When you think about the role of the government and how politics impact it, you will need to understand the pros and cons of government intervention clearly. There are multiple government agencies, departments, and regulations where the government is heavily involved in the economy that is necessary and helpful to the economy. Unfortunately, government agencies, departments, and regulations are also heavily involved in the economy and are unnecessary and unbeneficial. Regulations and government agencies were created to help maintain and operate the government efficiently and regulate our economy. Regulation is a significant way in which government influences the U.S. market economy. The scope of government regulations is vast and reaches all sectors of the economy and all aspects of our daily lives. The following paper will assess the government intervention providing both pros and cons while providing facts that support my opinion. The following sections will explain government intervention and how the process influences the political process with a rationale to support my claim in complete detail. It will state how an agency like the Federal Drug Administration and regulations like SarbanesOxley can impact our economy and how the government plays a role in doing so.
The Federal Drug Administration (FDA) plays a vital role in all of our lives as Americans. The FDA protects the public by ensuring the safety of drugs, biological products, and medical devices. It also protects the food supply, cosmetics, and products that can cause radiation to humans. The FDA also has responsibility for regulating the manufacturing, marketing, and distribution of tobacco products to protect public health, reduce tobacco use by minors, and speed up the innovations of medical products to make them effective, affordable, and safer for consumption (FDA.com, 2021). During the COVID pandemic, the FDA has had many challenges and has worked collegiately to keep the country safe and businesses operating so that the economy, company, and lives do not suffer. They have helped speed the innovation of the COVID vaccine so everyone could return to work so that business could open back up and return to normal, as normal as it can be under the fear of spreading or catching this horrible virus. The FDA’s key role in monitoring, preparing, and responding to global public health challenges is to maintain the safety of their people and keep the economy healthy as growing. There are pros and cons to the FDA strategies that can bring about change in the economy, and some say they help, and some say they hurt the current system.
The FDA addresses the pros in regulations, and health care is heightened awareness of physicians prescribing drugs that can potentially harm an individual because of the dangerous side effects. The FDA has made physicians more cautious in prescribing potentially hazardous medications based on their side effects. They increase public awareness and overall safety of the consumers by making sure drugs are not overprescribed and making narcotic drugs less accessible. Increasing awareness and educating America of the dangers of misuse will allow people to maintain their lives and continue working and stimulating the economy. The coronavirus (COVID-19) pandemic threatened to plunge the global economy into a recession or worse. By enforcing their regulations and monitoring drug companies, the FDA has helped individuals not feel pressured by the drug companies by limiting the amount of advertising allowed. This helps ease everyone’s mind when heading out to the drug store to spend their money, knowing they have the right to choose what pharmacy they want to go to and they will not feel gauged when we go pick up our prescriptions. This will allow more money to flow into the economy because the prices are controlled on the medicine that people need to survive are monitored by the FDA.
The FDA addresses the cons in regulations as well since regulations can create barriers in selling goods and services; there may be fewer people selling a product or service. Barriers such as licenses to start a small business can be costly, giving the consumer fewer choices since fewer people are selling the product. This will increase the demand for the service or product, which will make the customers face higher prices. Another con with the FDA is the lengthy approval time; even though they have shortened it considerably, shorter and safer approval times for lifesaving drugs can save lives and make the economy flourish if more people are healthy and working. Too many people die waiting on a drug or vaccine to be approved. Another con is that these delays allow drug companies to distribute drugs while waiting on approval, and greed and corruption can take the place of caring for our consumers’ safety and well-being. Although these drugs can save lives, there are also adverse side effects. The FDA will need to continue to strengthen and refine their system on research protocol so that they can detect early any misconduct or oversights in the safety and well-being of the consumers.
In the wake of the pandemic, FDA finally approved the first COVID-19 vaccine (FDA.gov, 2021). This will elevate many concerns and fears in the consumers and increase the number of people willing to take the vaccine so that businesses can return to normal. When consumers can shop with less fear of their health and well-being, they will spend more money on local businesses, and the economy will show an increase in sales on consumer goods and services and dining out more instead of cooking at home. Even with all the pros and cons within the FDA, they still have the consumers and the economy’s best interests in mind and work hard to maintain trust in their system. I feel confident that the FDA helps our economy greatly by managing the prices drug companies charge and ensuring the drugs are safe before consumers use them.
