Government And Business: An Indispensable Relationship

• My initial goal was not to get into some top school in the country or state because, for me, my goal was to study in a place that could give me many opportunities and create a good foundation for my future career development. That is why I chose to study at Pace University, a business school that provides a considerable pool of opportunities and is right in the Financial District of New York City. International Management, or in other words, International Business-Commerce, is the major that I am pursuing enthusiastically and wholeheartedly. I had never thought that business was something I was going to be interested in. It is a dream I have nurtured from the time I realized that business appeared and essentially influenced every person's daily life until I came to the United States to pursue this dream. Quite similar to domestic business which involves economic activities or transactions within certain geographical boundaries of a country, international business is much broader. It includes economic transactions that extend beyond a country's frontier and are spread across the globe. International business has a lot of problems to deal, along with just business operations such as language barriers, cultural differences, currencies, nuances of foreign politics, and relations. Back when I was about 11 years old, I didn’t consider business as a field that I want to run after seriously. Like most Vietnamese children, from the age when they know what a dream is and decide what they want to do in the future until the age of 11-13, I used to dream of becoming a pilot, an aeronautical engineer, a mathematician, and a celebrity like an actor or a fashion designer when I was in my secondary school. I heard my father talk about his business quite a lot, but my own view of business flared up at its peak in my mind when my father explained and told me everything about a typical business, his investments, the challenges he faced, and his cooperation with Taiwanese business partners. I have gradually become passionate about business and obsessed with understanding its presence and influence in daily life.

• Although my father is who guided me to the business field, my passion for business motivated me to learn about how it affects our lives but on a broader scale, international business. I have witnessed so many people who are financially struggled, live on the street because of their inability to pay their expenses, receive unfair compensations, are hungry and even live in poverty or bad conditions that are effected by many unsustainable projects and decisions of businesses. The effects that businesses have on our lives, such as the environment and our personal lives, have left quite a big question mark in my mind, which makes me always wonder what factors have influenced their activities - Is it the government intervention?. Those observations and my curiosity showed me that international business is not only the trade of goods and services at a transnational scale but also the application of strategies and activities that will bring about a healthy society in all social, ecological, and economic dimensions. Seeing many foreign businesses that failed in Vietnam but are very successful in the US and vice versa, or the influences of businesses on various aspects of life, helped me be more interested in the relationship between countries and firms. Those factors gave me a clearer insight into the alignment of business, culture, politics and sustainability.

• Nowadays, businesses gradually focus more on the sustainable development of the community and the quality of products to consumers. Even so, the decisions of businesses can intentionally or unintentionally adversely affect the environment and people's lives because they must be followed, are affected and somewhat limited by the policies of the country in which those firms operate. Undeniably, the interlinking between politics and business is prominent. Neither exists without the other. Therefore, that problem drew me to the question for this research project: “What would the impact be if the US government imposed more taxes and regulations on the operations of local and foreign businesses?” My hypothesis would have to be that government’s policies would be critical tenets for protecting the safety and sustainable development of the environment and the public, or preventing businesses from abusing its powers. This research is not limited to understanding the relationship between government and business. It also offers a more in-depth approach to international business that highlights how each country's political system, policies, and factors such as taxes, corruption, subsidies, and competitors will inadvertently affect businesses, which then also have a significant impact on people's lives. Additionally, this study will give me more experience and understanding of how businesses operate in different regions, thereby laying the foundation of international relations for my future advancement as I pursue my career as an international entrepreneur dealing with the international community and facing many unavoidable political factors. People with access to this research could also see and better understand whether what their government and existing businesses where they live are doing affects their future.

Abstract

The relationship between government and business is symbiotic, evident, and inevitable. They all have their own role. More specifically, the role of a business is to provide products to consumers. The government creates policies to regulate businesses and generate income for the country. Nevertheless, in general, they exist to protect the interests and safety of people. However, the policies introduced by the government are not entirely positive. They also bring adverse effects to all aspects of life. Those regulations hinder creativity and business flexibility or create ever-widening class disparities. In this study, standard forms of government impact on businesses, such as taxes, tariffs, non-tariffs, and food-related regulations, are examined for their impacts on the safety and well-being sustainability of the people. It is undeniable that such policies can help people stay away from unhealthy foods or help businesses move in the direction of benefiting the community. For instance, products that are manufactured in an unhygienic environment, carry pathogens or contain chemical residues will be prohibited. However, the government should only take appropriate regulations and not step into the activities of the business too much.

