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Business in Politics
This session:
Explains how corporations, now and in the past,
have exercised political influence.
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The Structure of American
Government
Several basic features of the Constitution shape
the political system:
Sets up a federal system, or a government in
which powers are divided between a national
government and 50 state governments.
Establishes a system ofseparation of powers.
Provides forjudicial review.
The First Amendment protects the right of abusiness to organize and press its agenda on
government.
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A History of Political Dominance by
Business
The Revolutionary War of 1775-1783 that created
the nation was, according to some historians,
fought to free colonial business interests from
smothering British mercantile policies.
The noted historian Charles Beard argued that the
Constitution was an economic document drawn
up and ratified by propertied interests, for their
own benefit.
Yet the record since adoption of the Constitution in1789 is one of virtually unbroken business
ascendancy.
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Laying the Groundwork
The economy was 90 percent agricultural,
so farmers and planters were a major part
of the political elite.
Under the leadership of Secretary of theTreasury Alexander Hamilton the new
government was soon turned toward the
promotion of industry.
As the young nations economy expanded,
so also did the political power of business.
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Ascendance, Corruption, and
Reform In the period following the Civil War, big business
dominated state governments and the federalgovernment in a way never seen before or since.
Through ascendancy in the Republican Party,
corporations had a decisive influence over thenomination and election of a string of pro-businessRepublican presidents from Ulysses S. Grant in1868 to William McKinley in 1900.
In Congress, senators were suborned by businessmoney and corruption was rampant.
Late in the century, farmers tried to reassertagrarian values through the Populist party.
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Ascendance, Corruption, and
Reform (continued) Business adversaries that emerged:
The populist movement
Organized labor
The Anti-Saloon league
After 1900, reforms of the progressive movement curtailedoverweening corporate power.
Big business feared giving women the vote.
The great political reforms of the progressive era were
reactions to corruption in a political system dominated by
business.
While business was more often checked after the turn of the
century, it remained preeminent. Corruption continued.
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Business Falls Back under the New
Deal
Conservative business executives argued that thedepression would correct itself without government action.
After the election of Franklin D. Roosevelt in 1932,corporations fought his efforts to regulate banking andindustry, strengthen labor unions, and enact social security.
Corporate opposition to New Deal measures ran counter topublic sentiment.
Roosevelt was hurt by all the hate and felt that through hismajor New Deal programs, he had saved capitalism in spiteof the capitalists.
One lasting legacy of the era was the philosophy thatgovernment should be used to correct the flaws of capitalismand control the economy so that prosperity would no longerdepend solely on unbridled market forces.
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Postwar Politics and Winds
of Change
In the 1940s, industries patriotic World WarII production record and the subsequentpostwar prosperity quieted lingering publicrestiveness about corporate politicalactivity.
During the 1950s, corporations once againpredominated in a very hospitable politicalenvironment.
During the 1960s and 1970s, nationalpolitics became dominated by a liberalreform agenda.
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The Rise of
Antagonistic Groups During the 1960s, the climate of pressure politics
changed with the rise of new groups focused onconsumer, environmental, taxpayer, civil rights,and other issues, changing the political arena for
business. The rise of groups hostile to business is part of a
broader trend in which new groups of all kinds,including business groups, have been stimulatedby growth of government.
In the 1990s there were an estimated 23,000organized interest groups, roughly 400 percentmore than in the 1950s.
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Diffusion of Power
in Government
A second change in the climate of
politics, besides new groups, has been
the diffusion and decentralization of
power in Washington, D.C. caused by: Reforms in Congress
The decline of political parties
Increased complexity in government
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The Universe of Organized
Business Interests
Literally thousands of groups represent business.
The most prominent groups are peakassociations that represent many differentcompanies and industries.
More than 6,000 trade associations representcompanies grouped by industry.
More than 700 corporations have staffs ofgovernment relations experts in Washington.These Washington offices are set up mainly bybig companies.
Business interests also form coalitions to createbroader support.
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Lobbying
There are two broad areas ofbusiness involvement in politics: Government relations, or lobbying
The electoral process
A lobbyist presents the position of acorporation, interest group, or tradeassociation to a government official.
Lobbyists provide critical intelligenceto lawmakers.
In Washington today, legislators arereceptive to lobbyists.
Lobbyists are only loosely regulated.
Lobbying
Advocating a
position to
government.
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Lobbying Methods
Major lobbying efforts nowresemble political campaigns inthe way they combine a broadrange of methods including:
Direct contact Background lobbying
Public relations
Legal support
Polling Policy analysis
Grassroots work
Grassroots
lobbying
The technique of
generating an
expression ofpublic, or
grassroots,
support for the
position of a
company orlobbyist.
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Paths of Pressure
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Efforts to Limit
Corporate Influence An effort at reform came after the election of 1904,
when Republican Theodore Roosevelt, whocampaigned as a reformer, was embarrassed by hisopponent, Democrat Alton B. Parker, for taking largecash contributions from corporations.
In 1907 progressive reformers pass the Tillman Act,making it a crime for banks and corporations todirectly contribute to candidates in federalelections, and this is still the law today.
