With the recent economic
melt-down like the instability in the Euro zone, and uncertainty in the housing
sector in America, some are left pondering whether political decisions affect
the growth and development of businesses negatively or positively? The problem
here is, with the advent of democracy, business and politics have become two
inseparable variables.
The relationship that exists
between business and politics affects the economy as a whole because the
“Fortune 500” companies have become the source of income for those vying for
political post. In return, when these people get into power, they sway
political decisions in the direction of their money banks. This turns to make
growth difficult for medium and small scale industries who account for high
unemployment rates of Americans. As a result, unemployment rates begin to
increase. The rich get richer and the poor get poorer. Are political decisions helping the
economy and is the relationship with business and politics unfavourable or favourable?
Usually political decisions are supposed to be
geared towards creating a healthy environment for businesses to grow. This is
when they can create more jobs and prevent any further economic melt-down.This would only happen if big businesses do not have a stake in future political decision. A fair political atmosphere
and a “no-strings-attached” relationship should exist between business and
politics.
So, do the
relationships that exist between business and politics influence the growth and
development of businesses? Is there a need to re-define the boundaries between
business and politics and re-evaluate political decisions geared towards
businesses? I will address all these in my research paper and come up
with comprehensive solutions.
The relationship between business and
politics in the American society can be traced from way back during the post
war periods. It started during the progressive era and is continuing with the
new deal. The progressive era was an era of social activism and political
reforms in the America. The progressive era had very positive impacts such as
increase in democracy, efficient governments and corporate regulations. The new
deal included a series of economic programs which were enacted during the term
of office of President Franklin Roosevelt with the aim of pulling America out
of the great depression of the 1920’s. This was the peak of the relationship between business and politics in the
American society. Political decisions had to be geared towards reviving the
economy at all cost either directly or indirectly. But even after the American
economy had recovered from the great depression, the strong and consolidated
relationship between business and politics did not stop. This later on started
having set backs on American Democracy, businesses and the economy as a whole.
The first effect of this relationship has been
on democracy. It would be unrealistic to say that American democracy is the
best in the world. In recent times, the relationship between the big businesses
and political decisions is so slim that they can’t even be differentiated.
Democracy if often referred to as “Government for the people by the people” but
this has never been the case. It has been “government by those who sponsor for
those who sponsor”. The fortune 500 companies sponsor political campaigns in
return for favours should their candidates win. Therefore most political
decisions are geared to favour the big guns of the economy. Most of these
companies succeed to persuade the government to ameliorate foreign and domestic
trade policies in order to give them an upper hand in the market. This negative
impact can be blamed on the promulgation of capitalism with the advent of
democracy. The pursuit of individual happiness has killed the perception of
unity and common growth. It is thus clear that this relationship is ruining the
value of and credibility in democracy.
The second effect is on businesses themselves.
This set back results from the role businesses play in the destruction of
democracy. As earlier said, most fortune 50 companies spend huge sums of money
to help sponsor the campaigns of politicians. Should this politician win, it
will be to the advantage of the companies who will receive political favors in
return. The question here is, what happens to these companies should the
candidate loose? The answer is obvious. They lose a large sum of money, the get
into bigger debts, the lay off workers because of lack of finances to pay them,
and the circle continues. With reference to our case study, the United States
of America, it is barely recovering from a financial crisis but still had the
most expensive presidential elections. Where did this money come from? It was
provided by companies. Was it for free? NO, it definitely wasn't for free.
All
of these minor effects drive us towards the main effect, the effect on the
economy at large. People are forced to support a political party because their
company gains favours from it. And at times if you don’t you indirectly get a
tough time at work especially when it comes to getting a promotion. When a
company loses large amounts of money during political campaigns, it lays off
workers and the unemployment rates increase. The government needs more money to
help revive the economy so they increase taxes and also increase national debt.
When the big companies gain trade laws in their favor, this is usually to the
disadvantage of small and medium size firms who account for the highest rate of
employment in the American economy. This in general doesn't give a good
perspective of whether an economic crisis will ever be avoided even though most
economist like to base their perceptions on what they can calculate and see but
they most often than not forget the unseen, the influence of politics in
business and vice versa.
But notwithstanding, just like every
problem on the surface of the earth, there are always possible solutions to
resolve the problem and hand and avert the setbacks.
The first step will be to re structure
the tax system such that it is fair to all.
First, the tax system lacks transparency and accountability. Second, accomplishing social policy through tax expenditures tends to award the
most help to those who need it least.
The second possible solution will be to
restructure the measures of democracy. Granted, democracy brings peace and
stability. When looked at in the mirror, democracy doesn't feed the people.
Democracy was just a rule set by power gamblers to settle their differences
amicably. Every year, Nothing less than 2 billion dollars is spent across the
globe in the name of democracy. If such huge funds are not needed to run
campaigns, then businesses would not have the opportunity to compel political
leaders into swaying decisions in their favour.
Another good solution to the problem stated
above will be to reduce the level of bureaucracy in the system. That is
decentralization as opposed to centralization.
The connection between the two is often difficult to explain, but
somehow they are closely linked.Politics comes into a business and business
comes into politics when decisions are made based on personal emotions and
perceptions of the issue at hand. Since the system is too centralized there
comes a point in time when either business or politics has to out play the
other to be victorious.
The most appropriate approach to the issue at hand will be a review of the tax
system. The tax system should be such that the more you earn the more tax you
pay. It might be like that on paper but since the tax system is not transparent
enough, this never happens since those who earn more and pay less use it to
sponsor political aspirants. Should they pay as much as they earn, they would
not have enough excess to help sponsor politicians. Furthermore, when the
higher earning citizens get better tax breaks, they are able to overpower the
middle and lower class and this is thus not good for the economy as a whole. It
is not good because it limits the emergence and growth of a strong middle class
which is the back bone of the economy. In the same regard, the middle income
earners pay more tax but get lesser social benefits.
A new report by the
Corporation for Enterprise Development and the Annie E. Casey Foundation
demonstrates, the $400 billion federal asset-building budget -- subsidies to
buy homes, save for education or plan for retirement -- is upside down. Rather
than ameliorate rising income inequality, it reinforces it. Low-income
households who do not earn enough to itemize deductions don't get the benefit.
A middle-class household earning $50,000 a year "receives less than $500
in benefits" from tax breaks for mortgages, property taxes and investment
income, the report found. "By contrast, taxpayers bringing in more than $1
million enjoy $95,820 in annual support through mortgage and property tax
deductions and investment tax breaks.
The solution to the problem therefore lies at the door step of policy makers who do not need to overlook the matter at hand. Policy makers have to put the interest of their people and the world at large before any of their personal needs.