Discussion

Overview of Government Regulations

Sustainability in the economy and life is a critical factor that can shape the effectiveness of the relationship between government and business, which is indispensable and inseparable for the development of the community and the safety of people. Sustainability in business does not mean an ongoing enterprise but also meeting the needs of people in terms of affordability, goods, and services. Government cannot exist without businesses; conversely, businesses cannot exist and function effectively without government intervention. The government has a role to play regarding the safety of its citizens and good business practices. It creates regulations to ensure the safety, welfare of the public and an ideal environment for businesses to compete. On the other hand, businesses provide products and services to the people and generate revenue for the government. Besides, they can also influence society or government by making a political contribution or impacting the environment. As for the people, according to the theory of democracy, they rule the government. They act as taxpayers and consumers. Without them, government and businesses will be fragile. In terms of the government immediate impact on the lives and benefits of the people, government and business are the two most powerful parties. Therefore, people will need to know the significance of any regulations or rules introduced by the government on any firm. It does not only affect the performance of businesses but also inadvertently affects people depending on the collisions of regulations and business operations.

Detailed Impacts of Government Regulations

The US government has been applying rules on businesses such as taxes, tariffs, regulations, and even mandatory requirements for the production of specific products, the performance of services, the distribution of goods, or the legal form of enterprises. There are many government agencies across the political system of the country. Each individual agency makes its own rule without thinking about the rules that the other agencies are creating. Therefore there are dozens and dozens of agencies that all create their roles. That problem led to the result that regulations become too restrictive, and so many layers of overlapping regulations make it difficult for businesses to navigate activities. All these overlapping regulations are just stacked on top of each other. Furthermore, what happens is that there is friction in the management systems of the businesses and flexibility in their decision-making. For instance, in Montana, there are not many requirements for construction projects. For that reason, the engineering firm is able to make decisions like highly efficient water usage fixtures. It is a win-win for both the contractor and the customer. On the opposite, in Washington State, firms would be required to follow a bunch of requirements. Nevertheless, the problem is that the regulations are so convoluted, and complicated. Consequently, they have to weave through all the regulations that they do not even end up with as good a product at the end of the day because they have so little flexibility due to the government regulations that say they must do it this way. However, making decisions that benefit customers is not the government's responsibility but the responsibility of businesses. On the positive side of this issue, the regulations for businesses are set for a reason depending on the environment, goals, and socioeconomic situation of the state. How complicated or helpful these regulations are for businesses is temporarily not mentioned because the interests of society will be the foundation and stepping stone for evaluating and deciding whether the mutual interventions of the two sides consisting of the government and enterprises are reasonable. Suppose people approach the imposition of regulations from a different perspective and focus on the sustainable development of society. In that case, they will see that government interventions or bilateral interventions of two countries, such as taxes, subsidies, tariffs, and non-tariff all affect many typical aspects such as consumer behaviors, Environmental Corporate Social Responsibility, the safety of people's product consumption, and eternal financial concerns of Americans such as retirement, savings, income, and housing.

Taxation is the government's most common way to intervene in business operations and regulate them in a way that could be adequate for the economy. There are corporate taxes, state taxes, federal taxes, sales taxes and so on. In the area of corporate taxes alone, one can see how complex government policies impose taxes on businesses. Typically, that the government has different tax policies imposed on different businesses. For instance, C-corporations are taxed twice when businesses pay corporate income tax, and their shareholders pay taxes on dividends received. Conversely, S-Corporations can avoid double taxation by passing corporate income, losses, deductions, and credits to their shareholders. However, the shareholders must report all deductions on their individual income tax return forms. Kinds of taxes vary from state to state. However, all in all, tax increases or tax rates will hinder the operations of businesses and may cause them to leave their current location and even the United States. That issue would lead to the instability of the supply of consumer products and manufactured materials. Theoretically, supply chain management is the responsibility of both the supplier and manufacturer. They create effective plans and management to ensure the theoretical economic model. However, nowadays, the only company is not enough to face many global issues, including the pandemic and the environment, which painfully affect the whole world supply chain. That is why bilateral government intervention is necessary. However, their policies also face many challenges due to the existence of different levels of economies and political institutions; typically, the US-China Trade War put an enormous burden on the international supply chains, and a wide range of businesses and caused many consumers to face economic difficulties.

