Government & The Economy - Report Example

Introduction The competitive market system is a market with a huge number of sellers and buyers. A competitive market consists of adequate number of buyers and sellerswhere none of the buyer or seller can affect price on the market.According to Keynes, a perfect competitive market system is a method of ongoing ruthless struggle for survival of carrying popular profit-makers to the top. Keynes also stated that there must be no safety or compassion for sellers of buyers on embarking their labor in the erroneous path. The continuation of American prosperity is hugely dependent on the application of competitive market system. The increase of regulation and complex tax code has created a huge impact on economy of America. The complementary, collaborative and restrictive action of government on imposing regulation and tax created positive and negative impact on American business. The prime purpose of the report is to provide evidence and reason behind the degree of truth on upsurge of government regulation in the competitive market system. Discussion A perfect competitive market system consist of certain characteristics such as organizations can liberally exit or enter the market, seller offer various goods which are same and large number of sellers and buyers are available in the market. Charles Darwin stated that, “the fittest win out in the struggle for survival which is mainly due to the fact that they have the capability to adapt in the changing environment at the expense of other rivals”. This statement of nineteenth century is regarded as the valuable source of knowledge for survival of the fittest. This resembles the fact that competition is intense in the era of globalization. Every brand competes against the rivals to create innovative products to sustain in the competitive market. The competition is regarded as the backbone of economic policy of United States of America. Positive impact of federal regulation of America United States government has set business regulations in order to protect the environment, hold corporations accountable and protect rights of employees. In this era of business-driven society, it can be notified that some of the regulation of U.S. government can be stand out more significant than that of other regulation (Adamson and Andrew 102). This is mainly due to the fact, their relevance to every consumer and employee of United Sates of America. The regulation of government is occurred at the time of significant undesirable economic externalities, undesirable market structures and price discrimination.Office of Management and Budget released a draft report on major federal regulation. According to the draft report, it has been estimated that major benefits provided by federal regulations is increased from 135 billion dollars to 218 billion dollars annually. In 2004, Occupational Safety and Health Administration regulatory program has been benefited significantly. Same goes for EnergyEfficiency and Renewable Energy regulatory programs is benefitted by 4.7 billion dollars. Clean Air Regulations and clear Water Regulations is benefitted by 163 billion dollars and 8.1 billion dollars respectively. Consumer welfare can be maximized by well-regulated competitive markets and can also help to raise economic growth (Allan 190). The advancement of technology and upsurge of competition has influenced markets to thrive by providing more cost-effective and better products to customers than that of competitors. The presence of effective completion in the market system can benefit consumer by having better quality of products with lower prices and greater choices. The role of government is vital for the development and economic growth of a country. Some of the introduction of costly regulation is mainly due to improvement of air quality, ensuring safe working environment and reduction of energy consumption. The Department of Agriculture is the agency which issues large number of regulations. There is an inextricable link between markets and government. It has been noticed that Government of United Sates has moved from structured safeguards to nonstructural safeguards. United States uses two common structural safeguards such as separate subsidiary requirements and line-of-business restrictions. Line-of-business restrictions are one of the structural safeguards used to prohibit the entrants of new telecommunications firm in the competitive market system. A separate subsidiary requirement structural safeguard is allowing leading firm to enter in to a competitive market. Moreover, there is a requirement on this structural safeguard which is dominant company can enter only through a separate subsidiary company. There are some of the broader approach implemented by Government of America to promote competitive market system. The application of rules and regulation of government in markets is to influence market outcomes and enhance the efficiency of the market to work more effectively. The introduction of set of regulations helps to create institution which is necessary administration and regulates the suitable conduct of individuals and businesses (Chronister 19). The introduction of consumer’s law is to protect consumers from frauds and scams. In case of competition law, it benefits market to ensure that dominant firms cannot distort the outcome of the market by avoidance of businesses from creating anti-competitive agreements. Therefore, it is important for government of America to create effective rules and regulations for the best possible outcome of the consumer and maintain competitive market system which is fair and open. Negative impact of federal regulation on competitive market system The cost of tax payers has been increased from 38 billion dollars to 44 billion dollars. This can be notified for the above draft report that the implementation of new major federal regulations has augmented the cost of tax payers. National wide survey announced by National Federation of Independent Business and The National Association of Manufactures states that more than 62% of manufacturers and small business owners specified the impact of laws, rules, taxes and regulation of United Sates of America is negative on their business The impact of federal regulation of America is less adverse towards the foreign competitors. 55% of the small manufacturers and businesses in America also state that countries like India and China are more supportive towards the small businesses. The poll of 800 decision-makers, manufacturers and small business owners reveals that the application of new federal regulation can create huge adverse impact on small business owners. The implementation of new rules and regulation can make sustainability for multinational organization. Global companies can become much stronger and sustainable than that of small businesses. According to Bill McInturff of Public Opinion Strategies, “the striking picture provided by data surveyed states the current state of the economy of America. It is clear from the above survey that manufacturers and small business owners are getting frustrated by the inability of federal government to solve the economic problems of America”. There are also several criticisms on separate subsidiary requirements and line-of-business restrictions. In case of line-of business restriction, there is a considerable amount of denial of benefit of consumer on entrance of new dominant telecommunications firm. Moreover, it can enhance the economy of country.On the other hand separate subsidiary requirements can lead to avoid entrance of new dominant companies. There are several role of competition in the market which includes driving firm to reduce cost and improve internal efficiency, providing incentive to business to capitalize on new innovation or to adopt new technology and reduction of managerial inefficiency. According to the National Association of Manufacturers, the dream of America is turning in to nightmare by policymakers. Moreover, it creates a negative business environment. According to CEO Jay Timmons, the findings of the surveys provide a vivid knowledge about the opinion of small businesses and manufacturer on policymakers. It has been viewed to provide a negative impact on the future growth of America. Jay Timmons also states that policymakers are creating regulation without fulfilling the responsibility of benefiting the people of America. The problem can be fixed by application of regulatory policies and pro-growth tax that can benefit America to create a successful and sustainable position on the competitive global economic market. Government is creating a barrier on the growth of economic condition which is increasing the costs of Americans and small business. CEO and President of National Federation of Independent Business also stated that it is now time for Washington to listen to the job creators of America to provide a solution to bring back the prosperity at the time of competitive market system. Hence, it can be proved that the increase of government regulation has created an advance impact on the economic growth of America. Conclusion It can be concluded that the paper provides a vivid evidence and reason to provide a degree of truth about the statement of upsurge of government regulation and its impact on economic problems of America. The economic outcome is efficient by the implementation of competitive market system.Market can be affected by government through indirect participation such as regulation and taxation and through direct participation such as supplier or buyer of goods and services. The competitive market system can be benefited by increase in annual cost through government regulation.The taxes of the country is raised by Government is mainly based on the activities of consumers and businesses in the recent market scenario. The development of financial markets has projected a new light on government of United States of America to create regulation and taxation.The intervention of government on American market can lead to unintended consequences. These consequences can be nullified by reduction of burdensome regulation and offering real solution. Works Cited Adamson, Daniel and Joe Andrew. The Blue way. New York: Simon and Schuster, 2007. Print. Allan, Clement. Microeconomic policy. New York: Edward Elgar, 2008. Print. Chronister, Lynne. Research Administration and Management. London: Sage, 2008. Print. Read More