Essay Sample on Government Business Protection

Introduction

The united states is one of the countries in the world that have played a key role in defining the way that business activities should be handled to ensure that the various stakeholders are managing to run their activities effectively. The protection of businesses by the government is an issue that boosts their performance and facilitates the economy growth.

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The reason why governments' offers protection to the business is to ensure that it experiences economic growth and reduction in unemployment levels. The role played by the government in protecting its economy include the offering of tariffs. It is the tax that is usually charged on the goods that are imported from other states and the reason why the authorities impose this tax is to reduce the amount of imports and encourage local production. By doing this, it means that the local companies will manage to find a market for their commodities and the employment level will increase as the local talent will be employed in these industries (Rodrik, 2018). These taxes make the imported goods and services costly in comparison to the ones manufactured locally, and the buyers in the market thus prefer the local ones since, in most of the cases, they offer the same quality of services and it only the prices that may be different. Additionally, the tax revenues collected will increase, and this will translate to more funds being available to the government that can be used in managing activities like development and maintenance of the various public utilities (Feenstra, 2018). Another way that government protects businesses is through quotas which is the process of restricting the amount of goods that can be imported and this strategy also works towards ensuring that the local industry is thriving as it will have a wide market for its commodities.

The government works towards ensuring that the local producers are working optimally through the provision of subsidies. They can be in the form of the government owning stocks in the local companies, implementing the tax breaks or offering loans at low rates of interest than the one prevailing in the market. These procedures tend to reduce operational costs and to facilitate the manufacturing process. The process translates to low prices if the commodities manufactured by these businesses meaning that they manage to realize a wider international market thus increasing the volume of sales and revenue earnings. The implementation of the anti-dumping policy is another rule employed by the government to protect its industries (Bond & Goldstein, 2015). The procedure involves introducing laws that prohibit the selling of goods in foreign states at low prices than their production cost. Some traders engage in this practice with the desire to gain a share of the market in that nation, but it can lead to the destruction of the local firms as the strategy is not sustainable in the long-term. Additionally, the local industry may experience a limited market for its commodities if the dumping process is allowed to continue. Through the exchange rate controls, it is possible to raise the levels of exports and reduce the level of imports in the United States. The strategy aims at making the commodities manufactured in the country to be cheaper than the international goods through the reduction in the United States currency value in the international markets. When the entities are protected, and they are given levies by the government, the main idea behind this move is to ensure that the organization based in the United States gains an undue advantage in the market over the rival entities in other countries (Subramanian & Subramanian, 2017). Additionally, the move leads to the economy of the United States improving since when the business sells more goods, the revenue and taxes that they pay to the government also increases.

There exist different arguments that are raised about the issue of the United States government protecting its businesses. A portion of the society claim that the activities should be supported while there are those who feel that the practice is not good and the authorities should stop covering their businesses. Some think that the protection process leads to economic welfare loss considering that these tariffs lead to the loss of producers and consumer surplus in the market. The restricted consumer choice and high prices prevailing in the market leads to the loss of welfare, and it may also trigger the loss of jobs and damages to the economy. The protection process leads to the creation of a regressive effect on the income distribution (Droste et al., 2016). The section of the society that is earning low income tends to suffer most due to the tariffs introduced by the government considering that the restrictions are mostly placed on the basic commodities that the low-income earners consume. The strategy also triggers production inefficiencies considering that the firms that are protected by the government lack the incentive to find ways that they can use to reduce their production costs. The issue triggers an increase in the average costs and inefficiencies in the production process.

The business protection by the United States government is an issue that should be promoted and supported for it leads to the county's economy and the organizations to benefit. The economic markets are usually highly competitive, and this means that the new and young economies are vulnerable and they might find it hard to compete with the established organizations (Floetotto, Kirker, Stroebel, 2016). Therefore, in the case of infant industry, they need to be offered the government protection until they are financially and economically stable to compete with the established organizations. When an entity is new, it may lack a market for its products due to the limited exposure in the market. Therefore, it may find it hard to sell its commodities, but through the government protection measures, it may manage to sell a huge volume of its goods due to the low prices in comparison to those of the rival entities. The protection of businesses by the United States government works towards managing and protecting them from unfair competition. The difference in the enforcement process and policy implementation are the factors that lead to unfairness in the market meaning that some countries manage to enjoy a favorable balance of trade. However, the trading states should have an optimal balance of trade levels to assist in capturing value in the market (Fuchs & Skrzypacz, 2015). The global markets work towards ensuring that they realize what is favorable at the global and domestic levels and this is why governments are pushed to seek protection for its economy. When unfair competition emerges in the market where the organizations based in the United States are suffering economically and financially due to the high costs of doing business, the authorities may chip in and help to stabilize the issue to give the local entities a competitive edge. The process is expected to ensure that they can compete with the other international organizations.

References

Bond, P., & Goldstein, I. (2015). Government intervention and information aggregation by prices. The Journal of Finance, 70(6), 2777-2812.

Droste, N., Hansjurgens, B., Kuikman, P., Otter, N., Antikainen, R., Leskinen, P., ... & Thomsen, M. (2016). Steering innovations towards a green economy: Understanding government intervention. Journal of Cleaner Production, 135, 426-434.

Feenstra, R. C. (2018). Alternative Sources of the Gains from International Trade: Variety, Creative Destruction, and Markups. Journal of Economic Perspectives, 32(2), 25-46.

Floetotto, M., Kirker, M., & Stroebel, J. (2016). Government intervention in the housing market: Who wins, who loses?. Journal of Monetary Economics, 80, 106-123.

Fuchs, W., & Skrzypacz, A. (2015). Government interventions in a dynamic market with adverse selection. Journal of Economic Theory, 158, 371-406.

Rodrik, D. (2018). What Do Trade Agreements Really Do?. Journal of Economic Perspectives, 32(2), 73-90.Subramanian, S., & Subramanian, V. (2017). Keywords FDI, Negative Impact, Positive Impact and Government Interventions. foreign direct investment for indian rupee appreciation a lesson at the right time., (172).