Textbook Notes (368,986)
Canada (162,320)
POLS 3470 (14)
Tim Mau (14)
Chapter 1

Uneasy Partnership, Chapter 1 – Business and Government.docx

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Political Science
POLS 3470
Tim Mau

Chapter 1 – Business and Government: The Politics of Mutual Dependence - Businesses of all sizes depend on governments for more or less stable sets of rules that are necessary for them to carry on successfully - Protects against threats or for a hand out in competing with others - Governments depend on business investment for economic activity and growth - Politicians need financial support from businesses to win and hold public office - Governments also have their own interests – perpetuate themselves and define policy goals o Can conflict with business interests - Neither business or government can be considered unitary actors - Reinforced by the realities of regionalism and federalism Political Ideas and the Role of Government in the Economy - Public expectations of governments’ role in the economy may be shaped by normative factors  societal concepts of the public good to be fostered or social evils to be corrected - Economic prosperity and its equitable distribution within society have become major factors in voters’ evaluation of governments - Citizens also look to governments to protect their interests from negative externalities  the direct or indirect effects of economic activities that harm other people o May emerge from abuses or negligence of economic/political power of businesses etc. (ex. Health, safety standards, etc.) - Similarly, governments or political systems that tolerate inequalities of opportunity without providing means for improvement are likely to be challenged by political movements to restructure social/economic relationships Liberal Capitalist democracy (Canada or the United States) Two basic approaches to the distribution of social and economic opportunities: 1. Allocates opportunities through political system (elected politicians, etc) 2. Competitive market economy - Two approaches overlap significantly Political Objectives of Economic Regulation: A historical overview - Spread of democracy reinforced the role of politics in legitimizing structures and outcomes of economic activity - Emergence during the 20 century of large professional bureaucracies to design and administer the policies and programs of a growing public sector has increased the capacity of government elites to play a central role in the workings of the economy Expanding State Power and Autonomy - Raison D’etat: the preoccupation of governing elites with the protection and expansion of their power to serve the interests of the state - Mercantilism  approaches to economic policy that are based on open state partnerships with private capitalist enterprises o Historically, these policies have reflected their rulers’ efforts to finance their activities to preserve and expand their political and military power o Another effect of mercantilism – the economic dependence of colonial economies on the imperial power for defense or internal security, capital to finance economic development and external markets for their products o Has influenced scholars and writers working from a social democratic perspective to argue that business (as a class) has enjoyed a privileged position in its dealings with government  It might be beneficial for fostering economic development but provoke resentment and political competition from other social and economic interests - In direct conflict with ideologies of the market system - Market Liberalism  stresses the importance of individual liberty, the private ownership of property, rule of law, and the 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 o Maximum freedom of economic activity from political control o Recognize the role of government in providing a stable and transparent legal framework to promote the common good - Dominant ideas that shaped Canadian government policies o Elements of market liberalism to public expectations of an active role for government in enabling citizens to achieve greater economic security Building Political Alliances with Major Economic and Social Interests - Neo-mercantilism  protective tariffs and state subsidies for internal improvements o Central to programs of industrialization and modernization o The effect of these ideas on Canadian public policies during the last century can be seen in government initiatives designed to foster Canadian control over economically strategic industries  Ex. Crown corporations as instruments to promote development and growth o Implied a clear distinction of roles between business and government - Alliance Building  reflect the demands of social and economic interests for governments to reduce perceived barriers to their economic advancement o Ex. Social groups efforts to offset economic disadvantages by political action – like Farmers’ groups o Trade unions – trade political support for favourable legislation and improvements to social policies - In Canadian history, a reaction has set in against excessive government economic controls and favouritism in the distribution of economic benefits and in favour of greater liberalization of the rules o Harmful to business and economic development, and reducing the living standards and opportunities available to ordinary middle-class Canadians Distributive Politics - Governments seek public support for their policies to serve interests of particular industries, regions, etc. or to impose penalties on some groups to serve interests of other groups. - May be practiced in the name of ‘public interest’ - In a democratic political system, economic regulations favouring one group tend to promote the emergence of organized interest groups seeking comparable benefits from the state - Social democratic egalitarianism is rooted in the concept of Vertical equity  The redistribution of income, wealth and opportunities by governments from more economically favoured to less favoured segments of society o Critics of capitalist system say it contributes to the UNEQUAL distribution of wealth, income
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