​Brief History

Business and Public Policy
  • Calvin Coolidge’s saying “The business of America is business” rings true and applies almost all the time
  • Nobody lobbies like business lobbies
    • Domestic and foreign corporations and their trade associations “account for the preponderance of politically active groups within the United States”
    • Almost every business wants its Washington representatives to work to keep taxes on business low and regulation sparse
    • Much business lobbying, though, pits one business interest against another
      • Cable TV and the broadcast networks, for example, compete for regulatory advantage and railroads are not interested in government subsidies for the airlines or truckers
Corporate Corruption and Concentration:
  • The corporation has long stood at the center of the American economy
  • Corporation and chief executives seemed to be modern symbols of American success
  • As the stock market turned, however, investors and retirees lost millions
  • Corporate corruption played a major part in this downturn
    • Corporate leaders from Enron, Tyco, Healthsouth, and other companies were charged with fraud and went to prison
    • Since the 1980s a new form of entrepreneurship has flourished – merger mania
  • Conglomerates buying up and buying out other companies have spent billions
    • There are now only two major credit card companies, only four publishers publish the vast majority of all school textbooks, there are only six cell phone companies, and oil companies have bought one another out, leaving only half a dozen major ones
    • The publisher and media conglomerate Time Warner was bought out by AOL and shareholders have rued ever since
  • At turn of twentieth century, powerful corporate titans took control of entire industries
  • After they eliminated competitors, they could charge customers essentially whatever they wanted
    • Rockefeller’s control of oil refining was most famous example
  • Government regulation of business is at least as old as the first antitrust act, the Sherman Act of 1890
    • The purpose of antitrust policy is to ensure competition and prevent monopoly
    • Antitrust legislation allowed the Justice Department to sue in federal court to break up companies that control too much of the market
Regulating and Benefiting Business
  • The corporate scandals of the early twenty-first century led to a new wave of calls for business regulation
  • Although business owners and managers, especially in small business, often complain about regulation, they should also remember some of the benefits they get from government
    • The government gives protection for inventions and creative works in the form of patents and copyrights
    • The federal government is the principal source of research and development funding in the United States
  • Businesses organized for lobbying have been around for years; consumer groups, by contrast, are a relatively new arrival on the economic policy stage
Consumer Policy
  • Originally, the governing economic principle of consumerism was "let the buyer beware"
  • The first major consumer protection policy in the U.S. was the Food and Drug Act of of 1906.
    • It prohibited the interstate transportation of dangerous or impure food an drugs.
  • Consumerism rose in the 1960s under the leadership of activists, such as Ralph Nader. These activists argued that it was the government's responsibility to be a watchdog on behalf of the consumer.
  • The 1960s and 1970s saw a flood of consumer protection legislation.
    • The Product Safety Act (1972) created the Consumer Product Safety Commission, which regulates things such as toys and lawn mowers.
  • The Federal Trade Commission has also become involved in protecting consumer interests through the regulation of advertising and the prevention of false advertising
  • Today, the Food and Drug Administration (FDA) has broad regulatory powers over the manufacturing, contents, marketing, and labeling of food and drugs. However, decreases in funding have resulted in the FDA being overburdened and understaffed.

Labor and Government
  • Originally, the federal govenrment allied with business elites to squelch labor unions.
  • The courts interpreted antitrust laws as applying to businesses and unions.
  • The Clayton Antitrust Act of 1914 exempted unions from Businesses.
  • The major turnabout in government policy toward labor came with the National Labor Relations (Wagner) Act
    • Guaranteed workers the right of collective bargaining
  • After World War II, the government tilted policy back towards management.
  • However, unions have had some successes recently, such as unemployment compensation and minimum wage standards.


