Transcript
The Role of Public Policies in
Governing Business
Public policy is what government chooses to do
or not to do,
Definition: Public policy, while being different
from nation to nation, is basic set of goals, plans
& actions that each nation & government will
follow in achieving its objectives
Govt performs variety of functions- resolving
conflicts within society- distributing material
rewards to members of the society
„ To perform these- money through taxes, levies
etc- so public policies may be regulative,
distributive & government may engage all
these- achieve the objectives
„ It may deal with important areas as defense,
education, public health, employment, relief
measures etc
Government & Public Policy
„ No policy becomes public policy- unless it is
adopted, implemented & enforced by
government
„ Government gives public policy- 3 distinct
characteristics:
1. Lends legitimacy (authority) to policies: government
policies- legal obligations- easily observed by the
citizens
2. Involves universality- to all sections
3. Only government can bring consensus- imprisoning
violators of policy
Classification of Public Policy
„ Public policy can be organized along 5
classification:
1. Regulatory: regulation is one or more visible types
of public policy- enforced through criminal laws
2. Distributive: policies provides goods & services
such as welfare & health to specific segment of
the population. Eg: defense, category based
education, jobs etc
3. Redistributive: aims at rearranging one or more
basic schedules- such as tax away proportionately
more money from rich from poor- income is spent
on poor
4. Capitalization: basic alterations in productive
arrangements such as nationalising banks, public
ltd company, old age pensions etc
5. Recent several ethical & moral issues such as death
sentence, euthanasia, etc have come to force
„ Areas of public policy:
1. Economic management: great depression-
economic regulation. Emergence of stabilization
measures by govt- combat recession & depression-
state intervention- essential to regulate economic
activities
TO KNOW
• FWW:1914:
• Greatdepression:1929-britishrule-tradepolicy-beneficial
toUK-damagetoIndia.Exports&imports-fell-railways&
agri
• Highprices-heavytaxes-commonman-saltsatyagraha-
1930impact
• Germanylost-heavydebts-cudncopeupwithmanuf
goods-UKpaidGermany,borrowingfromUS-Eucountries
dependentonUS-crashinAmericanstockcompany-Oct
24,1929-psychologicaleffect-Americastoppedproviding
loans-leadtofinancialdisaster
• Globaleconomicdepression-Americanstockmkt-post
war-inflation-hugestockspiledup-wartimeexpenditure-
hugedebt-states-butUS-lessaffected-sideofvictory
allies-creditorforEUcountries
• Goldstandard:
• UKadoptedgoldstd-from1790-golddeterminesvalueof
poundsterling-valueofpoundsterling-dependenton
amountofsterling-neededtopurchase-fixedamountof
gold
• OnsetofFWW-goldpricelow-poundsterling-highprice-
butduringFWW-poundfell-risingwarexpense
• Restorationofwar-restofthecountries-purchasedgold
fromUK-littleincreaseinfinancialreserves-UKlooked
Indiatocompensateforgold
• Onsetofdepression:
• Indiaforemostsupplierofrawmtrls-FWW-providedlarge
qtysofiron,steel&othermtrlsforthemanufofarms.
• Manufunits-exported-Britishrule-industrialisationpolicy
• Greatdepression-India-solemkt-importsofUK
• Imperialisticeconomicpolicies:exploitationofnatives-
benefitsofhandful-eg:britishexploitationoverMughals
politicalweakness,Apartheid
• ExploitedIndia-forBritishFavor-fallinpricesinIndia-
higherthanrestoftheworld-priceofcommoditiesmanuf
inindia-rose-comparedtoimportsfromUK
• Farmers-cultivatingfoodcrops-movedtocashcrops-
meetthedemandsofUK-unabletosellcrops-dueto
highprice-UKstoppedimportsfromIndia-protective
policy
• Limitedexports-accumulationofcommodities-limited
thecashflow-freedommovement-swadeshimovement-
restrictiononimports
• Severeimpactonrails-declineinexports&imports
• Homecharges:moneycollectedformcoloniesastax
• Farmer-suffered-increaseinlandrent,valueofagri
production-selloffhisgold/silverpossession-
transportedtoUKthroughPortofBombay-revitalizing
Britisheconomy
• IntensifyingstruggleinIndia-economicdemandsof
India-ReserveBankofIndiaAct-1934,centralBank-
existenceApril1,1935-SirOsborneSmithfirst
Governor-laterremoved-duetohistransparency&
openconfrontation
2. Labor management Relations: Industrial
revolution- exploitation of labor- labor policy
adopted by state to protect the rights of workers
unions
3. The Welfare state: Unemployment- root cause
poverty & distress- Government’s welfare policy-
provide social security, education, Medicare
4. Shaping of public policies affecting corporate
sector: stakeholders expectations- unmet-
triggers public pressure- need to understand
public issues into public policy
Corporation
Political forces
•Political relationships
•Political procesess
•Political stability
•Efficacy of Rule of Law
Technological forces
•New pdts & process
•Innovation
•Scientific discovery
•Investments in R&D
•Flow of technology
Economic forces
•Unemployment
•Interest rates, tax rates
•Imports & exports
•Income distribution
•Market structure
Social forces
•Demographic changes
•Social values
•Lifestyles & patterns of
living
Need for Public Policy in Business
„ Public policies- affects corporations shaped by: social
forces, economic forces, political forces, technological
forces
1. Social forces: size & composition of population- effect
on the demand of both demand & supply of goods &
services. Includes lifestyle & pattern of living- cater to
the needs of the consumers
2. Economic forces: to shape corporate & government
behavior- solve problems arising
3. Political forces: impact of government in shaping
policies
4. Technological forces: helps corp to upadte their
products & process & help to meet the competition
„ To create a competitive environment: public policies-
curb monopolies- through licensing or creating
competitive markets (FDI)- encourage to improve
betterment of pdts & services
„ To have a control on foreign investment: govt
interfering in regulations of foreign investment- govt
adopt protectionist policies for the following:
i. To protect growing local industries
ii. To regulate demand & supply- where resource are scarce
iii. To regulate prices in unhealthy competitive environment
iv. To protect environment & anti pollution measures
Different Levels of Public Policy
„ Different level/ layers of
public policy- depending on
intended geographic reach
& degree of authority
concerned:
1. National Level: public
policy- across the country-
for instance-Monopolies &
Restrictive Trade Practices
Act (MRTP), Sarva Shiksha
Abhiyan (RTE), national
programme for education of
girls at elementary level
2. State Level: policies
applicable particular state.
