GOVERNMENT BUSINESS RELATIONS Homework Help

GOVERNMENT BUSINESS RELATIONS

Neo-liberalism is a theory of political economic practices that propose that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade (Saad-Filho and Johnston 2005, p. 85). The mandate of a country or state is to ensure that there is development and management of institutional frameworks that enhances these practices in the economy. The state has to guarantee, for example, the quality and integrity of money. The government should also initiate legal frameworks, police departments, defence mechanisms, and military structure with an aim of securing the rights of private property, and enhancing the functioning of the markets. In the case where there are no markets—for instance in social security, health care, and education sector—the state should create if they deem necessary (Ong 2006, p.3). However, when the state is required to perform initiatives beyond this limit, it should avoid the initiative. The government should ensure that it reduces the cost outlay attributed to financing some of the public operations. In this essay, the focus is on the global economic problems that have been caused by neo-liberalism in which the society is currently experiencing.

Neo-liberalism made the private sector to implement decisions that would guide the market trends in the economy, which led to diverse problems in the sector. As the economic factors shifted to private sector, the public had no mandate to regulate the operations in the economy. Some of the basic commodities that were pre-supposed to be public amenities were privatized. However, in the case of infrastructure, education, health and social welfare, the budget allocation was reduced significantly. The poor continued with their poverty level, while the rich benefited from huge budget allocations on their private enterprises and business initiatives. The security of the society is crucial in enhancing economic growth and development. The government need to foster on the need to increase the budget allocation for these basic initiatives (Petras and Veltmeyer 2013, p.242).

Reducing the budget for the security and defence sector hampers economic stability of the country. Investors are willing to invest in economies where they are assured of security of their investment by the government in power. When the government is profit oriented, as stipulated by the neo-liberalism theory, the focus will be on profit-making initiatives, and budget allocation will only be undertaken on the most profitable operations. In the case where an economy is ruled by market forces, there is always less incentives directed to individual citizens. For instance, stock markets and powerful organizations have been prioritized than an individual citizen when financial allocation is undertaken. In the economy, such trend is depicted by the intensity of growth in the electronic sector, and, at the same time, increase in poverty level. It means that the poor people are paying the prices of neo-liberalism.

However, the most discouraging aspect of neo-liberalism is the inequities in the allocation of resources among the middle class and the poor. The society tends to believe that the system is the only realistic economic system, and there cannot be other alternatives to replace neo-liberalism (Bell Lara and Dello Buono 2007, p. 362). This has led to fewer people in the society accumulating wealth, and majority of individuals are poor. The politicians are considered to be the beneficiaries of this form of system. They provide information to the general public on the significance of the neo-liberalism system little do they know the severe economic implications associated with such a system. The leading elite have failed to consider the need of conserving the environment, and maximizing on the resources available in regions considered to be poor. Individualism has been the main trait of neo-liberalism, and it has been prompted by the need to meet selfish needs in the society. The inequality in the society is also manifested in the social environment.

According to Colclough (2008, p.78) the social security is not reliable and the society has ended paying for the basic services that would be; otherwise, offered for free in the society. There has been the loss of initiative in the economy which will bring about the change required. The society has been corrupted and individuals are focused on their selfish interest. There is no one left who could challenge the idea of schools being run as profit-making organizations. The hospitals are mandated to offer services at prices that are outlined by the pharmaceutical organization, and the medication should be accessible by the citizens. With the disappearance of welfare state, the society is vulnerable to exploitation by private institutions (Cameron and North 2003, p. 25). Neo-liberalism system ensured that public agencies are no longer functioning, which gives them the mandate to undertake any decision or action without public scrutiny.

Furthermore, neo-liberalization has necessitated monetary and fiscal constraints (Rowden 2009, p. 42). The economy depends on the monetary polices in regulating market operations across the globe. The supply of money should be maintained in the economy, as this will prove vital in mitigating inflationary activities. One way is for the government to purchase the government bonds, in the case where the money supply have reduced, increasing the amount of money in circulation. In free markets or neoliberalization, the markets determine the amount of money that is in circulation in the economy. The buying of government bonds also known as open market operations, in Federal System, gives the central mandate to purchase these government bonds or sells them in case of high money supply in the economy.
Other monetary policies that are constrained by neoliberalization include interest rates charged between banks. Banks tend to determine the amount of money that is in circulation, and moderating the demand of money in the economy requires the banks to either increase of decrease the interest rates charged. In the case of neo-liberalization, the economy will be affected by inflation as there is no clear procedure or initiative that mitigates the inflation level in the economy.

