business in canada (chapter 10)

Capitalism is a type of economic system that is based on a few fundamental principles:

Rights of the Individual
• In Canada, there are limits placed on individuals’ right to pursue their self-interest
• Government regulations enforce rules that affect how business owners conduct their
affairs, i.e., laws preventing discrimination in hiring

Rights of Private Property
• Individuals are permitted to own the means of production, whether it is land, labor,
or capital
• Taxation (on businesses, investments, income) and state ownership of assets (i.e.,
healthcare industry) help to distribute wealth more evenly in Canada

Competition:
• Competition (and the invisible hand of the market) is believed to help provide lower costs,
better products for consumers; however, “perfect competition” does not exist in practice
• In Canada, government has put in place mechanism to intervene, if required, to promote
competition
Role of the government
• “Pure” Capitalism advocates for very limited role for government (focused on ensuring the
other three elements—rights of individual, private property and competition are maintained!)
• In Canada, government does intervene in the affairs of business (e.g., regulations, taxation)

government interacting with society:
- Collecting taxes from businesses
- Acting as business owners
- Regulating the business sector
- Safeguarding Canadian interests in the global context

government interacting with business:
- Spending money on private business
- Assisting private businesses through subsidies or bailouts
- Safeguarding Canadian business in the global context

levels of government: (pg.285)
- federal (national- prime minister) the highest level of government > their regulations applies to all Canadians
- provincial and territorial (regional- premier) regional in nature > only affects those citizens and residents who reside in a particular province
- municipal (town/ city/ local- mayor) governs a city or a smaller community, such as a town or village

1. Collecting taxes from businesses:
• Sales Tax (HST)
• Property Tax
• Restrictive/Regulatory Tax (i.e., Tobacco, Alcohol, Sugary soft drinks as of July 2020)
2. Ability to drive behavior
3. Ability to capture “negative externalities”
• Tax on sugary soda can help offset higher healthcare costs
4. Debate: Is the Government overstepping its role?
• Why soda and not chocolate/fried foods?
5. Higher impact on people with low incomes
6. economic regulation is defined as “the imposition of constraints, backed by the authority of a government, that are intended to modify economic behaviour in the private sector significantly”

1. nurturing young industries
2. encourage foreign direct investment (FDI)
3. maintaining a favourable balance of trade
4. protecting domestic business from unfair competition
5. maintaining adequate levels of domestic employment
6. offering subsidies to compete globally

suggests, involves a reduction in the number of laws or regulations affecting business activity. It
also suggests a reduction of the powers of government enforcement agencies and other forms of government control or influence.


ie. In recent years, the process of deregulation in the Canadian economy
seems to have accelerated, particularly in industry sectors such as
transportation, telecommunications, financial services, and energy. While
the telecommunications sector maintains varying degrees of regulation in
different areas, it has seen an increased level of competition through
deregulation in areas such as overseas calling, domestic long distance, local
telephone service, wireless service, and other services. The Canadian
electricity sector has also seen deregulation occurring, particularly in
Alberta and Ontario.

The benefit: of deregulation for consumers is increased competition arising from the reduction of regulations that have formerly restricted the entry of new competitors.

The risk: of deregulation is consumer exploitation - that is, a reduction in quality of the products or services being offered, increases in consumer fees, or price increases as a result of the reduction in laws governing the industry's operation.

refers to the divesting of government involvement in the operation, management, and
ownership of activities. Typically, privatization involves the transfer of activities or functions from the government to the private sector. Privatization might involve selling off a Crown corporation to the private sector.

beliefs in:
1. power of competition as a control mechanism
2. private businesses can operate more efficiently
3. no longer a need for public involvement in some sectors
4. financial benefits from selling government-owned assets
5. challenges to "going private"

ie. LCBO pg 324

reflects a balance between market-oriented principles and the recognition of broader social and environmental goals. The country's commitment to inclusiveness, diversity, and responsible business practices shapes the landscape in which businesses operate.

Crown corporations are generally formed to fill a need that the federal or provincial government deems in the national interest or not profitable for private industry. Some Crown corporations are expected to be profitable organisations, while others are non-commercial and rely entirely on public funds to operate.


What is a Crown corporation?
A Crown corporation, or public enterprise, is an organization accountable to Parliament for its operations through a minister. Crown corporations may be federal (for example, Canada Post, the Canadian Broadcasting Corporation [CBC]) or provincial (for example, the Liquor Control Board of Ontario [LCBO]).

1. To implement public policy that includes protecting or safeguarding national interests
2. To protect industries deemed to be vital to the economy
3. To provide special services that could not otherwise be made available by private business
4. To nationalize industries that are considered natural monopolies