Describing Leviathan

6 Pages
Unlock Document

University of Toronto Scarborough
Management (MGS)

3) Describing Leviathan: A Governing-Instruments Approach  Leviathan: a sea monster embodying evil  Applied to the sovereign state in 1651  Today, used to criticize government and political processes (dangers of expanding public sector) 1.0  business’ prefer more conservative, right wing governments  promise expenditure cuts, privatization of crown corporations, openness to suggestions by individual executives and trade associations  only lasts in the short run (like the honeymoon phase of a marriage)  businesses are unable to contribute broader decisions regarding growth and effectiveness of government and economic nationalism  government influence in the private sector is grossly understated through conventional means of measuring economic activity 2.0  total government spending, G, is significant portion of GNP (more than in the US, but less than in Western Europe)  ratio of G to GNP continues to increase dramatically  exhaustive expenditures: expenditures that use up goods and services that would otherwise be available for private sector activities  transfers: unreciprocated payments to individuals, firms, or other levels of government that alter the distribution of money income but are not included in GNP  transfer to individuals  interest on the public debt  subsidies and capital assistance  transfers to other levels of government (cancels out when measuring GNP)  expenditures by level of government  result in significant changes in fiscal role of different levels of government  method A: calculated by subtracting them from the paying government and adding them to the expenditures of the receiving government  method B: including transfers at the level of government making them  dramatic increase in provincial share of total government expenditures 3.0  tax expenditures: potential revenues the government chooses not to collect  i.e. any form of incentive or relief granted via the tax system  “giving by not taking”  Cost of tax measures to the federal government  income tax expenditures  Governemnt is “paying a subsidy” when it grants tax concession or preference  Many tax expenditures reduce provincial taxes payable for personal income tax  Tax expenditures increase as a percentage of income in each income group 4.0  Economic regulation: the imposition of rules by a government, back by the use of penalties, that are intended specifically to modify the economic behaviour of individuals and firms in the private sector  Typical areas: prices/supply/rate of return/disclosure of information/methods of production/attributes of a product of services/conditions of service  Economic/direct regulation vs. new/social regulation  Direct regulation is industry specific – affects price, output, rate of return, entry/exit  Social regulation covers broad range of industries – affects environmental regulations, consumer protection legislation, “fairness” regulations, health&safety regulations, cultural regulations  Scope and coverage of regulation is consistently greater in Canada vs. the US in almost every industry  Subject to same type of controls in Canada and the US  Expenditures associated with regulation is “tip of the iceberg” (economic impact can be many times greater)  Considerable larger regulatory effort in Canada (great number of regulators)  Growth of regulation indicated by: pages of regulations/number of programs/important legislative initiatives/public expenditures  Federal and provincial regulation growing at similar rate  Concern with growth of regulation directed at social/environmental legislation (however, often more justifiable if properly drawn up b/c more beneficial to society than economic regulation)  Businesses feel government regulation that requires firm to take social costs into account, impose undesirable burden in decision making  However, external costs of private actions need to be accounted for  “road to bad policy is often paved with good intentions”  Internalizing external costs can lead to inefficiency (need to weigh benefits with costs when making decisions to avoid inefficiencies)  Some argue economic regulation is directly and explicitly intended to be economically inefficient to reduce national welfare in favour of designated select group of beneficiaries 5.0  So little is known about crown corporations’ activities  Like an enormous iceberg floating lazily in the foggy north Atlantic; silent, majestic, awesome (?)  Federal crown corporations employ more Canadians than federal departments  Provincial crown corporations’ assets substantially larger than total assets of federal and provincial governments 6.0 nd  Government ranks 2 to the chartered banks among Canada’s financial institutions  Financial assistance concentrated in four sectors: business/exports/housing/agriculture  Provinces are more active in agriculture/natural resources/housing  Account for large portion of long terms loans in agriculture  Major lender and only supplier of credit insurance through Export Dethlopment Corporation  6 largest supplier of residential mortgages and mortgage insurance  4 largest institution in financing business  Not easy to measure the size of subsidies inherent in federal and provincial loans  Use financial costs difference between lending rate and government’s borrowing rate?  Add governments’ cost of administering loan programs?  Measure cash cost, or so
More Less

Related notes for MGSC05H3

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.