Eg: Gujarat, Tamilnadu
3. Regional Level: policies to
apply certain regions-
Common Agricultural
Policies (CAP). Eg: sharing
of river
4. International Level: global
level policies. Eg:
Intellectual Property Rights
(IPR), sharing info about
green house gas emissions
etc
Elements of Public Policy
Inputs
What factors
to consider?
MECHANISMS
How to do it?
GOALS
What to do?
Results
What happens?
Agenda
building
Policy
evaluation
Policy
implementation
Policy
Decision
Policy
formulation
„ Many factors or “inputs”, influence the
development of public policy- several factors
such as domestic, political pressure, technical,
reaction to natural calamities
„ Public policies are “goal” oriented. Narrow self
serving policy such as patenting rights, tax
legislations varies from country to country
„ Government use different “mechanisms/
instruments”- to realise their policy goals. Eg:
during budget negotiation- discussion on
alternative ways to raise revenue- tax tares for
individuals, biz, excise duties, sales tax on
selected items (luxury items, alcohol etc)
„ Public policies have “effects”- some are
intended some are non intended- regulations
may cause biz to improve safe environment for
the workers. Eg: Maternity leave for women,
free health check up & delivery facilities for
women etc
„ How to assess the public policy? Should answer
these 4 basic questions:
1. What inputs will affect the public policy?
2. What goals to be achieved?
3. What instruments are used to achieve the goals?
4. What will be the effects?
1. Agenda building: public policy agenda- consists of
major issues or problems- officials give major impact
or compelled to act. Eg: 33% for women, Delhi case,
BBMP waste disposal
2. Policy formulation: Policy formulation occurs when
interest groups- take position on public issues- try to
reach consensus
3. Policy decision: happens when some authorities- fails
to authorise the course of action
4. Policy implementation: action taken to enforce public
policy
5. Policy evaluation: occurs when impact of public policy
becomes evident
The Corporation & Public Policy
1. Limits to powers of democratic government:
policy implementation- government powers
are restricted under
1. Constitutional law: defines the limit of government
to act, powers in each level of govt & rights of the
citizen
2. Common law: regulated by the judiciary
2. Limits to powers of non democratic monarchy,
dictatorship, religious rulers, socialist state: no
limits on power of govt- except public. Eg:
Sadam Hussain, Idi Amin etc
Framing of Public Policy
„ Powers of government:
1. Constitutional government: the will of the people &
their desires get reflected in public policies.
Petitions through elected representatives, public
debate in election & campaign, promises given in
election manifestoes , media promotion etc- framing
public policy
2. Non democratic Governments: special interest
lobbying of leadership, illegal bribes & payments,
civil obedience plays a decisive role in shaping public
policies
Buisness & Politics Levels of Involvement
„ 3 levels of biz involvement in political activities &
distribution of goods & services, income generation
& employment
1. Level 1: Financial involvement:
1. Formation of Political Action Committee (PAC):
democratic societies- direct contributions by
corporations to political candidates is forbidden- US
allows
2. Trade association support: techniques used by biz to
participate in governmental politics- lobby against is
proved effective
2. Level 2: Organisational Involvement:
„ Lobbying: involves direct contact with the government
official & influence the thinking or actions- person to
issue public policy. Done through face to face contact,
lengthy discussions & meetings. Eg: Reliance, Walmart
„ Employee grassroot involvement: grassroot
programmes are organized efforts to get constituents
to influence government officials to vote or act in a
favorable way
3. Level 3: Strategic public policy involvement:
involvement of industry working groups & task forces
etc
Biz, Government, Society & Media
relationship
Government
Society Media
Biz
Control, influence
& intrusion go
both ways
Govt represents the political
voice of the society. Civil
society & public interest
groups influence the govt,
Govt also influences both
Media rises issues as a player, in keeping/ placing issues in the
agenda & in contributing to their resolution
Government Regulation in Business
„ What is business regulation?
„ Government regulation of biz is a mechanism for
implementing social choices & helps in creating the
basic conditions that lead to economic prosperity
„ People rely govt to institute & maintain rules of conduct
for citizens & for the corporations
„ Ppl expect local govt- to regulate traffic, basic
necessities (water & transportation)
„ Central government- regulate trade & fiscal policies
„ Complex- companies hires lawyers & PRO to monitor &
manage- interaction with the govt
Justification of Government Regulation
Types of Government Regulation
Problems of Government Regulation