, and can improve relationships between businesses and consumers.
What are the criticisms of self-regulation?
Self-regulation is criticized for potentially lowering standards compared to government regulation, being ineffective when competition is involved, and lacking adequate penalties for violations.
Critics argue that self-serving restraint by industry participants harms competition and innovation.
What is the Responsible Care® Ethic?
The Responsible Care® Ethic, launched by the Chemistry Industry Association of Canada (CIAC), promotes continuous improvement in health, safety, and environmental performance.
It commits member companies to do the right thing, protect health and the environment, and be accountable to the public.
What are the principles of the Responsible Care® Ethic?
Work to improve people’s lives and the environment
Be accountable to the public
Take preventative actions to protect health and the environment
Innovate safer products and processes
Ensure stewardship of products and raw materials
Engage with stakeholders for enhanced sustainability
What is private regulation?
Private regulation refers to independent organizations, often non-profit, setting standards for responsible business practices.
These regulators are separate from both government and business and often enforce standards through certifications rather than legal penalties.
What is third-party certification?
Third-party certification is an independent review of products or services to determine compliance with safety, quality, or environmental standards.
This certification helps consumers make informed purchasing decisions and allows companies to distinguish themselves as responsible businesses.
What are some examples of third-party certifications?
Marine Stewardship Council (MSC): Sets standards for sustainable fisheries
Forestry Stewardship Council (FSC): Certifies responsible forest management
Rainforest Alliance: Certifies products like coffee, tea, and chocolate
Fairtrade Canada: Ensures fair trade standards for producers of items like coffee and sugar
What are the downsides of private regulation?
Some certification labels can confuse consumers, especially in environmental areas.
Competing certifications may undermine trust in standards.
Enforcement is often challenging, and some certification bodies are less independent than they claim, with potential business influence.
What is ‘Self-regulation’ in business?
Self-regulation is a form of regulation imposed by the corporation or industry itself, rather than by the government or market forces.
It is often seen as faster, cheaper, and more efficient than government regulation because it is voluntarily developed and adapted.
What are some criticisms of ‘Self-regulation’?
Criticisms of self-regulation include its potential to impair competition and innovation due to self-serving restraints by industry participants, lower standards than those imposed by government, ineffective enforcement, insufficient penalties, and lack of public or consumer representation.
What is ‘Market Regulation’?
Market regulation refers to the dynamic forces of a free market regulating corporations through competition, consumer choice, and stakeholder pressures.
In this system, the government does not interfere with business activities, and competitive rivalry is encouraged to correct abuses.
What is ‘Corporate Social Responsibility’ (CSR)?
Corporate Social Responsibility (CSR) refers to the self-discipline of corporations in adhering to ethical norms, social and environmental reporting guidelines, and codes of conduct.
It is the most general form of self-regulation but is sometimes criticized for failing to fully live up to its promise.