Lobbyists play a massive role in the pharmaceutical industry; studies found that the pharmaceutical and health product industry spent $4.7 billion lobbying the U.S. federal government (Wouters, 2020). Lobbying and campaign contributions can lead to an inefficient economic policy. The primary way that campaign contributions and lobbying may dampen economic growth is through the practice known as rent-seeking. Rent-seeking is the process by individuals or groups seeking income through government favors rather than through productive economic activity by redirecting revenue to projects they promote (Gwartney et al., 2018). Lobbyists spend a large sum of money on lobbying and campaign contributions to influence legislative and election outcomes on prescription drugs sold in retail pharmacies. They use the data they have accumulated and use it to their advantage to get the politicians on their side to engage in lobbying in favor of pharmaceutical companies and their products. Pharmaceutical companies and the health industry spend a lot of money on lobbying and campaign contributions to influence legislation (Wouters, 2020). This is a powerful tool for the drug companies on how well their lobbyists can influence the political process.
There are so many sectors of the business world that have long complained about government regulation, and many American businesses have both suffered and prospered from government regulations. One that has helped many companies for corporate fraud is when Congress passed the Sarbanes-Oxley Act in 2002. This act was implemented as a federal law that was created to protect the shareholders, employees, and the public from accounting errors and fraudulent financial practices (Davis, 2020). The Sarbanes-Oxley Act helps the company because the government is watching the patterns of accounting, auditing, and corporate responsibility (Davis, 2020). SOX has been successful in forever changing the corporate governance landscape for the benefit of investors (Crowe, 2018).
There are pros and cons of this act, and many in the business world opposed the bill. Some claim that compliance would be difficult, time-consuming, and ineffective. There is a lot of criticism from smaller companies that must follow the same reporting rules as larger corporations. It is costly because if auditors are responsible for accurate accounting responsibilities for the reports, then more time is put in, so the fees go up (Ahrenstorff, 2017). In contrast, others claim it has forever changed the landscape of corporate business, benefiting the investors and giving confidence to the investors (Crowe, 2018). Another pro to SOX is the internal control testing that allows transactions to happen properly because checks and balances are in place to catch any abnormalities. Despite the costs in mandating, there is still significant evidence that this act has been proven beneficial to our economy.
A lobbyist is a person that is employed by another person who will maintain the governmental affairs by another person or government entity to lobby on their behalf (SFWMD, 2021). The lobbyist will go direct, face-to-face, make telephone calls, write letters, or any means necessary to meet with fellow legislators, government officials, or advocacy groups to build a relationship. Lobbyists play a massive role in the Sarbanes-Oxley Act by evaluating the behavior of the investors and corporate insiders. Investors lobbied strongly in favor of the strict implementation of the act, while insiders and business groups lobbied against it. Since a business must comply or face stiff penalties, companies would find it advantageous to have a lobbyist on their payroll to speak for them to the lobbyist’s individuals on their behalf. Even though the SOX act remains in place and unchanged, it was under heavy criticism when it was implemented; studies have shown that it has improved financial reporting greatly.
In closing, the government plays a significant role in influencing our market and economy. It has changed so many aspects of the lives of consumers and businesses combined. Even with all the pros and cons associated with the Federal Drug Administration and the Sarbanes-Oxley Act, this helps maintain our government’s economy. It helps the consumers, investors, and businesses know that the government has their best interest at heart when establishing these government regulations and organizations.
References
Ahrenstorff, R. (2017). The 4 biggest pros and cons of the Sarbanes-Oxley Act. Retrieved from
https://ktconnections.com
Craig, J. & Madland D. (2014). How Campaign Contributions and Lobbying Can Lead to Inefficient Economic Policy. Retrieved from https://www.americanprogress.org
Crowe, C. (2018). Don’t forget the good that SOX has done. Retrieved from https://www.wsj.-
com/articles/dont-forget-the-good-that-sox-has-done-1519423423
Davis, M. (2020). Government regulations: Do they help businesses? Retrieved from
https://www.investopedia.com
FDA.GOV (2021). FDA Approves First COVID-19 Vaccine. Retrieved from https://www.fda.-
gov/about-fda/reports/economic-impact-analyses-fda-regulations
FDA.GOV (2021). What we do? Retrieved from https://www.fda.gov/about-fda/what-we-do
Gwartney, J. A., Stroup, R. L., Sobel, R. L., & Macpherson, D. A. (2018). Macroeconomics: Private and public choice (16th ed.). Retrieved from https://www.cengage.com
SFWMD (2021). Florida sunshine law code of ethics and lobbyist registration. Retrieved
fromhttps://apps.sfwmd.gov/
Lutkevich, B. (2020). Sarbanes-Oxley Act. Retrieved from https://searchcio.techtarget.com
Wouters, O. (2020). Lobbying expenditures and campaign by the pharmaceutical and health
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