Alesina, Alberto. Political Cycles and the Macroeconomy. Cambridge, Mass. [u.a.: MIT Press, 1997. Print.
This book was written by one of the most experienced persons on the field of political influence on businesses. Alesina Alberto is a renowned Italian political economist who has authored several books and articles on the relationship between business and politics. He is a professor of Political Economy at Harvard University and as such speaks authoritatively on the subject. The book addresses the relationship between economic/business cycles and the political cycles. It examines how the timing of elections, electoral laws, the nature of competition between political parties and its influence on employment, the ideological orientation of governments, inflation, monetary policies, inflation and economic growth.
In the book, Alberto shows that although business and political cycles are closely intertwined, the latter has a greater influence on the former. Political cycles have the upper hand in determining the nature, profitability and even the survivability of businesses. The author states that that politician has powers to establish laws that can cause businesses to wither flourish or decline. The presence of political good will goes a long way in helping businesses stabilize, grow and attain profitability.
There is a vast amount of empirical evidence as well as theoretical literature on the relationships between businesses and politics. The underlying assertion of the book is that voters are likely to “reward” by voting in those leaders who have shown tendencies towards creating favorable business environment. The leaders could promise to lower taxes, offer incentives to businesses, increase government and private sector partnerships among other issues that the business community deems to be favorable to business and profitability.
The book also presents the bigger picture of political policies and macroeconomic policies. It places businesses at the heart of making political policies successful through increased remittance of revenue to the government by the business community. The data presented in the book is borrowed from countries allied to the Organization for Economic Co-operation and Development (OECD) as well as the United States. Two-party political systems are shown to have a particularly strong influence on the business cycles among all the countries mentioned in the book.
Cukierman, Alex, Hercowitz & Leiderman Leonardo. Political Economy, Growth, and Business Cycles. Cambridge, Mass. u.a: MIT Press, 1992. Print.
The three professors who wrote this book are all economic experts at the Tel Aviv University. The book is based on empirical results and theoretical analysis of studies by economists on the links between government policies and business cycles. This book responds to the question, “What political and economic factors stimulate economic growth and expansion?” The book covers a broad range of issues touching on politic and the expansion of economies. Some of the topics in the book address economic reform and price flexibility. Others examine the effects of political coups on economies. Political coups or the ousting of governments from power has been presented as one of the most debilitating effects on business cycles. On the other hand, political stability has a direct benefit to businesses. In deed political influence is one of the factors that affect a business among the PESTLE (Political, Economic, Social, Technological, legal and Environmental) factors.
Essays addressing the business cycles are grouped into two. The first category addresses growth and the policy choices whereby policies react to distributional and economic
considerations through majority rule processes (political elections). The other category focuses on the policy as it is and places empirical estimates on the speed of rates of growth across different parts of a country. In addition, the book addresses the effects of elections and control or decontrol of prices.
Newell, Claire. "Senior Conservative MP uses political contacts to further Business Empire." The Telegraph. Telegraph Media Group, 6 Oct. 2005. Web. 12 Nov. 2013. <http://www.telegraph.co.uk/news/politics/conservative/10429206/Senior- Conservative-MP-uses-political-contacts-to-further-business-empire.html>. Online
This article criticizes how government officials and politicians use political power to expand their businesses unfairly. The article attacks a UK member of parliament allied to the ruling Conservatives party used his political contacts to gain favors from the government and expand his business empire unfairly. The MP had offered to use his political power to create business deals with foreign ministers and officials in return for cash rewards.
The MO confessed to have been using a “network” to set up meetings with politicians from countries where he had connections with other members of parliament. While sitting on the official parliamentary groups meetings he had brokered investments and arranged meetings with senior government officials. This was an absolute conflict of interest which has been banned by parliamentary rules. It presents a series of communications and corrupt dealing that the MP had with businessmen from Albania and Malta. The article further states that the MP could ask for £3,000 per month for his “consultancy” services. A further 3% of any deal that he helped each businessman to acquire would also be availed to him.
This article presents the blatant manner in which politicians use their power to do business deals against the rules of their parliaments and the constitution. It shows how politicians who may be incompetent in handling some businesses may disadvantage genuine and competent businesses from benefiting and thriving in their own countries.