Businesses have gone through 4 waves of tariffs from the US and China since 2018. There were retaliations back and forth between the two countries. At the peak of the war, the US imposed a tariff on $267 million worth of Chinese products (Lai 2019). Those taxes raised the costs of living like goods, housing, and materials which hurt many households and enterprises across the country. That rise in living expenses and overlapping regulations created bureaucracy. It jacks the price of things up because the businesses, somehow or another, have got to make them a profit. They always figure out what the costs are to get through the bureaucracy and then still make a profit on top of that. Therefore, the more regulations, the higher the costs of living. The gap between the higher class and other classes is getting bigger and bigger. It really creates serious distress economically where wealthy people figure out how to navigate that bureaucracy. The poorer people are struggling because of the high cost of living. That problem also led to the issue that expensive states and expensive cities are losing people. New York State lost nearly half a million people last year. California lost half a million people last year. Pennsylvania lost 300,000 people last year. On the contrary, lower-regulation, more affordable states like Florida and Texas are gaining people, approximately 500,000 people a year. Briefly talking, some government regulations also influence the population distribution of the country.

Approaching this issue from another angle, raising tariffs for foreign products or imposing taxes on domestic companies is not always a bad strategy. Tariffs, in fact, are made to protect the domestic industry from other international competitors and also protect jobs for Americans. On the other hand, taxes contribute positively to national savings and many of the projects run by the government. Nowadays, customers are susceptible to price changes, and each of them has a specific price acceptability range; they will turn to other existing substitutes in the market if the products they buy cannot meet the demand for a price. It could be good for the economy as it stimulates competitiveness between businesses, which helps them find innovative solutions in the process of operating their businesses or improving products to be able to adapt to these fluctuations, although it is not challenging. Besides, regulations that the government makes are not only taxes or related to financial factors. For illustration, there are many government restrictions regarding labor hours, certain types of merchandise selling, or how to merchandise and sell things. There's ADA compliance laws with regard to the floor of a retail establishment and prohibits discrimination against people with disabilities. There's also a fire marshal requirement for the guards and the safety of the building exit sprinklers. Fire extinguishers have to be checked on a monthly basis. The government has a lot of things to say about how a business operates to protect people. However, generally speaking, they are for the safety of people.

There is a crucial government intervention that cannot be ignored and is opposed to tariffs. Although it is not as common as tariffs, non-tariff measures are the way that helps the government prevent the exchange of goods that are not guaranteed quality. Besides the environment, safety and welfare should be the primary consideration of the country for their people. In terms of both domestic and foreign markets, agricultural products carrying pathogens like foot and mouth disease (FMD), plants containing GMOs (Genetically Modified Organisms), or poor quality consumer products having the presence of chemical residues have a significant effect on the health of consumers. For example, wild-caught fish have been proven to be much better than farm-raised fish as they could be raised in very unhealthy conditions. People are also concerned about unhealthy substances in groceries and basic needs that they buy at the store consisting of unsolved hormones in milk and poisonous substances in meat. Therefore, the imposition of government regulations would introduce a ban on certain antibiotics that can be found in food or the suppliers who don’t meet the implementation of the standard of food safety. Going back to the bilateral intervention of the countries previously discussed, the application of policies and the connection between the two governments will solve this problem quite thoroughly.

Conclusion

The effects of government imposition of taxes and regulations on domestic and foreign businesses are massive. Because free enterprise, by its very nature, is innovative and creative in terms of what the economy and people need, taxes and regulations for companies will partly hinder their business activities. They may inadvertently affect the supply, quality, and cost of products. Looking at Apple, it was a highly unregulated industry. That is why the company invented and introduced the incredible power of the iPhone and all the benefits that everyone around the world gets because of smartphones. However, regulations will have positive effects on the benefits of the people. Tax and non-tariff policies can create some barriers to bartering activities. The point here is that the government should not step in the operations of businesses too much. It is there to provide specific safety standards with regard to business and good business practices. Regulations will ensure that products are manufactured, handled, or advertised sustainably before reaching consumers and also ensure the safety of the domestic market, thereby creating a long-term premise for both domestic and foreign economic development. The aforementioned financial policies and the impact of government agencies on businesses will be seen as a favorable impact in the context of when the world has recognized the importance of sustainability nowadays.

References:

Lai, E. L.-C. (2019). The us-china trade war, the american public opinions and its effects on china. Economic and Political Studies, 7(2), 169–184.