1. Government's Role
in Business

2. Objectives To differentiate among the roles of government in business
To describe types of governmental activities in business
To explain the role of the legal system in business
To identify the role and impact of organized labor in business

3. The government fulfills many roles and performs many activities in business

4. Promoting Economic Growth
The government:
increases/decreases tax rates
regulates amount of money in the economy with the Federal Reserve Bank
negotiates international treaties and trade agreements

5. Promoting Competition
Acts passed to ensure competition:
Sherman Antitrust Act of 1890
allows the government to break up companies with control of a market
prevents monopolies
Clayton Antitrust Act of 1914
passed to amend and clarify the Sherman Antitrust Act
Federal Trade Commission Act of 1915
established the Federal Trade Commission
Federal Trade Commission
promotes fair competition
prevents false/deceptive advertising

6. Regulating & Deregulating Industries
Regulation
is when the government sets strict rules affecting businesses within certain industries
Deregulation
is the removal or relaxation of the rules affecting businesses within certain industries
There has been a movement toward deregulation
in many industries since the 1970s

7. Training and Supporting Business
The government:
provides information and training
publishes information businesses can use
rate of inflation, unemployment, consumer spending
provides direct loans, loan guarantees and subsidies of various types
established the Small Business Administration
provides low-cost loans, advice and other assistance to small businesses

8. Providing Trained Workers
The government regulates:
public schools, which offer instruction in skills relating directly to jobs in business
funding for rehab and retraining of workers
state and local employment agencies

9. Buying Industry's Products
Buys goods and services provided by private industry
Constructs and provides maintenance for transportation systems
Maintaining Means of Transportation

10. Protecting Consumers
The government creates laws and agencies protecting the eight basic rights of the consumer
Examples:
Consumer Product Safety Commission
Fair Packaging and Labeling Act
Fair Credit Reporting Act

11. Protecting Employees
Employees are protected through numerous government legislations designed to
provide a safe work environment
provide freedom from discrimination and harassment
protect from unlawful termination
ensure certain rights to privacy
provide the right to participate in labor unions
establish minimum wage

12. Protecting Investors
Laws require corporations to disclose information affecting shareholders’ investment decisions, such as financial statements
Shareholders have the right to vote on major decisions affecting the company
Shareholders are entitled to receive dividend payments if the board declares dividends for the company’s stock
Shareholders are prevented from gaining an advantage at the expense of other shareholders through insider trading laws

13. Protecting the Natural Environment
Environmental Protection Agency (EPA)
established in 1970
created to protect the natural environment in which we live
stresses clean air, land and water
creates laws to prevent businesses from harming the environment

14. Government's Role
as Tax Collector

15. Goods and services provided by the government are paid for through various taxes
Income from taxes is used to fulfill previously discussed roles and activities

16. Personal Income Taxes
Are a percentage of total income deducted from your paycheck
Are a graduated tax- the more money you make, the higher percentage of taxes you pay
Are also paid by sole proprietorships and partnerships on business profits
Examples:
Federal Individual Income Tax
State Individual Income Tax
Social Security Tax (FICA)

17. Corporate Income Taxes
Are federal taxes paid on corporate profits
Are also imposed by state, local and foreign governments

18. Property Taxes Sales Taxes
Are paid by businesses on land, structures and other property they own
Are added to the price of goods and services at the time of purchase
Are added to merchandise sold at the retail level
Sales Taxes

19. Excise Taxes Are designed to control potentially harmful practices
Are automatically included in the price
Produce income which must be used for a purpose related to the tax
Examples:
gasoline
tobacco
alcoholic beverages
air travel

20. Customs Duties Are also called import taxes
Are fees imposed on goods brought into the country
Are designed to protect U.S. businesses against foreign competition
Raise the price of imports to a level comparable to the price of domestic merchandise

21. Tariffs
Are a special tax placed on foreign goods sold in the United States
Are used to achieve two effects:
lower prices and increase imports (reduce tariffs)
raise prices and reduce imports (increase tariffs)

22. The U.S.
Legal System

23. Three Branches of Government
Executive Branch
headed by the U.S. President
Legislative Branch
includes the two houses of Congress
1. the House of Representatives
2. the Senate
Judicial Branch
is the U.S. courts

24. Three Main Types of U.S. Law
Statutory Law
Administrative Law
Common Law

25. Statutory Law Is written by the legislative branch Example:
the Uniform Commercial Code (UCC)
is a set of standardized laws governing business transactions
is adopted in most states throughout the United States

26. Administrative Law
Is rules, regulations and interpretations of statutory law set forth by administrative agencies and commissions
Is enforced on corporations by administrative agencies

27. Common Law Is based on precedents established by judges’ decisions
Began in England

28. Organized Labor in Business
Labor Unions
are organizations formed to represent workers and prevent unfair labor practices
has members who are typically employees of the same type of occupation or industry
Wagner Act of 1935
is also known as the National Labor Relations Act
gives workers the right to organize a union and bargain with management

29. Collective Bargaining
Is when union representatives and management come together to discuss issues arising between employees and employers
Union workers strike when an agreement cannot be reached
Examples for discussion:
pay, working conditions, work hours, benefits

30. Taft-Hartley Act of 1947 Stopped: Legalized: feather bedding
labor unions forcing companies to hire unnecessary workers
closed shop
requiring businesses to hire only union members
Legalized:
right-to-work laws
allows employees the right to work for a company whether or not they decide to join the union

31. Assessment List two ways the government promotes economic growth.
What was the purpose of Congress passing the Sherman Antitrust Act of 1890?
List three ways the government protects employees.

32. Assessment
Why was the Environmental Protection Agency created in 1970?
What is the difference between personal income taxes and corporate income taxes?
Define tariff.

33. Assessment List the three branches of the U.S. legal system.
(T/F) Common Law is law based on precedents established by judges’ decisions.
What is a labor union?
What did the Taft-Hartley Act of 1947 help to legalize?

34. Acknowledgements Production Coordinator Krista Scott
Environmental Protection Agency.
Federal Trade Commission.
Small Business Administration.
U.S. Consumer Product Safety Commission.
Production Coordinator
Krista Scott
Production Manager
Geoff Scott
Graphics Editor
Allison Mangold
Executive Producer
G.W. Davis
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CEV Multimedia, Ltd.