Fritsch, Tobias. Rational Opportunistic Political Business Cycles. München: GRIN Verlag GmbH, 2010. Print.
This book focuses on the trade-off between focusing on the present or on the future welfare or rather between consumption and saving. He notes that natural resources and price inflations for produced goods are highly dependent on whether a country’s population generally chooses to consume or to save. The prevailing political decisions are factored in when these decisions are made. The book describes what it is that motivates politicians to influence voters in a certain way before elections.
According to Fritsch, politicians use economical instruments such as aggregated demands, Philips curve and budgets among others to increase their chances of winning elections. They do so by presenting themselves as the best placed people to bring about revitalization in businesses and improve the livelihoods for all people. Fritsch notes that many of the promises made by politicians before they get to power are never fulfilled. Some of the reasons he fronts for this are poor crafting of policies and manifestos, impracticability of the policies, huge monetary demands for the implementation of the policies, lack of insight and plans on the sustainability of the policies among many other reasons.
In addition the author shows that the decline of businesses when a certain government is in power is usually a recipe for economic stagnation of the whole country. When businesses realize that they are unable to cope with government policies regarding them, they decline. As a result they realize smaller profits and the government receives lesser taxes. As a knee-jerk reaction, such a government may impose higher taxes and this scares away investors and greatly impeded economic growth. When another political season comes, politicians try and make amends where they erred against businesses, pledge more support and are voted back to power. This is what constitutes a political business cycle. As such, this book shows the tight relationship between government policies and the business community and is thus a very relevant source in discussing why business cycles tend to follow political cycles.
Barnett, Michael N and Martha Finnemore. Rules for the world. Ithaca, N.Y.: Cornell University Press, 2004. Print.
This book analyses the effects that global or international businesses have on politics, their desired effect on politics and the importance of these effects to be in place. Finnemore and Barnett assert that these organizations are more than instruments of states from which they originated. The authors state that international organizations are bureaucracies with authority to make rules and exercise power. The organizations may use their power to their good to gain more profitability and expand their services to the enjoyment of more people. However, these international companies may become obsessed with power and thereby produce inefficient, unresponsive and self-defeating outcomes.
According to the Finnemore and Barnett, businesses neither control nor are they controlled by the global political environment. The two entities are closely linked. This book is aimed at presenting an argument that the UN, the IMF through powerful bodies in themselves, are not scions of state political powers. This makes this source a biased one but whose bias contributes to greater understanding of the economic status and stability of UN member states.
Barnett and Finnemore discussed three areas of public policy: IMF’s use of expertise to intrude into national economies, the UN’s secretariat failure to intervene in the Rwandan Genocide and the redefinition of “refugees” as well as their repatriation by the United Nations High Commission for Refugees (UNHCR). These bodies are defined as powerful bodies with autonomous power and actors. The book “Rules for the World” presents a new look into global politics.
Inc, "Business Cycles." Inc.com. Version 12. 2, 13 Dec. 2013. Web. 12 Nov. 2013. <http://www.inc.com/encyclopedia/business-cycles.html>. Online
This article discusses business cycles extensively. It presents the states of a business cycle as: recession, recovery, growth and decline. In one of the parts, the article states that “business cycles are the result of the politically-motivated implementation of macroeconomic policies that are designed to suit the interests of politicians running for re-election”. The article states that business cycles are founded on the belief that politicians have a tendency to expand economic policies in only those ways that aid their re-election efforts.
The article also looks into government spending during periods of political turmoil as opposed to periods of political stability and the effects this has on business cycles. Variations in government spending influence business fluctuations. The most influential government spending has been noted to be during or after wars. During the World Wars 1 & 2, government spending soared thereby causing expansion of world economies and this was beneficial to businesses in many countries. However, some forms of political turmoil especially domestic wars such as the Korean War of 1950s usually result in economic contractions due to reduced government spending thereby causing having an adverse effect on businesses.
Besides political influence, other factors that shape the business cycles are also presented as volatility of business spending, momentum (free-spending habits by consumers), technological innovations and variations in inventories (amount of stock maintained by businesses) among others.
