The role of Government in an economy – Pt 1

LAST WEEK, I promised that this week I would give you the answers to the multiple-choice test on business finance and then begin role of government.

Here are the answers to the test:

1.A 2.B 3.C 4.A 5.A 6.D 7.B 8.A 9.B 10.B 11.D 12.C 13.C

How did you do? I hope you got full marks or close to it. Now, let us begin the role of government in an economy.

Government may be defined as a body or group of elected officials whose main role or function is to carry out the will of the people as expressed in Parliament. They are the representatives of the population and are responsible for the overall welfare of the state or country. Governments, thus, manage the affairs of the country on behalf of the citizens.

THE RESPONSIBILITIES OF GOVERNMENT

These are many and varied. However, the syllabus has outlined the main responsibilities for us to emphasise. In addition, it would be good if you read up on other responsibilities of government, so as to widen your knowledge base for the examination.

(A) SECURITY OF THE STATE

The government provides laws that citizens should abide by. These laws should be made with the interest of the citizens in mind. Penalties such as fines and imprisonment are laid down for those who break the law.

The police, armed forces (army and navy), prison services and fire services are all a part of the security of the state.

(B) PROTECTION AND GENERAL WELFARE OF CITIZENS

Protection is provided by defence, which includes the police, army and navy. The general welfare of the state comes in the provision of social services that improve the well-being of individuals and families. The social services include health provisions, educational provisions, provisions for housing, unemployment benefits, transportation facilities, communication facilities and infrastructure, such as water, electricity and roads.

The general welfare of citizens is also enhanced through cultural and heritage programmes and through programmes that seek to protect the environment.

National or social insurance benefits are also aimed at improving the general welfare of citizens through the provision of pensions, maternity benefits, widow and orphan benefits, and benefits for those who experience prolonged illness, etc.

(C) JOB SECURITY AND SEVERANCE BENEFITS TO WORKERS

Governments allow trade unions to be formed. These unions see to the job security of their members. In addition, the government usually has a Ministry of Labour which intervenes in cases of unfair dismissal.

Severance benefits to workers include unemployment benefits and benefits to workers who experience prolonged illness, who become invalids, or who have experienced accidents on the job.

(D) PROTECTION OF THE ENVIRONMENT

Governments are involved in the protection of flora (plant life) and fauna (animal life) and the physical environment through agencies such as the Natural Resources Conservation Authority, Jamaica Environment Trust, the Forestry Department, the Ministry of Health, Environment and Housing Ministry and the Ministry of Mining and Energy.

They have policies regarding beaches and sea grass and pollution of the earth in various forms. (e.g., International Clean Air Act). There are also laws to protect certain birds and fish against overhunting and overfishing, respectively, and there are deforestation laws to protect our forests.

See CXC Principles of Business by Karlene Robinson, et al., page 242 for a list of environmental acts passed in Jamaica.

(E) MAINTENANCE OF A SAFE ENVIRONMENT FOR INVESTORS

Foreign direct investment is very important for economic growth and development, especially for developing countries such as Jamaica. In order to attract foreign investors, governments must ensure a safe physical, economic and political environment. This is achieved through keeping crime and violence to a minimum, political stability, ensuring favourable interest on investments, tax-free holidays, duty-free concessions, and rebates.

GOVERNMENT LAWS FOR BUSINESSES

This includes laws regarding the setting up of businesses (legal aspects of the business), zoning laws, laws regarding the disposal of waste and the adherence to the ISO (International Standards Organisation). Government also has a taxation policy and institutes tax deadlines, which are advertised on radio, television and other media. Tax collectors are employed and there are specific penalties for tax evasion. Businesses must also abide by government laws regarding the employment of labour (labour laws) and the protection of the environment.

GOVERNMENT AND CONSUMER PROTECTION

Consumers are protected from unfair treatment when they go shopping or deal with government agencies. Institutions such as the Consumer Affairs Commission, the Prices Commission, the Ministry of Consumer Affairs and Bureau of Standards Jamaica work to protect the shopping consumer. The ombudsman is a government official who deals with the problems experienced by persons who have to deal with government agencies. In some countries, price controls are enforced by the employment of price control inspectors and laws regarding the display of prices for items under price control. Food and drug standards and hire-purchase laws also protect the consumer.

Next week, we will continue to look at the role of government. Bye for now.