PA 315 GOVERNMENT BUSINESS RELATIONS CHAPTER 3 California State University San Bernardino College of Business & Public Administration Professor Sharon Pierce * HISTORICAL BACKGROUND ON GOVERNMENT * THE EVOLUTION OF GOVERNMENT’S ROLESAs American society has changed, so too have the expectations of government.Examples of social changes include:Need for big defense The creation of big businessThe desire for less risk and more stabilityThe demand for social architecture – k-12 schools to community colleges and state universitiesCatastrophic Events: Johnstown Flood of 1889 and Hurricane Andrew in 1992Hurricane Harvey - TexasHurricane Irma – FloridaHurricane Jose - Hurricane Katia - Hurricane Maria Our founding fathers wanted a limited government as they felt more government led to corruption * EXPECTATIONS IN JOHNSTOWN FLOOD, 1889Federal assistance was not expectedPresident Benjamin Harrison organizes a fundraiser * QUESTIONThe provision of disaster relief has increasingly become a federal responsibility in the last century. True False * * HISTORICAL DEVELOPMENT OF GOVERNMENTAnti-Central Government (1781-1787)Small Government (1787-1887)Moderate-Sized Government (1887-1933)Big Government (1933-1970s)Rightsizing Government (1970s-present) * Now let’s look at the evolution of government in a slightly different line. The Anti-Central Government Era coincided with the Articles of Confederation and was relatively short-lived, stretching from 1781 to 1787. The Small Government Era lasted from 1787 to 1887, during which time the country grew from 13 small colonies to 38 states spanning the continent. During the Small Government Era, the population grew to be 15 times the size it had been; the percentage that was urban versus rural grew from just 3.35 percent to 30 percent in that century. The Moderate-Sized Government Era is defined as the period from 1887 to 1933, a time during which the economic GDP expanded greatly and which included the “age of invention.” The Big Government Era, from 1933 to the 1970s, was ushered in by the Great Depression (1929-1939), followed closely by the vast and expensive Second World War, but also included a quarter-century post-war boom. The Rightsizing Government Era began in the 1970s and presently continues, as the limits of government – to provide the level of services, the number of problems, and degree of governmental protection –began to exceed the expectations that had accumulated and the resources it was likely to get. During this period, GDP growth has slowed, real wages are often stagnant, and tough choices have to be made about addressing old problems, all while envisioning and implementing an ideal for the largely post-industrial society we are becoming. Anti-Central Government, 1781—1787Provider of monetary and fiscal structureMinimal  Mint money, request proportional taxes from the individual states, attempted to pay off debt Provider of infrastructureModestCiti ...

1. PA 315
GOVERNMENT BUSINESS RELATIONS
CHAPTER 3
California State University San Bernardino
College of Business & Public Administration
Professor Sharon Pierce
*
HISTORICAL BACKGROUND ON GOVERNMENT
*
THE EVOLUTION OF GOVERNMENT’S ROLESAs American
society has changed, so too have the expectations of
government.Examples of social changes include:Need for big
defense The creation of big businessThe desire for less risk and
more stabilityThe demand for social architecture – k-12 schools
to community colleges and state universitiesCatastrophic
Events: Johnstown Flood of 1889 and Hurricane Andrew in

2. 1992Hurricane Harvey - TexasHurricane Irma –
FloridaHurricane Jose - Hurricane Katia - Hurricane Maria
Our founding fathers wanted a limited government as they felt
more government led to corruption
*
EXPECTATIONS IN JOHNSTOWN FLOOD, 1889Federal
assistance was not expectedPresident Benjamin Harrison
organizes a fundraiser
*
QUESTIONThe provision of disaster relief has increasingly
become a federal responsibility in the last century.
True
False
*
*
HISTORICAL DEVELOPMENT OF GOVERNMENTAnti-
Central Government (1781-1787)Small Government (1787-
1887)Moderate-Sized Government (1887-1933)Big Government
(1933-1970s)Rightsizing Government (1970s-present)