After 1907 the spirit of the Tillman Act was quicklyand continuously violated.
Since the Tillman Act did not limit individualcontributions, wealthy donors stepped in.
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The Federal Election Campaign
Act In the years following the Tillman Act, Congress added to the
body of election law although none of these measures
limited the influence of what continued to be the main source
of campaign funding corporations.
Democrats angry at Nixon passed the Federal Election
Campaign Act (FECA) in 1971 to stiffen disclosure
requirements on campaign contributions and expenditures.
In reaction to Watergate, Congress extensively amended the
FECA in 1974.
The intent of the amendments was to limit corporateinfluence; however, over the next 30 years it failed to do so.
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How PACs Work
To start a PAC, a corporation mustset up an account for contributions.
Corporate PACs get their fundsprimarily from contributions by
employees. The money in a PAC is disbursed to
candidates based on decisionsmade by PAC officers, who must becorporate employees.
There are no dollar limits on theoverall amounts that PACs mayraise and spend.
Political action
committee
A political
committee
carrying acompanys
name formed to
make campaign
contributions.
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Soft Money and
Issue Advertising In 1979 Congress amended the FECA to
encourage support for state and local politicalparties by suspending limits and prohibitions oncontributions to them.
These contributions came to be known as softmoney.
Although corporations are barred from contributingto federal campaigns, a series of advisory opinionsby the Federal Election Commission opened thedoor for them to give unlimited soft money
contributions to national party committees. In 1996 the Supreme Court held that soft money
could be used forissue advertising.
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Reform Legislation in 2002
Senators John McCain (R-Arizona) and RussellFeingold (D-Wisconsin) pushed through a bill thatwas enacted as the Bipartisan Campaign Reform
Act of 2002 (BCRA).
National parties are prohibited from raising or spendingsoft money.
Corporations can give unlimited amounts of soft money toadvocacy groups for electioneering activity, withrestrictions during blackout periods.
Contribution limits for individuals are raised.
The main purpose of the new law is to end the useof corporate soft money forissue ads run justbefore elections.
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Testing the New Law
The 2004 election cycle was the first under BCRArules. The new law did not stop the rise in overallspending.
Hard money contributions went way up.
New advocacy groups formed to take in the softmoney that corporations, unions, and individualscould no longer give to parties.
Independent expenditures for and againstcandidates increased.
So far, the new restrictions of the BCRA have workedto cut the flow of unregulated soft money into federalelections, but overall growth of campaign giving andspending has not been slowed.
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Tension Over Corporate
Political Expression
Tensions exists between two strong values inthe American political system, freedom ofspeech and political equality.
Regulation to silence speech, including
corporate speech, goes against the grain of theFirst Amendment.
Restraints on corporate giving have beenpermitted to ensure political equality in elections
and the implied duty to maintain elections free ofcorruption and the appearance of corruption.
Dissenters have argued that corporations havethe right to unlimited speech.
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Concluding Observations
There is significant imbalance of resourcesbetween corporate interests and other interestssuch as poor people, small farmers,environmentalists, and consumer advocates.
Business today is forced to deal with more, andstronger, opposing interests than in the past.
The rise of soft money and refinements in lobbyingmethods create a perception that corporationmoney is undermining the independence ofofficials.
Because of disclosure rules, American politics iscleaner than the politics of most other nations andcleaner than in past eras.
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Political and Government
EnvironmentCase study of India
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Constitution of India
The Constitution of India was adopted by The
Constituent Assembly on 26th November 1949.
It came into effect from 26th Jan. 1950.
Our Constitution contains 395 articles and 10
schedules.
It is divided into 22 parts containing articles and
schedules.
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Constitution of India
The most important parts and articles are:
Part II- Containing Articles 5-11 relating to citizenships
Part III- Containing Articles 12-35A relating to Fundamental
Rights
Part IV- Containing Articles 36-51 relating to Directive
Principles of State Policy.
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Constitution of India
Part V- Containing Articles 52-152 relating to Union.
Part VI- Containing Articles 153 relating to the state.
Part XVIII- Containing Articles relating to Emergency
Provisions.
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The Preamble to the Indian
Constitution
The Constitution of every country has its own preamble.
The preamble reflects the intention, views and objectives
of the constitution maker.
It also contains the basic values of the country.
It serves as a guide in the interpretation of a Statute(law)
when it is vague.
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Preamble to the Indian
Constitution
The Preamble to the Indian Constitution states that , We
the people of India having solemnly resolved to
constitute India into a Sovereign, Socialist, Secular,
Democratic, Republic, to secure to all its citizen:Justice, social economic and political.
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Preamble to the Indian
Constitution
Liberty of thought, expression,belief, faith, and
worship:
Equality of status and opportunity and to promote
among them all:
Fraternity assuring the dignity of individual andintegrity of the Nation.
