Student Name __Luke (Alok) Singh_______ LE3302 Government & Business Spring 2009 FINAL EXAM Text/Discussion Questions

Date _4/24/09______

1. (TEXT) What are the Four Principles of Government? After naming them, give a specific example in our government of each principle. (15 Points) Principle # 1: Under the federal system, powers are distributed between the nation and the several states. In the U.S., some of the powers of the federal government are: 1. The power to lay and collect taxes, duties, imposts, excises, to pay the debt, and provide for common defense and general welfare. 2. The power to borrow needed funds. 3. The power to regulate commerce with foreign nations and among the several states, and with Indian Tribes. 4. The power to establish uniform laws of bankruptcy. 5. The powers to coin money, regulate money supply, and fix the standard weights and measures. 6. The power to establish Post Offices and Post Roads. 7. The power to promote the progress of Science and useful Arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. The states have the power to make laws on all its constituents that are not granted to the federal government or denied to the states in the U.S. constitution. Some of the areas of that the states govern are education, family law, contract law, and most crimes. Although the constitution does not have explicit language on a point of law, certain powers could be deducted from the constitution. Principle # 2: Within the state and federal governments there is a separation of legislative, executive, and judicial powers. In the U.S. the state and federal governments have a separation of powers between the three branches of government, this is commonly referred to as checks and balances, this is done to prevent the abuse of power. The legislative branch of government has the power to pass legislation. In the U.S. the legislative branch is composed of the House of Representatives and the Senate. The executive branch is vested in the President by congress with the advice and consent of the Senate so that

he may preserve, protect, and defend the Constitution and the laws of the United States. The President is also the commander in chief of the army and navy of the United States. The President is given veto power over any bill that congress passes and then congress has the power to pass a bill over the Presidents veto with a 2/3 majority of the Senate and House. The judicial branch of government is composed of the Supreme Court and inferior court established by Congress. The judges are appointed by the President with advise from the Senate, and they hold their terms for life. The judicial branch has the power to decide cases and controversies and interpret the law. An example of the power of the legislative branch would be the passing of a law that created the Environmental Protection Agency in 1970. When this legislation was passed by congress the President at the time, Richard Nixon had the ability to review the legislation and veto the law if he disapproved. This is one of the checks and balances that the government has built into it. The Supreme Court is given the power to interpret the law, which has been passed by congress and any controversies that arise in the U.S. An example of this would be the landmark case of Plessey vs Ferguson (1896) that upheld the constitutionality of racial segregation under the separate but equal doctrine. This would later be repudiated by the Supreme Court decision Brown v. Board of Education (1954). In conclusion, even as the three branches of government have a separation of power there are checks and balances built into the system. The executive branch is able to block legislation from passing and the legislative branch has the power to overrule the Executive branchs veto with a 2/3 majority. The Judiciary branch is able to check the legislative branch by interpreting the laws that the legislative branch passes and the Executive branch appoints the justices to the Supreme Court with the advise of the Senate. Principle # 3: These governments rest on written constitutions, containing guarantees of individual rights. The limitations of control of economic activity by the federal government are found in the due process clause of the Fifth Amendment to the Constitution and in the protection of individual rights against eminent domain. The Fifth Amendment states, No persons shallbe deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use, without just compensation. An example of a case of eminent domain would be when the government takes away private land for public use in the case of a major road that is about to be built that is currently occupied by private land. In this case the government is require to give the owner of the land just compensation for the land they are going to over take for public use. Principle # 4: The acts of legislatures and executive branches are subject to judicial review.

