Government Relations

Chapter 9 of our book covers the topic of government relations to businesses in America. The actual beginning of government regulation in business began in 1887 with the Act to Regulate Commerce and with the institution of the Interstate Commerce Commission. This was followed by the Sherman Antitrust Act in 1990. One of the most significant acts that affected business was the Sarbanes-Oxley Act of 2002. This act was designed to review and protect audit requirements and practices.

Today, government is involved in almost all stages of business development and businesses eventually realized that instead of fighting the government’s regulation, it might be more useful to lobby their own positions to political decision makers. In December 2002, a survey revealed that of the 565 Fortune 1000 firms, 72.6% have political interaction with the federal government. And many companies have felt the consequences of not having a presence in Washington. This includes Wal-Mart when they were attempting to open stores in China. Today, Wal-Mart has 5 lobbyists in Washington. In America, the government and business relationship is an ongoing process.

An example of government regulation in today’s economy is the fall of General Motors. Attached is a link to a video with a debate with Peter Flaherty, president of National Legal and Policy Center, debating the actual cause of GM’s death. Flaherty claims government safety regulations and fuel economy standards resulted in making vehicles harder to sale and had car companies creating too many similar vehicles and lessening competition. He claims the biggest short coming was the failure to take on unions and that government regulations distorted the entire standard of the industry.

http://www.youtube.com/watch?v=rWfsHlT65ic