Big Businesses Peculiarities and the Role of Government

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In this chapter, Thomas Sowell discusses the peculiarities of big businesses and the role of government. The author mentions that in this context, the word big has two meanings. In particular, it can mean that a company has a significant market share; Moreover, this notion can imply that the revenues of an organization are substantial. Additionally, the author introduces such a concept as corporation. In such organizations, the owners do not bear responsibility for the financial obligations of the company or the decisions of senior executives.

This attribute of corporations has significant implications for the economy, because millions of people can own the stocks of a business without being liable for the decisions of the management. Nevertheless, this separation can lead to several controversies. For example, one can refer to the debates about the compensation paid to senior executives of corporations. Additionally, the author mentions the risk of corporate fraud that can pose a great threat to many investors who put their trust in the integrity and professionalism of corporate board and senior management.

Furthermore, Thomas Sowell examines the functioning of monopolies and cartels. These examples are supposed to demonstrate how competition can be impaired. In turn, Thomas Sowell discusses the intervention that the government can implement in order to limit the power of big businesses. In particular, the author mentions anti-trust legislation. One of the main arguments is that extensive regulation can adversely affect the development of many companies.

Nevertheless, these restrictions are necessary for avoiding such pitfalls as price fixing. Another important argument is that in the globalized world, the role of monopolies may not be as significant as it was several decades ago. The gradual disappearance of trade barriers diminishes the bargaining power of many companies that could be previously regarded as monopolies. This is one of the changes that should not be overlooked by the readers. In turn, the main task of legislators is to determine what kind of effects governmental interventions into the market can produce on the community.

This chapter is aimed at discussing the peculiarities of productivity and pay. The author examines several factors that can shape the amount of compensation given to a person. For example, one can speak about the differences in skills. This tendency manifested themselves during the last decades, during which the increasing automation of production eliminated a great number of jobs requiring the use of physical labor. Therefore, continuous professional development is critical for success.

Additionally, Thomas Sowell pays close attention to job discrimination. The problem is that people can be disadvantaged due to their ethnic origins, race, gender, or religion. This is one of the problems that should be effectively addressed. In turn, the differences in compensation can be partly be explained such a factor as efficiency.

In some cases, the operational expenses can prevent businesses from increasing the compensation of employees. Finally, the level of corruption within a country can also affect the level of compensation or revenues. Thus, the writer discusses various factors that can contribute to pay differences. In many cases, they are not related to the productivity and performance of a worker.

Furthermore, Thomas Sowell focuses on the concept of productivity which can be defined as the contribution of an employee to the performance of the company. Yet, the author also acknowledges that productivity can be very difficult to measure, because it often depends on external factors such as the performance of other employees who may not be always motivated. This is one of the challenges that business administrators and employees can encounter.

Thomas Sowell ties the discussion of these issues to such a concept as income distribution which gives rise to numerous debates. For instance, one can speak about the growing inequalities between various layers of the society. The main problem is that this tendency has become particularly noticeable nowadays, and it should not be overlooked by legislators. In turn, it is critical to understand the factors that contribute to this trend. These are the key arguments that the writer advances.

In this chapter, the author discusses the influence of government on the labor market. The author notes that this market is not driven only by the laws of supply and demand because the government wants to help business and employees work out a compromise. In particular, the state can influence such areas as minimum compensation, unemployment benefits and job security.

The author discusses the effects of such interventions on the economy of the country. In many cases, they can be rather adverse, especially if the government introduces extensive regulations that decrease the economic efficiency of businesses. In some cases, they have to close down due to the increased operational expenses. This is one of the pitfalls that should be avoided by legislators because they should consider the long-term effects of their decisions.

Overall, the author shows how employers and workers strive to increase their bargaining power. For instance, one can speak about the trade unions and association of employers. Such organizations can often enter into conflicts because they cannot always reconcile a conflict of interests. The examples provided in this chapter indicate that the role of trade unions gradually declines in many countries.

This trend can be partly explained by the increase of compensation provided to workers. In many cases, trade unions were excluded from negotiations. Nevertheless, these organizations still continue to play an important role in the economic sectors that are dependent on the government. For instance, one can speak about healthcare or education.

Additionally, Thomas Sowell examines such as an aspect as working conditions because this area is also regulated by the state. For instance, the government influences various practices of businesses such as safety of procedures, employment of children, and working hours. In some cases, the violations of these norms lead to severe penalties or even criminal charges.

Nevertheless, the changes in working conditions can also be explained by the competition between businesses that strive to attract the most talented employees. Therefore, the relations in labor markets are driven by various factors that are not always related to the decisions of policy-makers. This is one of the key issues that should be identified.

In this section of the book, the author examines the main functions of the government and their relations to the development of economy. Thomas Sowell argues that the main task of the state is to create a legal framework that can eliminate unnecessary barriers and protect the rights of various stakeholders. For example, one can speak about the protection of property rights. Overall, the author emphasizes the importance of transparent and consistent policies because they can boost the economic growth of a country.

In contrast, the absence of transparent laws can contribute to corruption. The author does not deny the importance of some governmental interventions. For instance, one can speak about environmental regulations. Nevertheless, in many cases, these interventions can impair the development of businesses. The author also notes that the work of government can be driven by the political interests, rather than the necessity. This is one of the risks that should not be disregarded.

Furthermore, Thomas Sowell discusses the economic activities in which governments can be involved. He notes that economic sectors that are dominated by the state can eventually become stagnant. In turn, the scholar advocates the necessity to open these markets to private businesses. In many cases, this intervention can result in the improvement of services and the decline of costs. For example, one can speak about the delivery of mail. This outcome can be explained by the impact of competition and the need for efficiency. This tendency has been observed in many areas that were once controlled by the state.

The author’s main point is that the functions and powers of governments should not be taken for granted. In many cases, there are efficient alternatives to the state. Very often, their activities can be performed by entrepreneurs. These are the main opinions that Thomas Sowell expresses. To some extent, this author is quite skeptical about the role of governmental institutions.

This chapter is aimed at the discussing the financing of governments and the way in which the state manages its resources. It should be noted that these institutions are not self-sufficient because they are dependent on various sources of revenues. For instance, one can speak about taxation. This issue has long been a subject of many debates because it affects a great number of stakeholders such as workers, governmental organizations, businesses, and people who are dependent on the government.

Additionally, governmental can derive finances through the exercise of eminent domain. It means that governmental organizations can seize the property of people, provided that this expropriation is necessary for public use. Furthermore, governments can become debtors in order to finance their activities. Sometimes, they can achieve this goal by issuing bonds that can be acquired by citizens.

The author also discusses such a notion as the national debt incurred by the government. The writer does not regard this debt only as a negative phenomenon, because some economies can afford it. Still, it is critical to find ways of decreasing these debts because it may eventually affect a great number of people. These are some of the main details that should be considered.

In turn, Thomas Sowell discusses the expenditures of the state. In many cases, these expenditures are related to the obligations of the state; for instance, it is possible to speak about pension plans. The main problem is that the expenditures of the government can be driven by the political ambitions of separate decision-makers. As a result, states can assume obligations that cannot be easily met.

This is one of the problems that should not be overlooked. Furthermore, the governments should be made accountable for their expenditures because they are not always justified. In their turn, policy-makers should make sure that they manage finances in a responsible way. These are main issues that Thomas Sowell focuses on.

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Big Businesses Peculiarities and the Role of Government

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