The courts interpret the Constitution and the laws determining whether the laws shall stand, by giving the Constitution one meaning or another, and giving meaning to the laws themselves. These interpretations can be narrow, ambiguous, and inconsistent, shifting and even reversing direction from time to time. An example of judicial review of the concept of interstate commerce follows: Interstate commerce The Supreme Court through the cases of Gibbons v. Ogden (1824) decided that interstate commerce would include commerce consisted of traffic but is something more, it describes the commercial intercourse between nations and parts of nations, in all its branches. So the concept of commerce was extended to beyond the art of buying and selling across state lines to include all the processes through which trade was carried on. In the case of Steamer Daniel Bell v. U.S. the court further refined the concept. In this case the Federal Court upheld federal regulations of a steamer carrying goods between two ports in Michigan on the grounds that the out of state origin of and destination of these good made the vessel an instrument of interstate commerce. Another refinement of the concept of commerce is found in the case of Shreveport cases (1914). The court permitted the federal government to fix railway rates between pints within the border of a state because the traffic bore such a close and substantial relation to interstate traffic. Thus the control of rates was essential and appropriate. In 1937 the court ruled in NLRB versus Jones and Laughlin Steel that collective bargaining was OK in manufacturing since it was in interstate commerce. In the 1945 case, US v. Frankfort Distillers, the court ruled interstate commerce included retail trade. 2. Provide an argument for government regulation of fast food and its impact on the health of our citizens. Describe how this should be done, who should enforce it and what the penalties should be. Use some of the principles you learned in this class in making your case. (25 Points) The federal government should regulate fast food because of its negative impact on the health of the constituents. Many studies have shown that the amount of salt intake that Americans get from processed foods and restaurant meals is about 80 % of the intake that they eat each day. The average American salt intake is 3,400 mg of sodium a day, which is 15 times what the human body requires. This has lead to an epidemic in high blood pressure in the U.S., which is the second leading cause of preventable death after smoking. Excess salt has been linked to osteoporosis, kidney damage and stomach cancer. Other studies have shown that eating fast food more than twice a week is associated with more weight gain and insulin resistance. Insulin resistance is commonly seen in patients before they develop diabetes. There has also been a large increase in childhood obesity that has been linked to the rise of the fast food industry. We are now seeing children developing Type II Diabetes, which was originally thought to only be an adult illness. One meal at many of these restaurants often has enough calories to satisfy a persons caloric requirement for an entire day. Fast food has been directly linked to many of the health problems facing the nation today, and has developed in to public health issue.

The market of the fast food industry has an externality known as external cost of consumption associated with it. The cost to society of a person consuming fast food is greater than that to the customer or the restaurant. Because of the external cost there is an overproduction of fast food in the market today. The federal government has a responsibility to protect the American people from this industry through regulation. The regulation should require the listing of the nutritional contents of the restaurants food in a manner that these values are clearly visible inside the restaurant. Currently, most restaurants have the nutritional value of their food listed in a manner that is not easily accessible to the public while in the restaurant. The nutritional contents should be posted in a manner that would allow a person to be able to compare the contents of the meal to the average nutritional requirement of an average meal. The Food and Drug Administration should enforce the specifics of the regulation. The penalties for breaking the established rules of the regulation should be monetary penalty of 10 % percent of net profit of the offending organization for the previous fiscal quarter. The law should set up a committee to be convened by the FDA to determine detailed guidelines for the enforcement and to study the specific effects of the regulation and the possibility of what a stricter regulation policy for the industry could be if health benefit to the American people are not seen. This committee should study the effects of the regulation on the industry and provide updates to congress, semiannually. If the regulation has not shown a benefit to the American populace by the third year of the policy, the committee will be asked to come up with regulations that would restrict the nutritional contents of the food in the fast food industry in accordance with the current literature on good nutritional and dietary guidelines. The committee will present a report within two years outlining a discussion of the implications of a nutritionally restrictive policy on the fast food industry and if they recommend such a policy is need in the United States. 3. In your mind, does the government have a right to determine the minimum wage a specific type of business should pay in a particular community? How about a specific neighborhood? In you opinion does government have the responsibility to make sure that everyone should be guaranteed a living wage? Explain & defend your position (25 Points) I feel that the government has a responsibility to ensure that its constituents are able to support themselves on the wages that they make though employment. The purpose of a minimum wage is to ensure that people are not taken advantage of by large businesses, which have a bargaining advantage over their workers. The sweatshops and long hours and unfit working conditions of the past shows that there is a need for laws that provide fair employment practices. A minimum wage set by the community is meant to protect the American worker from unfair employment practices. I dont think that a minimum wage should be set specific to a particular neighborhood, because many people that work in a particular neighborhood do not live there, and so do not need a wage that is reflective of the living standards of that neighborhood. For example, Manhattan, New York has an extremely high cost of living, but I dont think the