3. *
Now let’s look at the evolution of government in a slightly
different line.
The Anti-Central Government Era coincided with the Articles of
Confederation and was relatively short-lived, stretching from
1781 to 1787.
The Small Government Era lasted from 1787 to 1887, during
which time the country grew from 13 small colonies to 38 states
spanning the continent. During the Small Government Era, the
population grew to be 15 times the size it had been; the
percentage that was urban versus rural grew from just 3.35
percent to 30 percent in that century.
The Moderate-Sized Government Era is defined as the period
from 1887 to 1933, a time during which the economic GDP
expanded greatly and which included the “age of invention.”
The Big Government Era, from 1933 to the 1970s, was ushered
in by the Great Depression (1929-1939), followed closely by the
vast and expensive Second World War, but also included a
quarter-century post-war boom.
The Rightsizing Government Era began in the 1970s and
presently continues, as the limits of government – to provide the
level of services, the number of problems, and degree of
governmental protection –began to exceed the expectations that
had accumulated and the resources it was likely to get. During
this period, GDP growth has slowed, real wages are often
stagnant, and tough choices have to be made about addressing
old problems, all while envisioning and implementing an ideal
for the largely post-industrial society we are becoming.
Anti-Central Government, 1781—1787Provider of monetary and
fiscal structureMinimal
Mint money, request proportional taxes from the individual

4. states, attempted to pay off debt Provider of
infrastructureModestCities would maintain
streetsPurchaserModestCities would purchase some
suppliesRegulator of BusinessVirtually noneBy states only
(criminal laws)Social architectVirtually noneBy states only
(some education)Service providerVirtually noneBy states
onlySafeguard against (individual) risk Virtually noneRaise an
army for a common cause; Request states to use state militias
for a common causePromoter of businessVirtually noneAppoint
ambassadors
*
QUESTIONWhich of the following is true about the Anti-
Central government era in the US?
The federal government could only impose tariffs, not income
taxes.
The federal government maintained a navy but not an army

5. The federal government was allowed to pay off the national debt
None of the above
*
Small Government, 1787—1887Provider of monetary and fiscal
structureModestRaise money through tariffs, mint money,
Treasury Department, National Bank (1791-1836)Provider of
infrastructureSubstantial Created a postal system and
accompanying roads, transcontinental railroads
States and local: most roads, harbor improvements, support of
bridges, drinking water in large citiesPurchaserModest
Transportation services, military suppliesRegulator of
BusinessVirtually
noneSocial architectModest Morrill Land Grant College Act of
1862 (funds for higher education), set-asides of “federal” land
for educational purposes
State and local: primary and secondary educationService
providerModest Postal service (communications)
State and local: county hospitals, public librariesSafeguard
against riskVirtually
nonePromoter of businessSubstantialPresident Jefferson’s
Louisiana Purchase – doubled the size of the United States
President Monroe 1823 - Monroe Doctrine foreign policy for the
United States
Florida purchase, annexation of Texas, Mexican-American War,
California, Alaska

6. Prior to the MORRILL LAND GRANT College - men in upper
class
*
THE SMALL GOVERNMENT ERA (1787-1887)Provider of
infrastructure
Promoter of
business
*
THE SMALL GOVERNMENT ERA (1787-1887)Monetary and
fiscal structure
Purchaser

7. Service provider
Social architect: democratizing higher education
Regulator of business, safeguard against risk
*
QUESTIONWhich of the following was true in the Small
Government era?
It spanned from approximately 1787 to 1887
If the expansion of the country is considered promotion of
business, it did a great deal
Service provision was modest by all governments
All of the above
None of the above
*
Moderate-Sized Government (1887-1933)Provider of monetary
and fiscal structureSubstantialFederal Reserve, federal income
tax (Sixteenth Amendment - 1913)
(1861 – Revenue Act but was brief as it was repealed by 1871)
(1894 – Congress enacted a flat rate income tax but was ruled
unconstitutional the following year)Provider of
infrastructureGreatFederal: postal airports
State and local: streets, public transportation, sidewalks, streets,
sewage, water and electricity in all urban
areasPurchaserModestTransportation services, military supplies
Regulator of BusinessSubstantialInterstate Commerce Act of

