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Government Roles in the Economy - Coggle Diagram
Government Roles in the Economy
Promoting a stable market
A monopoly is when a company or group has complete control over the supply of a product or service.
They cut out competition.
If a company has a monopoly they can set the price at what they desire, which could result in abuse of power.
There is less incentive to create a better quality productt, creating a lack of competition.
An example of a monopoly is Amazon. This is ebcause consumers have a choice of whether to purchase an item for a certain price from Amazon, or from its competitor.
Ensuring the Safety of the consumer
Companies like the Canadian Standards Association (CSA) and the Consumer Product Safety Commission (CPSC) ensure that products meet industry standards for safety.
If a product passes all safety tests it is usually trusted in the market, however, the government agencies responsible for consumer safety cannot oversee all production.
Sometimes unsafe products enter the market and if they do, the government can force the company to issue a recall on that product.
A recall allows the consumer to have their purchased good repaired for free or get a refund.
Environmental Protection
Companies and businesses can more about profit than environmental sustainability and have the potential to pollute freely in the name of maximising profit.
Government agencies ensure that companies meet environmental protection standards, which is important to every consumer.
Forestry companies usually harvest trees from public or ‘crown’ land.
After they clear the trees off the land they must pay to have the land re-planted with trees to ensure the sustainability of our forests.
Labour Laws
In Canada and in every province there are laws that protect worker and employer rights. Governments enforce occupational health and safety standards. They conduct workplace inspections and they investigate workplace accidents and injury.
Employees have such rights as:
Proper notice for termination
Limit on weekly work hours
Minimum wage
Mandatory breaks and rest periods
Youth labour laws
Right to refuse unsafe work
Labour laws are important because they ensure workers and employers are protected and cannot abuse their power.
Drawbacks of government involvement in the economy
Governments wield a lot of power and are privy to information outside of the public sphere. It is against the law for government officials to use private information to gain profit, this is called insider-trading.
In the last decade, the Ontario Liberal government has faced serious and high-profile corruption cases including eHealth Scandal, Ontario power plant scandal, and Ornge scandal.
Government organizations sometimes have a reputation for being inefficient and wasteful.
Government employees are often well paid and have good job security. This can lead some to become lazy and inefficient at their job.
Private companies run on profit so finding efficiencies makes you more competitive and profitable.
That is why some people think all crown corporations should be privatized.
Crown Corporations
Crown corporations are wholly owned federal or provincial organizations that are structured like private or independent businesses.
They usually created to fulfil a need that would not make any profit for a private company.
CBC
Canada Post
VIA Rail
Bank of Canada
Prevent Price Fixing
The government can ensure companies cannot fix their prices to be askew from normal market forces (supply and demand).
This protects the consumer as it keeps prices for goods and services fair and affordable.
Price fixing prevention is enforced under the Competition Act which serves to promote competition and ensure the best prices for consumers.
Price fixing occurs when several similar companies agree to inflate the price of their goods or services to increase profits.
Price fixing goes against the law of supply and demand by in a sense creating a monopoly.