The economy should be balanced, and the government should play a part in regulating the activities in the market; as this will mitigate the inflation that is evidenced from the operations of neo-liberalization. When the lending rate is regulated and certain interest rates are charged when giving out loans to the consumers, the banks will minimize a situation where high money supply in the economy or high demand of money characterizes the economy. Neo-liberalization does not give the government an opportunity to balance the economy as it is restrained from moderating the interest level in the economy (Leitner et al. 2007, p.319). A balanced economy enhances equity in the operations across the economy and the resources can be distributed to the various classes of people without discrimination. The gap between the poor and the rich is reduced when development initiatives and operations are implemented within the system. Inflation has been the main problem that the economy has faced; depicted by the recent 2007 economic crisis that was felt across the globe. It is imperative for the government to consider the implications of inflation on the citizen’s access of basic amenities such as education and health services.

In addition, unemployment rate has increased due to limited access to job opportunities by the poor population. Generally, the employment capabilities in the society depend on the economic growth and development that is imminent in the economy. Neo-liberalization is known for its inability to increase economic growth, and the success of the operations in the economy. Where the government increases its operations and enhance economic growth initiatives, unemployment rate would be significantly reduced. Focusing on the public needs in the economy is crucial in necessitating increased economic growth. In Sub-Saharan Africa and parts of Asia, people are languishing in poverty, and it is attributed to the poor governance in the system that is in operation (Ferguson 2006, p. 25). The poor should be given the opportunity to access education. When neo-liberalization increases the cost of education, the poor cannot have access to proper education; hence they cannot secure formal employment.

The poverty trend in the economies that embraces neo-liberalization is quite alarming, and the trend is expected to continue in the future, if the government cannot reduce the cost of providing its services. Market interventions have been deregulated prevented the accessibility of critical and vital services by the poor individuals in the economy (Ferguson 2008, p. 22). Indeed, freeing up of trade increases the extent of privatization, which has an effect on the provision of social amenities in the economy. Privatizing some of the public amenities can not only increase the operability in the economy, but it will jeopardize the functioning of other government initiatives.

In conclusion, three decades after the end of World War II, the economy has experienced tremendous changes, which either increases or reduces the economic growth and development. Neo-liberalism, being one of the initiatives in the economy, has brought about numerous problems that can be mitigated if the system is ignored. As the economic factors have shifted from the public sector to private individuals, most of the basic needs and amenities are accessed at a cost. Other problems that are realized from neoliberalization include constraints in fiscal and monetary policies, deregulation of the labour market, and inequality in resource allocation.

References
BELL LARA, J., & DELLO BUONO, R. A., 2007. Imperialism, neoliberalism and social struggles in Latin America. Leiden [u.a.]: Brill.
CAMERON, J. D., & NORTH, L. L., 2003. Rural progress, rural decay: neoliberal adjustment policies and local initiatives. Bloomfield, Conn: Kumarian Press.
COLCLOUGH, C., 2008. States or markets?: neo-liberalism and the development policy debate. Oxford: Clarendon Press.
FERGUSON, I., 2008. Reclaiming social work challenging neo-liberalism and promoting social justice. London, UK: Sage Publications.
FERGUSON, J., 2006. Global shadows: Africa in the neoliberal world order. Durham, N.C. [u.a.]: Duke University Press.
LEITNER, H., PECK, J., & SHEPPARD, E. S., 2007. Contesting neoliberalism: urban frontiers. New York: Guilford Press.
ONG, A., 2006. Neoliberalism as exception: mutations in citizenship and sovereignty. Durham: Duke University Press.
PETRAS, J. & VELTMEYER, H., 2013. Beyond Neoliberalism: A world Win, London: Ashgate Publishing, Ltd.
ROWDEN, R., 2009. The deadly ideas of neoliberalism: how the IMF has undermined public health and the fight against AIDS. London, Zed Books.
SAAD-FILHO, A., & JOHNSTON, D., 2005. Neoliberalism: a critical reader. London, Pluto Press.