Textbook Notes (358,576)
Canada (155,751)
POLS 3470 (14)
Tim Mau (14)
Chapter 1

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University of Guelph
Political Science
POLS 3470
Tim Mau

Chapter 1 – Business and Government: The Politics of Mutual Dependence The Reality of Mutual Dependence - North American business marketplaces – individualism, private business, survival in world of intense competition and unforeseen changes in business environment - businesses depend on governments for more or less stable sets of rules - look to governments for protection against threats or hand-outs - governments depend on business investment for the economic activity and growth vital to prosperity and employment of citizens, tax revenues and public satisfaction to win re-election - politicians look to businesses for financial support necessary to win and hold public office - since colonial era gov cooperation with business has been major factor in ability of politicians to promote the settlement and development of Canada’s huge under populated land-mass – helping relatively underdeveloped regions catch-up with more populous and prosperous areas - other social and economic interests have organized to challenge the ability of the strongest business groups to define the public interest in ways that serve their own interests - govs also have their own interests – define goals independently – can result in conflicts with business - political and economic systems mutual interdependence - blends elements of politics and economics for both parties - Canada – diversity reinforced by federalism and regionalism and competing interests of different economic and societal sectors - reflected in organizational and economic fragmentation of business interests and numerous departments and agencies in various levels of gov - political and bureaucratic influence over economic activity is pervasive - may be exercised through specific policy decisions and gov actions (direct), framework policies that shape context for both public and private economic decision-making (indirect), or by allowing broad discretion for personal and private choices in the marketplace - diversity of business and social interests creates fertile groups for political conflict as different groups attempt to influence gov policies in their favour - Canada’s openness to international economic forces makes the political system increasingly dependent on the effective operation of the market economy to create new wealth, sustain and expand economic opportunities and employment, generate tax revenues needed to pay for public services - without a growing economy, gov decisions that redistribute income, opportunities or market share, directly/indirectly, through taxes, transfers, regulations, or some policy instrument can easily become a zero-sum game in which one group’s economic gain is offset by another’s loss political ideas and the role of the government in the economy - public expectations of government’s role in the economy may be shaped by normative factors: - societal concepts of the public good to be fostered - social evils to be corrected - also reflect pragmatic issues – citizens’ relative economic well-being, need for political support, or protection against hostile economic circumstances - govs exists not only to promote the public good byt also to define it in ways that link the perceived interests of a majority of citizens with their policies and priorities - competing ideas define, justify, and challenge the relationship of govs with different aspects of the economy - Canadians usually expected govs to play an active role in promoting economic well-being – distribution of public works and gov contracts in patronage-driven politics of 19 and early 20 century or attempting to combine a dynamic market economy with a growing welfare state and increased social opportunities through Keynesian policies (after World War II) - also look to govs to protect their interests from negative externalities of economic decision-making – the direct/indirect effects of economic activities that harm other people - abuses of economic/political power by businesses, unions or economic associations - health, safety, natural environment, property rights, international - also influenced by existing economic structures - policy decisions also reflect evolution of Canada’s federal systems that must balance regional interests, national and international trading, financial systems - Canada & US – liberal capitalist democracy - 2 basic approaches to distribution of social economic opportunities amoung citizens: 1) opportunities and resources through the political system at the discretion of elected politicians, bureaucrats, or quasi-autonomous regulatory structures 2) competitive market economy functioning on the basis of known rules that are generally applicable to all participants as producers, workers, or consumers - Canada reflects both political objectives of economic regulation: a historical overview - demonstrates numerous ways to politicize economic decision-making - concept of an economic marketplace functioning more or less independently of direct political directions and control only entered the mainstream of th political/economic thought during 18 century in American colonies and Western Europe - as rulers’ efforts to exercise political/economic power at the expense of citizens – rarely resulted in lasting prosperity/growing national wealth - spread of democracy in 19 century and 20 century reinforced role of politics in legitimizing the structures and outcomes of economic activity - 20 century large professional bureaucracies to design and administer policies/programs of growing public sector has increased the capacity of gov elites to play central role in workings of some means in addition to periodic elections to give legitimacy to policy preferences of elites - power of state may also be used to redistribute economic opportunities and benefits to particular groups in society – equity and justice or as a means of appealing to the self-interest of particular social/economic groups in return for their political support in gov policies expanding state power and autonomy - public interest in governments involvement in economy – raison d’etat: the preoccupation of governing elites with the protection and expansion of their power to serve the interests of the state - mercantilist approaches to economic policy are based on open or tacit state partnerships with private capitalist enterprises and other major economic interests with sufficient political clout to secure gov support “in the national interest” - historically – economic policies of govs have reflected their rulers’ efforts to finance their activities and to preserve and expand their political and military power - after effect of mercantilism – economic dependence of colonial economies on the imperial power for defence/internal security, capital to finance economic development, and external markets for their products - socialist to social democratic perspective - rooted in classical liberal or contemporary neo-conservative political economy, market liberalism stresses the importance of individual liberty, the private ownership of property, the rule of law, diffusion of both political and economic power to maximize the social and economic well-being of individuals and the collective well-being of the community - market liberalism: seeks to achieve the maximum freedom of economic activity from political control & preservation of competition, the maintenance of social order (social cohesion) and promotion of economic opportunity and well-being - recognize the gov in providing stable and transparent legal framework to promote the common good Nationalism and the
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