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Basic Characteristics of
Indian Constitution
Sovereignty
Democracy
Secularism Socialism
The Parliamentary System
Separation if Powers
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Fundamental Rights
Fundamental Rights enumerated in Part III of the
Constitution are:
1. Right to Equality
2. Right to Freedom
a) Freedom of speech and expression;
b) Freedom to assemble peacefully and without arms;c) Freedom to form association or unions;
d) Freedom to move freely throughout the territory of India;
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Fundamental Rights
e) Freedom to reside and settle in any part of the country;
f) Freedom to practice any profession, or carry on occupation,
Trade or business
3. Right against Exploitation
4. Right to freedom of Religion
5. Cultural and Educational Rights
6. Right to Constitutional Remedies
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Legal Environment in India
With expansion and diversification of
business the legal system of India has
become quiet comprehensive and
complex. Some of the laws are asfollows :
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Legal Environment in India
The Contract Act 1872
The Partnership 1932
The Companies Act 1956
The Industries Act (Development &
Regulation) 1951
The Competition Act 2002
The Income Tax Act 1961
The Consumer Protection Act 1986
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Legal Environment in India
The Foreign Exchange Management
Act, 1999
The Patents Act 1970
The Trade Marks Act 1999
The Environment Protection Act 1986
Indian Sale of Goods Act 1930
Industrial Dispute Act 1947
Minimum Wages Act 1948
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Legal Environment in India
Monopolies & Restrictive Trade PracticeAct 1969
SEBI Act 1992
IT Act 2000
RTI Act 2005
MSMI Development Act 2006
Central Excise Act 1944 Banking Regulation Act 1949
Land Acquisition Act 1894
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Legal Environment in India
Environmental ActsAir Act 1981
The Water Act 1974
Noise Pollution Rules 2000 Hazardous Wastes Management Rules
1989
Foods Food Safety and Standards Act 2006
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I di F d l D
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Indias Feudal Democracy
To realize its peoples
potential, industrialization
and modernization are
imperativeby Markandey Katju
Times of India,29th Jan 2013
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The Indian Constitution, following the British
model, created a system of parliamentary
democracy. Up to 1947, when India becameindependent, it was still a largely feudal,
agricultural country.
The British policy was to keep us largely un-
industrialised, since an industrial India, with
its cheap labor, could become a powerful rival
to British industry.
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The Indian Constitution was based on
western models. We borrowed parliamentary
democracy and an independent judiciary fromEngland, federalism and the fundamental
rights from the Bill of Rights in the US
Constitution, the Directive Principles of State
Policy from the Irish Constitution etc. Thus we borrowed a modern Constitution
from western models, and transplanted it from
above on our largely backward, feudalsociety.
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Democracy is a feature of an industrial, not
feudal, society. But the intention of our
founding fathers- Pandit Nehru and hiscolleague was that democracy and other
modern principles, such as liberty, equality,
freedom of speech, freedom of religion, liberty
or equality, as well as modern institutionssuch as parliament and independent judiciary
etc would pull our backward, feudal society
into the modern age.
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They set up a heavy industrial base (which
the British had prohibited). Consequently
India became partially industrialised andmade some progress since 1947.
We produced a large pool of engineers,
technicians, scientists, doctors, women got
education, and so on. However, midway
between 1947 and now our democracy and
hijacked by the feudals.
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Caste and religious vote banks, which could
be craftily manipulated by many of our
politicians to serve their selfish ends,emerged and became a normal feature of
elections and other political activity in most
parts of India.
Everyone knows that in most parts of India
people vote on caste and religious lines,
instead of looking at the merits of thecandidate.
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It is for the reason that many persons with
criminal background have often been elected.
Democracy was never meant to be run in thismanner, and this has blocked our progress.
Hence fundamental social and political
changes are now required.
The unfortunate truth is that most of ourpeople are still intellectually very backward,
with faith in casteism, communalism and
superstittions. Honour killing, dowry deaths,female feticide, etc are prevalent in large
parts of India.
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Child malnutrition at 48% is higher than in the
poorest sub-saharan countries of Africal such
as Somalia and Ethiopia. The Arjun Senguptareport states that 77% Indian lives on less
than Rs.25 per day. A UN report estimated
that 2.1 million Indian children die before
reaching the age of five years, that is fourever minute.
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Unemployment is massive in India, with even
postgraduates seeking a peons job.
Healthcare for the masses is abysmal. Poorpeople in India can hardly afford doctors or
medicines, and hence they resort to quacks.
Education is in a shambles.
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Our national aim must be to make India a
modern, powerful, secular, highly
industrialized country, in which all its people(and not just a handful, as is the case today)
get decent lives, and the great social evils like
poverty, malnutrition, unemployment,
skyrocketing prices, lack of healthcare andgood education, etc which are widespread
today in India are abolish forever.
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Backward and feudal ideas like casteism,
communalism and superstitions must be
replaced by modern scientific and rationalthinking. How is this is to be achieved? To my
mind this can be achieved by the struggles of
the people using their creativity.
All patriotic people in India must strive for thisgoal, and join in this great historical task. This
will no doubt call for great sacrifices, and will
probably require a long, painful and sustainedstruggle for about 20 years or so.
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But if we do not do this we will be cursed by
our descendants for having betrayed the
nation. The writer, a former Supreme Court Judge, ischairperson of the Press Council of India
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