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Canada (161,660)
York University (12,802)
ADMS 1000 (315)
Chapter 7

Chapter 7 political context.docx

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Department
Administrative Studies
Course
ADMS 1000
Professor
Natalie Guriel
Semester
Fall

Description
Chapter 7- Political Context The Canadian Business Enterprise System: Fundamental Features Business enterprise system 1. What goods and services are produced and distributed to society 2. How the goods and services are produced and distributed to society The Canadian business enterprise system- capitalist economic system 1. Rights of individual  Individual has every right to pursue their self interest , includes seeking to make profits from the business enterprise  Limits placed through government regulations o Ex: selection criteria for a certain job 2. Rights to private property  Individuals have the right to own land, labour, and capital  Uneven redistribution of wealth in society 3. Competition  Sufficient competition among business enterprises will ensure that business provides the goods and services required by society at fair cost  Invisible hand \perfect competition does not exist 4. The role of government  Minimal government interference in business enterprise system Communism  Capitalist system allows the individuals or business the responsibility for the allocation of resources  Where as communist places the responsibility for the allocation of society’s resources in the hands of eh government The Roles of the Government The Tax Collector Role Revenue taxes  The intent of revenue taxes is to collect money in order to help fund government services and programs. Revenue taxes include individual taxes as well as corporate income tax, along with property tax and sales tax. 
 Individual Income Tax  Largest source of revenue for the federal and provincial governments; income of individuals Corporate income Tax  Second largest source of revenue for the federal government  Corporation taxed on their net profit at a combine federal and provincial rate  Policy to manipulate tax to stimulate government investment Sales Tax  Revenue source for most provinces  Revenue source for federal government  Retail stores act as collection gents  GST (GOODS AND SERVICES) is a value added tax Property Tax  Largest revenue source for municipal governments  Fund the operating cost of the municipal government and its services Restrictive taxes  Restrictive taxes are primarily aimed at controlling or curbing the use of specific products or services. o Excise taxes  Applied to goods or services that the government desires to restrict such as cigarettes and alcohol o Customs duties and Tariffs  Tax on goods imported from other countries  Protects domestic industry The Business Owner Role: Crown Corporations  A Crown Corporation or public enterprise is an organization accountable, through a minister, to parliament for its operations. Crown corporations may be federal (e.g., Canada Post) or provincial (e.g., the Liquor Control Board of Ontario (LCBO) Why do we have them?  To implement public policy that includes protecting or safeguarding national interest  To protect industries deemed to be vital to the economy. Ex: the Canadian Radio Broadcasting Commission was established by the Canadian government in 1932 to administer a national broadcasting service in order to prevent Canadian broadcasting becoming inundated with material originating in the US.  To provide special services that could not otherwise be made available by private business. For example, Trans Canada Airlines (Air Canada) was established in 1930s, after observing that no private business was willing or able to provide domestic air services.  To nationalize industries that was considered to be “natural monopolies,” including the generation and distribution. 
 Benefits and Disadvantages of Crown Corporations 
  Crown corporations can be both good and bad. Yet there are more positive than negative effects of crown corporations. o For example, crown corporations provide high quality services such as public health care and free education. If these sectors were to be privatizing there would not be any public health care or free education. However, crown corporations are not only good, as they don’t face competition, which is one of the main sources of success. 
 The Regulator Role  Government economic regulation has been defined as “the imposition of constraints, backed by the authority of a government, that are intended to modify economic behavior in the private sector significantly.”  Imperfect Competition o Imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied.  Perfect Competition o Optimal number of competitors iin any given industry to ensure fair pricing and distribution of the goods or services at the highest possible level of quality Public Interest  protect the public interest.  Instead of having established its own public enterprise, government can control the operations of a private enterprise through regulations.  The government has also established a competition policy to control the nature of competition in the business sector.  This is intended to stimulate open competition and eliminate any restrictive business practices with the aim of encouraging maximum production, distribution and employment opportunities. o Tribunals, commissions, agencies, boards o CRTC  The Canadian-radio television and telecommunications commission  Grants licenses  Must meet programming requirements o Canadian Transport Commission o Provincial liquor boards  Consumer Protection o Department of consumer and corporate affairs o Food and drug act o Hazardous product act  Environmental Protection o Environmental Contaminants Acts  Competition Policy o Competition act  Eliminate restrictive trade practices Government as a Partner of Business Industry Strategy  Government policies that directly affect the pattern of industrial development  Assistance in areas like research and development, innovation, strengthening export market, skills training programs Government Assistance to Private Business Protectionism  Long history in Canada  National policy 1879 o Eg use of Tariff to curb purchases of foreign goods  Incentive programs o Encourage managers to engage in certain activities in a desired manner o Financial support for such activities would influence decisions to engage in these activities  Property tax incentive  Government Assistance o Industries with leading-edge technology, or those providing highly skilled jobs, or oriented towards exports, might be among the more likely recipients of government aid o Bail our of Chrysler o Encourage business to remain in Canada  Pratt- whitney Canada Bailouts  refers to government assistance given to prevent an organization or industry from financial collapse.  A bailout is when a bankrupt, or nearly bankrupt, business is given more “liquidity” in order to meet its financial obligations.
  A government would usually enter into a bailout if the failing company is very large company and conseque
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