Policymaking and Interrelated Activities

  • Executive: The President must decide if they are any important business issues at the time and he may ask his chiefs of staff or Congress to look into them.
  • Legislative: Congress can levy certain taxes and businesses and also create regulations that businesses must follow through different laws. They can also create antitrust laws to prevent monopolies from being formed.
  • Judicial: The Supreme Court often hears cases regarding the legality of "monster" corporations and whether or not they are violating antitrust laws or creating a significant monopoly. It must also determine whether business laws created by Congress are constitutional and in accord with Congress' enumerated and implied powers to regulate businesses.
  • As described above, these three branches of government must work together to both regulate business and ensure its prosperity for both the sake of the American people and the American economy as a whole. They must work to pass legislation with the goal of promoting business without letting monopolies form and also must work with the bureaucracy to implement major policies.

Consumer Policy
  • Executive: The President must decide what consumer policy issues are important at the time and asks Congress to look into these issues
  • Legislative: Draft and debate bills to determine legislative actions that could help consumers be better protected.
  • Judicial: Must determine whether the consumer protection laws enacted by Congress are constiutional and in accord with Congress' enumerated and implied powers.
  • As described above, these three branches must work together in order to ensure that new policies are passed constitutionally and with the interests of the public in mind. These three branches must also work with the bureaucracy to ensure that the federal agencies are able to implement this policy.

Labor and Government
  • Executive: The President has the power to halt major strikes by seeking a court injunction for an 80-day "cooling off" period. The President can also ask Congress to look into relevant issues.
  • Legislative: Has had to decide on the legality of unions and whether they should be legally considered as monopolies or trusts. Also explore legislative options with the introduction of relevant bills or ideas from the President.
  • Judicial: Must determine whether unions constitute trusts; also determine the constitutionality of laws that deal with unions and labor relations.
  • As described above, these three branches must work together in order to ensure that new policies are passed constitutionally and with the interests of the public in mind. Additionally, the government sometimes has to intervene during strikes in major industries, such as the coal mining industry.

Tracking the Toyota Recall
  • After experiencing problems with the accelerator pedal, many people sued Toyota using the judicial system. After seeing the large number of problems that were reported with accelator pedals, the House Panel of the National Traffic Safety Administration held a hearing to judge Toyota's actions regarding the recall of more than 8 million vehicles. Since that time, Toyota has attended another hearing, this one in front of the House Energy and Commerce Committee, in which the company was fined a record $16.4 million for failing to acknowledge the defects in a timely manner. This shows how the branches of government work together during conflicts to resolve any issues that affect the public.

Role of Non-Governmental Groups

  • Examples of Non-Governmental Business Groups
    • BINGO (Business-friendly International NGO)
    • The Business English Special Interest Group
    • Nation Association of Private Enterprise
    • The National Business Association
    • The American Small Business Association
    • U.S. Chamber of Commerce
  • These groups serve as "civil society organizations." They often send representatives to Washington D.C. to work on keeping taxes for business low and regulation sparse. These groups often lobby against one another in Washington to gain the specific benefits that they want and to ensure that their constituents' businesses grow and prosper. Overall, they help businesses of all sizes to minimize costs and provide information.

Consumer Policy
  • Examples of Non-Governmental Consumer Advocacy Groups
    • Consumer Alert
    • Better Business Bureau (BBB)
    • Public Knowledge
    • Consumer Reports
    • ConsumerWatch.com
  • These groups try to keep consumers aware of the latest news and developments in consumer issues. These issues include things such as safety reviews and recalls of unsafe products. Groups such as the Better Business Bureau also try to protect consumers from companies with shady records and past histories.

Labor and Government
  • Examples of Non-Governmental Labor Groups
    • Unions
      • United Auto Workers
      • AFL-CIO
      • Industrial Workers of the World
      • Pilot Unions
      • Teacher Unions
    • U.S. Chamber of Commerce (Pro-Employer/Management)
  • These unions try to organize members in order to negotiate the best possible workplace environment and compensation for their members. They negotiate things such as pay, vacation time, and injury/disability compensation. Pro-management groups such as the U.S. Chamber of Commerce are trying to protect the interests of the employer and negotiate with the unions on the management's behalf.


