Corporations and the US Government

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Table of Contents

Introduction
Discussion
Conclusion
References
Footnotes

Corporations in the United States play a very important role in developing the economy; the discussion in the paper is to see how private and public corporations in the U.S have evolved since independence by supplementing the government and its economy.

Introduction

Corporations in the United States have a long history and it dates from the year 1776 when the American people freed themselves from the English oppressors. By attaining dependence, the American people had access to their own corporations which were very productive in developing the nation’s economy. Colonialists used to exploit the citizens of America and this exploitation and misuse of natural resources triggered the revolution which led to the independence of the United States. It is believed that corporations were forbidden, since they used to influence the decisions which were made, for example in deciding the national elections. This paper will discuss the progress which the corporations have taken since the independence of the United States of America. In order to empower corporations in the U.S, the government has come up with policies and other mechanisms which enable such corporations to engage in the nation development. This discussion will also focus on the measures which the U.S government has taken to ensure that all corporation fulfill their mandate which they have been licensed to do. Companies that have been chartered by the national government have to reapply for the charter for them to continue offering services. Finally, the paper will discuss the importance of the government in the smooth running of corporations in the U.S.

Discussion

There has been good progress of corporations in the U.S since independence for instance charters are not offered to companies because of the good relationship they have with the state but they are offered through merit. In the early days of independence, there were protests in the streets over the procedures which the government used to license companies. There were battles in the streets also over the control of resources by the government and the private sector; furthermore, the private sector wanted more independence in the international and regional markets which were being controlled by the government. The government was against the independence of the private sector since some corporations were abusing their charters and deviating from the initial purpose which they have been licensed to perform.

The U.S government approved some of the requirements which the private sector was fighting for and thereby allowing free trade and the involvement of corporations in the nation-building¹. The government acquired some corporations which initially belonged to the British. Today corporations are no longer chartered but they are registered by the national government, regional or state government, and then regulated by the laws which have been legislated by the required authorities in the U.S. To register a company in the U.S one is required to show the budget and physical address of the company. Since then corporations have been in the government’s strategy in developing the economy and the welfare of the citizens.

Corporations in the U.S are normally registered either as non-stock or stock corporations with the local authorities or jurisdiction. A stock company means that the corporation is a profit-making company while a non-stock company is the one that does not have shareholders or stockholders but it has members who have voting rights in case there is an important decision to be made. In some states in the U.S corporations are divided either into profit or non-profit making companies rather than separating them in terms of stocks and stockholders. Some states such as Georgia, allow variations of corporations that are used by professionals². By allowing these corporations to be used by professionals they acquire the term professional corporations. In the modern U.S system, corporations have a corporate governance system that commonly appears in a variety of business and other profit-making activities. These statutes of corporate governance are normally interpreted just like the profit-making businesses in the courts of law. Many corporations in the U.S have been listed in the public market which is the New York stock exchange market for trading. In this market, the stocks are bought and sold by the general public without any interference from the government. The largest businesses in the U.S are normally traded publicly in the market as public corporations.

Changes in the trading system in the U.S have made small companies that are closely held together are being preferred rather than corporations that are publicly traded. Small trading companies are preferred because decisions can be made faster and instant compared to the other trading corporations which require a very big human resource due to bureaucracy. The advantage of publicly traded companies and corporations over their small companies is that they have large capital base and can spread their debts across the stockholders and other members that relieving themselves too much weight on debts. This means that shareholders will take a small position of the debt compared to the closely owned companies where the owner takes all the hit.

The growth of American economy has been driven by the development and empowerment of corporations even though many American people view such corporations with suspicion³. Corporate managers have time and again been on fire to explain the value of bigness of a corporation. Many people fear that the big corporations are there to undermine small and up coming companies thereby ending up swallowing them but that is not the case with the acquisition system nowadays. With the new; legislation which was sponsored by the government, ensures that these small companies are well protected and there is no need for suspicion⁴. Consumers also have had the issue of monopolies by some corporations and they tend to think that these institutions will increase the prices since they are well established in the markets, but this is not the case with the modern economies especially in the U.S. The government has its fears also in the monopolies, this is because some companies are gaining control of the market more than it is required which some companies have done beyond the 30% mark of the market share. But this market share is dependent on the number of competitors and their size.

The U.S government has played a very critical role in developing corporations in the country, since the all corporation must work with the government in either way in order to achieve its mandate and also improve the welfare of the people. We have seen the U.S government bailing some of the biggest corporations in the world and this justifies the involvement of the government in developing a good business environment for people to do business well. For instance the U.S government offered General Motors millions of dollars in order to keep it in business and avert its downfall; this signifies that the government has a very important role to play in ensuring that business operations of all corporations run smoothly without fear of economical melt down. Another multinational corporation that was bailed out is the Freddie Mac Corporation⁵. This company was affected by the wide spread inconsistency of the market and instability of finances and there was a looming perception of insolvency. To help the company the U.S government sort legal redress to invest tax payers’ money in the company in order to avert this problem.

Conclusion

In conclusion, it is important for all governments across the globe to provide a good working environment for business people in order to establish big corporations that will be of benefit to the people. Many countries should take the example of the U.S government in providing subsidies to investors and also bailing out companies in time of economical hardship and by doing so people will be protected from loosing jobs. Corporations in the U.S provide the highest number of employment compared to the government sector and this shows the important role such corporations pal n the building of the nations economy. Therefore, for the economy of the U.S to continue flourishing it is important for the government to provide proper legislations that will protect such companies from being run down by some greedy business people. In addition many U.S based corporation are involved in development activities which have proved important to the growing economy of the country.

References

Buckwitz, Goerge D. America’s Welfare State: From Roosevelt to Reagan: The Johns Hopkins University Press (1991).

Dougherty, Carter, Stopping a Financial Crisis, the Swedish Way: The New York Times. (2008). Web.

Grosse, Robert E. The future of global financial services: Wiley-Blackwell. pp. 57-62. (2004).

Grynbaum, Michael and Jolly, David, U.S. Takeover of Mortgage Giants Lifts Stock Markets: The New York Times. (2008). Web.

Vikramaditya S. Khanna. The Economic History of the Corporate Form in Ancient India: University of Michigan. (2005).

Footnotes

Grynbaum, Michael and Jolly, David, U.S. Takeover of Mortgage Giants Lifts Stock Markets: The New York Times, Web.
Vikramaditya S. Khanna. The Economic History of the Corporate Form in Ancient India: University of Michigan. (2005).
Grosse, Robert E. The future of global financial services: Wiley-Blackwell. pp. 57-62. (2004).
Buckwitz, Goerge D. America’s Welfare State: From Roosevelt to Reagan: The Johns Hopkins University Press (1991).
Dougherty, Carter, Stopping a Financial Crisis, the Swedish Way: The New York Times. Web.

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Corporations and the US Government

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