8. 1887 – to regulate business activities of railroads
Sherman Act (1890) – anti trust laws to regulate monopolie
Clayton Anti-Trust and Federal Trade Commission Act (1914) –
strengthened Sherman Act and criminalized unfair trace
practices (price fixing)
Food and Drug Act (1906) public outrage over unsanitary meat
packaging
State and local: stronger zoning, comprehensive planningSocial
architectSubstantialGrowth of 1-12 education, normal
schoolsService providerSubstantial Expansion of drinking
water, irrigation water for rural areas, other utilities,
rudimentary welfare systemsSafeguard against riskMinimal One
time legislation to assist after disasters by state legislatures or
CongressPromoter of businessSubstantialSpanish-American
War, give away of Western lands (e.g., land rushes in
Oklahoma), Hawaii, Panama Canal
*

9. THE MODERATE-SIZED GOVERNMENT ERA (1887-
1933)Regulator of business
*
Monetary and fiscal
infrastructure
Infrastructure
Social architect
The Moderate-Sized Government Era (1887-1933)
*
The Moderate-Sized Government Era (1887-1933)Service
providerPromoter of business
Safeguard against risk

10. Purchaser
*
QUESTIONWith the rapid expansion of large corporations after
the Civil War, the US federal government responded with anti-
monopoly efforts such as the Interstate Commerce Act and the
Sherman Anti-Trust Act before the turn of the century.
True
False
*
Big Government, 1933 to 1970sProvider of monetary and fiscal
structureGreatRequired taxes to support insurance to
counterbalance recessions and depressions—Social Security,
Medicare, Glass-Steagall (protect deposits)Provider of
infrastructureGreatFederal Highways Act, bailout of Penn
Central, continued expansion of all transportation
systemsPurchaserSubstantialLarge and technologically advanced
military, materiel for civilian employees and servicesRegulator
of BusinessSubstantialSecurities and Exchange Commission in
response to the Crash of 1929
National Labor Relations Act – granted workers the right to
form unions/collective bargaining
Fair Labor Standards Act – set work week to 44 hours (reduced
to 40 in 1950)

11. Age Discrimination Act – prohibited age bias
Occupational Safety and Health Act (OSHA) assured safe and
healthful working condition
consumer protection laws (1960s to 1980s)
EPA – protects human health and the environment Social
architectGreatNational Parks, Work Progress Administration
during Great Depression provided massive aid
mortgage support (Fannie Mae and Freddie Mac) – expand
homeownershipService providerSubstantial Rural
electrification, flood prevention, garbage and other “specialty”
servicesSafeguard against riskSubstantialSocial Security,
unemployment insurance, Medicare, Medicaid, FEMA
predecessor agenciesPromoter of businessSubstantialTariff war
at beginning of Great Depression, informal leader of world
economy via international finance institutions; creation of
economic development agencies
*

12. THE BIG GOVERNMENT ERA (1933-1970S)Social architect
Social Security 1935, Medicare 1965; Public parks, Works
Progress Administration (peak: 3 million); Fannie Mae for
mortgages
Monetary and fiscal infrastructure
Infrastructure
*
THE BIG GOVERNMENT ERA (1933-1970S)Regulator of
business Service provider
Promoter of businessSafeguard against risk
Purchaser
*
QUESTIONIn the era of Big Government, the federal
government moved its attention from legislation regarding
monopolies to focus on regulating Wall Street, labor, consumer
and employee safety, among others.
True
False
*

13. Rightsized Government, 1970s to the presentProvider of
monetary and fiscal structureGreat but shiftingUse of interest
rates by Fed; repeal of Glass-Steagall but addition of new
regulations in 2010 (Dodd-Frank); bailouts of Wall Street
(banks and AIG) and main street (automakers)Provider of
infrastructureReducedPurchaserSubstantial Military and basic
materialRegulator of BusinessReduced and shiftingDeregulation
of transportation, airlines, banking, finances
Regulation of some banking and finance; Sarbanes Oxley
2002Social architectReduced and shiftingReform of welfare
(limitations); defunding of public higher education as well as K-
12Service providerReduced and shiftingExpansion of
privatization in some areas, but expansion in healthcare ; postal
reorganizationSafeguard against riskSubstantial Affordable Care
Act (2010), occasional extensions of unemployment insurance
from 26 week basePromoter of businessSubstantial but
shiftingCA makes it more difficult to have local economi c
development agencies