In all, political influences are shown to have an overbearing influence on factors such as monetary policies and fluctuations in imports and exports. The article concludes by giving business owners tips to manage business cycle downturns. Some of those tips include: flexibility (having a flexible business plan), long-term planning, attention to customers, objectivity and study in which the article advises business people to take time and survey the political climate prior to making some decisions. In the same manner business people listen to economists, so should they listen to politicians in order to predict the future of their businesses s far as survival, expansion and profitability are concerned. The article is therefore a very relevant and useful source that sheds light into exactly how political influences interfere with the business cycles.
Solomon, Robert C., and Fernando Flores. Building trust in business, politics, relationships, and life. New York ; Oxford: Oxford University Press, 2003. Print.
This book is a philosophical review of how people or entities from different fields in life can create, cultivate and maintain trust between themselves. Both Robert Solomon and Fernando Flores are both professors of business and philosophy and they therefore write from a position of experience and authority on how businesses can maintain trust with the government and politicians in general.
The book begins by stating the importance of trust in any relationship. It mentions that meaningful and mutually beneficial relationships in marriage, business and politics are anchored ion trust. The authors implore on what constitutes trust, how it can be achieved and sustained and also how it can be regained once it has been broken. According to Solomon and Flores, trust in business, politics or marriage is an emotional skill which is kept alive with promises, emotions, commitments and integrity.
In regard to the place of trust in business-politics relationships, the authors implore the possible ways in which trust can be broken. The authors posit that insidious office politics can sabotage a company and deter its profitability. Lack of trust between government agencies and the business community also hampers the mutual development of both entities. When the business community and the government are cynical of each other, then both suffer mutual damages. Examples of mistrust could include allegations of embezzlement of funds by politicians mandated to oversee an incentives programme. The authors present diplomacy, increased communication and consultation as some of the ways and means that parties can use to solve differences and thereby increase their level of mutual trust. Moreover, governments (politicians) should be welcoming to investors from different nationalities and cultures. Though the threats of terrorism and global insecurity are closely intertwined with globalization and the free trade, the cultivation of trust between political and business entities should suffice.
Kelly, Spors. The Business of Politics: Entrepreneurs might be better off not making their political preferences known to customers. But some want to anyway. N.P., 11 Aug. 2008. Web. 11 Dec. 2013. <http://online.wsj.com/news/articles/SB12. Online
This article presents the plight of small businesses when it comes to taking political stands. The article presents the scenario of two San Francisco-based entrepreneurs Joe Gebbia and Brian Chesky. The two were ardent supporters of the Democratic Party presidential candidate Barrack Obama. They operated a website that allows travelers to find locals willing to rent spare beds called AirBed & Breakfast Inc. They hoped to cash in on the many people travelling to party conventions but they could not open up about their political stand lest they lose clients affiliated to other political parties!
Unless a business person is very sure that supporting a certain political course will yield to massive profitability in the long-term, s/he should very much refrain from openly taking staunch political stands.
Works Cited
Alesina, Alberto. Political Cycles and the Macroeconomy. Cambridge, Mass. [u.a.: MIT Press, 1997. Print.
Barnett, Michael N and Martha Finnemore. Rules for the world. Ithaca, N.Y.: Cornell University Press, 2004. Print.
Cukierman, Alex, Hercowitz & Leiderman Leonardo. Political Economy, Growth, and Business Cycles. Cambridge, Mass. u.a: MIT Press, 1992. Print.
Fritsch, Tobias. Rational Opportunistic Political Business Cycles. München: GRIN Verlag GmbH, 2010. Print.
Inc, "Business Cycles." Inc.com. Version 12. 2, 13 Dec. 2013. Web. 12 Nov. 2013. <http://www.inc.com/encyclopedia/business-cycles.html>. Online
Kelly, Spors. The Business of Politics: Entrepreneurs might be better off not making their political preferences known to customers. But some want to anyway. N.P., 11 Aug. 2008. Web. 11 Dec. 2013. <http://online.wsj.com/news/articles/SB12. Online
Newell, Claire. "Senior Conservative MP uses political contacts to further Business Empire." The Telegraph. Telegraph Media Group, 6 Oct. 2005. Web. 12 Nov. 2013. <http://www.telegraph.co.uk/news/politics/conservative/10429206/Senior- Conservative-MP-uses-political-contacts-to-further-business-empire.html>. Online
Solomon, Robert C., and Fernando Flores. Building trust in business, politics, relationships, and life. New York; Oxford: Oxford University Press, 2003. Print.