Impact of Policymaking on the American Public

  • Business policymaking has an especially large impact on the American public. By issuing regulations and taxes, Congress has a direct influence on businesses of all sizes. Additionally, the Supreme Court can hear cases regarding antitrust policies and monopolies that are being formed also having an impact. As a result, the goods and services that are provided to the American public are altered becasue of these decisions and changes, whether prices increase or decrease. Thus, everyday consumer needs based on business are essentially regulated by policymaking by the government.

Consumer Policy
  • Consumer policy policymaking has a large impact on the American public. Establishing recalls on unsafe products and providing reviews helps consumers to make the best choice in regards to purchases. Consumer policy groups such as the BBB can also help prevent consumer from being ripped off by disreputable companies.

Labor and Government
  • Policies that involve labor greatly impact many Americans, especially those who are part of unions. Members of unions are impacted by decisions such as right-to-work court cases (employees cannot be forced to join unions) and, in the early 1900s, laws that established that unions were not to be considered trusts. Also, strikes can cause many conflicts; when the government ends strikes, it generally allows for both management and employees to gain from negotiations.

Current Issues

  • Through American history, there have been many historical and current, legal and alleged monopolies on certain areas of business. One of the most notable current so-called monopolies is Microsoft. Microsoft has had several problems in the past with becoming a large corporation. In 2001, it settled antitrust litigation in the United States and it was fined by the European Commission in 2004. The company also encumbered a fine of nearly $1.35 billion in 2008 for incompliance with the 2004 rules set in place. Also, Microsoft is considered by many of being a monopolist on the desktop market, as they hold nearly 100% of that market, and can more or less dictate what happens in that market. Furthermore, the court case United States v. Microsoft Corporation arose and was a set of consolidated civil action filed against Microsoft pursuant to the Sherman Antitrust Act.

Consumer Policy
  • One of the most well known consumer policy issues is the recall on more than 8 million Toyota vehicles. These vehicles were recalled due to defective accelerator pedals. After a hearing before the House Energy and Commerce Committee, Toyota was ordered to pay a $16.4 million dollar fine for failing to acknowledge the defects promptly. More recently, Toyota has announced that it will recall the Lexus GX 460 SUV due to stability issues that were first reported in a Consumer Reports Magazine safety warning. Toyota has also been forced to recall more than 600,000 Sienna minivans due to a problem with the spare tire carrier cable.

  • Another recent consumer policy issue concerns the safety of toys made overseas. There are some concerns that these toys could be made with materials that are hazardous, especially for young children. It is due to consumer advocacy groups that such information has been released to the public; by doing this, they have helped keep many children safer.

Analysis of Current Policy

  • The current policy of business representatives working directly with Washington officials and Congress creating antitrust laws to prevent monopolies from forming has been around for a long time, but definitely has a few problems with the system. The main issue is the fact that business, especially large corporations and ones that form monopolies, control an enormous deal of money. With the PAC, interest groups, and 527 groups that these businesses create, their money has a direct link to the government officials. In turn, government officials may be pressured to vote certain ways or to ignore the monopolizing of a business if they (or their party) are receiving funding or endorsement from these businesses.
Consumer Policy
  • The current policy of holding hearings to examine the actions of companies that have produced defective products and have knowingly failed to acknowledge the problems is working quite well. It ensures that companies are held accountable for mistakes. However, one improvement that could be made is to expedite the hearing process so that settlements are not dragged out, as they sometimes are. This could be done by possible creating a consumer advocacy court for regions of the country that would allow these cases to be heard without delaying other cases that are awaiting trial.
Labor and Government
  • The current practice of collective bargaining is working quite well. However, strikes still occur when management and labor are unable to reach compromises. This practice could be amended by imposing government guidelines when strikes are about to occur. Then, both sides would be subject to government labor policies while they worked out their differences. Not only would this involve less frustration during negotiations, but it would allow for work to continue while negotiations are conducted.

Works Cited

Edwards, George C., Robert L. Lineberry, and Martin P. Wattenberg. Government in America: People, Politics, and Policy (12th Edition). 12 ed. New York: Longman, 2005. Print.