14. *
THE RIGHTSIZING GOVERNMENT ERA (1970S-
PRESENT)Regulator of business
Social architect
Infrastructure
Service provider
*
Monetary and fiscal infrastructure
Promoter of businessSafeguard against risk
Purchaser
THE RIGHTSIZING GOVERNMENT ERA (1970S-PRESENT)
*

15. QUESTIONAs a promoter of business, California is seen as a
supporter of economic development agencies?
True
False
*
*
SUMMARY OF GOVERNMENT’S ROLES INTERACTING
WITH AND SUPPORTING BUSINESS
*
In summary, historically despite the reference for small
government, the US government have gradually adopted many
roles that interact and support business.
Anti-Central Government, 1781—1787
Small Government, 1787—1887
Moderate-Sized Government, 1887—1933
Big Government, 1933—1970s
Rightsizing Government, 1970s—present
Provider of monetary and fiscal structure
Minimal
Modest

16. Substantial
Great
Great but shifting
Provider of infrastructure
Modest
Substantial
Great
Great
Reduced
Purchaser
Modest
Modest
Modest
Substantial
Substantial
Regulator of Business
Virtually none
Virtually
none
Substantial
Substantial
Reduced and shifting
Social architect
Virtually none
Modest
Substantial
Great
Reduced and shifting
Service provider
Virtually none
Modest
Substantial
Substantial
Reduced and shifting
Safeguard against risk
Virtually none

17. Virtually
none
Minimal
Substantial
Substantial
Promoter of business
Virtually none
Substantial
Substantial
Substantial
Substantial but shifting
QUESTION Despite the historical preference for small
government, American governments’ roles and responsibilities
are constantly expanding. Why did this happen? What are the
factors that lead to government expansion? What do you think
are the effective ways of rightsizing or shrinking government?
The roles and responsibilities change over time including
expanding and decreasing because of people, culture, and time.
As America expands the roles and regulations of the
government must expand as well.
Factors that lead to expansion was war, western expansion,
industrial revolution
Effective ways to address the dilemmas are through regulation
and privatization
*
Anti-Central
Government,
1781—1787

18. Small
Government,
1787—1887
Moderate-Sized
Government,
1887—1933
Big
Government,
1933—1970s
Rightsizing
Government,
1970s—present
Provider of
monetary and
fiscal structure
Minimal
Modest Substantial Great Great but shifting
Provider of
infrastructure
Modest Substantial Great Great Reduced
Purchaser
Modest Modest Modest Substantial Substantial
Regulator of
Business
Virtually none Virtually
none
Substantial Substantial Reduced and
shifting
Social architect
Virtually none Modest Substantial Great Reduced and
shifting
Service
provider
Virtually none Modest Substantial Substantial Reduced and
shifting

19. Safeguard
against risk
Virtually none Virtually
none
Minimal Substantial Substantial
Promoter of
business
Virtually none Substantial Substantial Substantial Substantial
but
shifting
PA 315
GOVERNMENT
BUSINESS
RELATIONS
CHAPTER 2
California State University San Bernardino
College of Business & Public Administration
Professor Sharon Pierce
CHAPTER REVIEW 1
• Which of the following are generally thought
to put pressure on society for the growth of
government?
a. Wars

20. b. Special interests seeking special assistance
c. The complexity of society
d. All of the above
e. None of the above
CHAPTER 1 REVIEW
• The two oldest roles of government,
according to the text, are transportation and
education.
• True
• False
CHAPTER 1 REVIEW
• When governments provide public education,
the text calls that role:
a. Safeguard against risk
b. Purchaser
c. Social architect
d. Service provider

21. CHAPTER 1 REVIEW
• One of the areas which is commonly thought
of as a strength (dubbed ‘the good”) of
government is:
a. Requiring taxes
b. Creating monopolies
c. Providing economic stability
d. Preventing the collusion of power (manipulation by
powerful interests)
CHAPTER 1 REVIEW
• Altogether, the U.S. has approximately how
many governments?
• 51
• 435
• 37,000
• 89,000
• .25 million

