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The Role of Government in the Economy - Coggle Diagram
The Role of Government in the Economy
The Canadian government plays an important role in maintaining safe, fair and competitive economy.
Promoting a stable market:
Monopolies are bad because they can manipulate prices, the product might be lower quality, and the consumer choice is limited. Sometimes government creates monopiles to provide essential services like water or sewer line.
Canada poste is an example of legal monopoly in delivering mails in Canada.
Monopoly: When one producer controls all supply of a product or a service when there is no competition.
Ensuring the Safety of the consumer
The Canadian government works to ensure that Canadians are protected from unsafe food, product and medication.
Role of health Canada
Health Canada monitors any new disease or infections. It approves or monitors new medication and their side effect. Health Canada ensure food, drugs, cosmetics and medical devices are safe to be used on Canadians.
Roles of CSA (Canadian Standards Association)
CSA makes standards for safety, performance and quality of products. An example is appliances, helmet etc. CSA also ensures that the products meet national safety requirement as provided by CSA certification. By providing safety standards government ensures Canadians are not at risk for injuries, fires or electrical hazards.
Product Recall
When a product is found to be unsafe or defective Health Canada issues product recall. For example, Heath Canada recently recalled Tylenol tablets because the dose was not labeled correctly on some of them. Recall helps prevent injurie, illness and accidental death.
Environmental Protection
Environmental protection is important so public gest clean air, water etc. Government ensures environmental protection to prevent climate change and save our ecosystem. Government encourages sustainable resources. Government provides education and incentive to industries for reduction in carbon emissions.
An example of environmental regulation on businesses in Canada is the Clean Fuel Regulations CFR, implemented under the CEPA (Canadian Environmental Protection Act). The CFR aims to reduce the carbon intensity of transportation fuels, ultimately encouraging the use of cleaner fuels and technologies to combat climate change. This regulation targets liquid fossil fuel suppliers, requiring them to gradually decrease the carbon intensity of gasoline and diesel produced and sold in Canada.
Labor Laws
Labor laws regulate rights, restrictions, and obligation of trade union workers, and employers in Canada. These laws cover minimum wage, working hours, health and safety, leaves and unions.
Labor laws are important because they protect workers rights, promotes equality and prevent discrimination. They reduce exploitation of employees.
Crown Corporations
Crown Corporations are governed owned companies that provide goods or services to Canadian public. They can be Federal or provincial. Crown corporations provide essential services. They promote national development. Crown Corporations also create jobs and support Canadian economy.
Some examples of Crown Corporations in Canada are Canada post, CBC (Canadian Broadcasting Corporation) and VIA.
Prevent Price Fixing:
Prevent Price Fixing is when the businesses set the same price for the goods and services instead of competing with each other. For example, LOBLA and Shell gas station agree to sell gas at the same high price.
The Canadian competition act bands price fixing, rigging and anti competitive practice. This is to make sure that consumers are protected, and businesses have fair practices.
Drawbacks of government involvement in the economy
Government corruption and collusion:
There have been reports/incidents where Canadian government have abused their power for personal gain or favored their friends and families without fair biddings or contract.
SNC/LAVALIN scandal where government favored certain business.
Waste and inefficiencies:
There have been times where government programs have overspent and used the resources inefficiently because there is no competition.
Valley line LRT (Edmonton) construction costed 3 times than what was budgeted due to inefficient use of resources.