community should impose a minimum wage specifically for people working on the island. People in search of work from the neighboring areas can commute to the location. So long as there are people looking for work and employer looking for jobs they will seek each other out and the market system will take care of the pricing of the jobs. The market system is governed by the rules of supply and demand and if an employer has a large numbers of jobs at their company, the employer may have an unfair bargaining advantage against those seeking employment. The need for a minimum wage in a community is necessary to protect the workers from the power of big businesses to unfairly compensate workers. 4. Describe the concept of Public Cost vs. Public Benefit. Give an example of a law or rule that demonstrates this principle. (20 Points) The concept of public cost vs. public benefit deals with externalities of consumption of certain goods. Pollution is an example of a negative externality (public cost). Education is an example of a positive externality (public benefit). In the case of a negative externality (pollution) the market will overproduce the good, which will lead to economic inefficiency. The opposite occurs in a positive externality (education), there is underproduction of the good. The solution for these two problems in market efficiency is government action. By regulating the amount of pollution that a company can put into the environment the market inefficiency can be corrected. The Clean Water Act and the Clean Air Act among others do this through the regulation of industry. Even in the case of pollution there is a public benefit by allowing society to be industrialized. In the case of education, society benefits when its members are educated. This is the reasoning for pubic schools in the United States. Education is turned into a public subsidy since the price the consumer is willing to pay is not high enough to account for all the benefits of education. 5. What is an unintended consequence of a law, rule or regulation? Give an example. (15 Points) Unintended consequences are outcomes that are not limited to the results originally intend in a particular situation. The unintended consequences may or may not be able to be foreseen, however they should be the logical results of the law, rule, or regulation. One example of unintended consequences of a law is the argument that legalized abortion in the United States can account for the drop in the crime rates that occurred in the 1990s. This was argued by research done by Steven Levitt and John J. Donohue, and outlined in Levitts book Feakanomics. The states that legalized abortion before Roe v. Wade had an earlier drop in crime, and states where abortion is common saw greater drops in crime than the stats where abortion is rare. They also found that in high abortion states, only arrests of those born after abortion legalization fall relative to the low abortion states (Donohue). In this case the unintended consequence of legalizing abortion had the effect of preventing

children to be born in bad environment, in which they had a high risk of performing socially destructive behaviors such as crime when they grew older. Extra Credit Question: What does the term Participatory Democracy mean to you? Give three distinct examples of Participatory Democracy. Participatory democracy means that the citizens have a voice in the direction and operation of the political system. I think of a political system akin to the transition state of the White House before President Obama took office. It is a system in which the elected officials are looking towards the people for ideas of how to better run the government. One example of a participatory democracy would be when small community groups organized and wrote reports on ways to improve government and submitted their finding to President Obamas site www.change.gov. The amount of groups that organized in this way showed the great amount of people who have a willing interest to take part in the policy of this country. A second example of a participatory democracy would be when a citizen writes their congressman or woman about a political issue that they feel deserves attention and should be handled in a particular way. Congress members know that for every letter that they get there are many more people with similar feelings; this has been established thorough research. A third example of a participatory democracy would be community websites such as the Blacksburg electronic village, setup by Virginia Tech for the city of Blackburg, Virgina. The site allows citizens to have a forum to voice their opinions within the local area and organize thorough the medium of the Internet. In the end it us up to each individual citizen to take part in their government.

References
Donohue, John J.; Steven Levitt (May 2001). "The Impact of Legalized Abortion on Crime". Quarterly Journal of Economics (MIT) 116 (2): 379420.