22. CHAPTER 1 REVIEW
• Government-business relations are largely
defined by the:
a. Complementary roles
b. Cooperative roles
c. Conflicting roles
d. All of the above
e. None of the above
BIG GOVERNMENT
VS.
SMALL GOVERNMENT –
WHICH IS IDEAL FOR THE
UNITED STATES?
WHAT DO YOU BELIEVE IS THE
IDEAL ROLE OF GOVERNMENT?
64%
12%
17%
7%

23. Class Poll Spring 2019
Less Government
Moderate Government
More Government
Not sure
WHAT DO YOU BELIEVE IS THE
IDEAL ROLE OF GOVERNMENT?
FALL 2018
SPRING 2018
WINTER 2018
FALL 2017
LESS
GOVERNMEN

24. T
• “I believe the government should have less power
as it is getting to the point where you almost
have to ask permission to leave your house.”
• “People should have more power than they have
now.”
• “Small government means the system is more
flexible.”
• “Although big government has benefits, it can get
annoying paying more and more taxes for
programs you will most likely never use.”
• “We can’t be a ‘free’ country if we are going to
restrict our freedoms or taken them away.”
• “People should have more control…government
sometimes interferes too much in the public life
domestically but also internationally.”
• “I want the power to make decisions for my
family.”
MODERATE
GOVERNMENT
• “Too little government would make society chaotic. The
rules and regulations that the government implements
helps stabilize society as a whole.”
• “When it comes to a crisis, natural and unnatural, we

25. need the government to help us out. But, in the case of
owning a gun, weed, and things like that, I don’t think
government should ever play that big of a role in it.”
• “Things like natural disaster aftermath benefits from
large government funding for example but things like
checks and balances from small government could
come together for form a successful moderate
government.”
• “Government should be neither big or small – small
government is great because it is more efficient and
flexible but big government is helpful after natural
disasters.”
• I think social programs are needed but there should be
more controls in place so people don’t abuse the
system. We should find another way to get social
programs funded, everything should not be the
government’s responsibility, however, that may mean
that citizens should step up.”
• “I believe the government is just right.”
MORE
GOVERNMENT
• “Larger government could be more beneficial in the long
run…an earthquake happening – the majority of people will
then think or prefer the larger government is better.”
• “Military expenses – I and most of society would want a
bigger government for our safety.”

26. • “I think a big government has more power and will be able
to take action against big matters – some examples are a
major disaster or war.”
• “More social programs from this type of government are
incredibly beneficial to the overall population…It also
regulates people and businesses to act fairly in a socio-
economic way; trying to benefit society/the
planet/communities.”
• “When we are in a crisis with our economy, the
government is there to lift us back up…their role should be
to use their power to help us in our time of need.”
• “More government intervention in improving the quality of
our lives.”
• “A big government to serve & protect their citizens.”
• “I believe we need more government because there are a
lot of illegal business activity still happening,”
CHAPTER 2
THREE MODELS OF GOVERNMENT-
BUSINESS RELATIONS
• Business centered approach
• Shareholder model
• Strategic Business model

27. • Stakeholder model
• Not a comprehensive list
THE SHAREHOLDER MODEL
• Considers only business interests
• Emphasis on profit-making
• Government and business should be
separate – government as little as
possible
• Focuses on internal efficiency and
competition (Adam Smith – free
market)
• Example: investment banks
WHAT IS A SHAREHOLDER
• A shareholder is any person, company or other institution that
owns at least one share of a company’s stock.
• Because shareholders are a company's owners, they reap the
benefits of the
company's successes in the form of increased stock valuation.
• If the company does poorly, however, shareholders can lose

28. money if the price of its
stock declines.
CRITIQUE OF THE
SHAREHOLDER MODEL
• Market failure demands government vigilance and
intervention.
• Business’ demands for government and advantageous
position to benefit from government
• Too much emphasis on monetary and material gains
• Does not focus on external issues – environment,
community, etc.
SAMS CLUB CLOSED 63
STORES
• Shareholder model
WHAT DO YOU THINK ABOUT
SAMS CLUB CLOSING 63
STORES?
• Walmart is closed 63 Sam's Club stores.
• The closures span 24 states and Puerto Rico.

29. • Illinois lost seven stores, the highest number
of any state.
• The Memphis, Tennessee Sam's Club and
nine additional stores were turned into e-
commerce distribution centers.
http://markets.businessinsider.com/stock/WMT-
Quote?utm_source=referral&utm_medium=aol
http://www.businessinsider.com/sams-club-closures-leave-
hundreds-without-jobs-in-puerto-rico-2018-
1?utm_source=referral&utm_medium=aol
THE STRATEGIC BUSINESS MODEL
• The model emphasizes competition
• Most efficient and effective use of resources; playing the
game well
• Government with low taxes and few regulations, stable
policies and strong performance, and
protections in global competition
• The model also emphasizes collaboration
• Good strategies for a winning team – win win situations
• Practical use of governmental resources – Boeing Corporation
• Example of Strategic Business Model – Community
banks/credit unions
• Community focused – local needs and conditions
• Strategic in managing the local connections

30. CRITIQUE OF THE STRATEGIC
BUSINESS MODEL
• More balanced and realistic than the shareholder perspective.
Yet,
• Unclear and inconsistent
• government and business relationship is a flow of complex
exchanges of
influence, which is subjected to multiple social, political, and
economic forces.
• Difficult to be strategic in market place.
• Business is a major initiator of change through its interaction
with
government.
THE STAKEHOLDER MODEL
• Corporation locates at the center of an
array of mutual relationships with
stakeholders:
• Primary stakeholders have immediate, continuous,
and powerful impact.
• Secondary stakeholders have less mutual
immediacy, benefit, burden, or power to influence.

31. • The model is an ethical theory of
management , in which the welfare of each
stakeholder must be considered as an end
THE STAKEHOLDER MODEL
• While profits are important, business and social values are
still important
• Long term view is more important than short term view
• Business perspective and value of reputation versus profit
maximization
• Better Business Bureau – 1912
• Good Housekeeping Seal of Approval - 1909
• Consumer Reports – 1936
• Corporate Social Responsibility - 1979
• Views community and environment as necessary factors to
consider – not
because of requirements
• Focuses on customer confidence, employee loyalty, civic trust
– (Commercials
after oil-spills)
• Many large corporations have adopted methods and processes
to analyze their
stakeholders and engage them.

32. WHO ARE STAKEHOLDERS?
• A stakeholder is any individual or
group who can affect or is affected by
the actions, decisions, policies,
practices, or goals of the organization.
• a. The key stakeholder is the company or
group that is the center or focus of an
analysis.
• b. Primary stakeholders include owners,
customers, employees, suppliers,
stockholders and the board of directors.
• c. Secondary stakeholders include all other
interested groups, such as the media,
consumers, lobbyists, courts, governments,
competitors, the public, and society.
CRITICS TO THE
STAKEHOLDER MODEL
• Unrealistic assessment of power
relationships between the corporation and
other entities
• Too vague a guideline to substitute for
the yardstick of profits
• Not clear who or what is a legitimate
stakeholder

33. COMPARISON OF THREE
MODELS
OVERVIEW
• The three models demonstrate that the choices involved in
designing a country’s political and economic systems are not
easy ones.
• Therefore they provide some theoretical bases for our
exploration of the question: how extensive a role government
should play in a nation’s economic development.
PA 315 Government Business Relations Chapter 2Chapter
review 1Chapter 1 reviewChapter 1 reviewSlide 5Slide 6Slide
7BIG GOVERNMENT VS. SMALL GOVERNMENT – WHICH
IS IDEAL FOR THE UNITED STATES?What do you believe is
the ideal role of government?Slide 10Fall 2018Spring
2018WINTER 2018FALL 2017Less GovernmentModerate
GovernmentMore GovernmentChapter 2Three models of
government-business relationsThe shareholder modelWhat is a
shareholderCritique of the shareholder modelSAMS club closed
63 storesWhat do you think about Sams club closing 63
stores?The strategic business modelCritique of the strategic
business modelThe stakeholder modelSlide 28Who are
Stakeholders?Critics to the stakeholder modelComparison of
three modelsOverview