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Applied Economics in Business

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Although most people agree that the governmentâ??s role in the free market economy should be limited, the degree of appropriate government involvement is contested. Under what circumstances should the government bailout a failing business? Explain and cite a specific example to illustrate your reasoning.

Some people might argue that the reason the government has to manage cost and benefit externalities is that people are basically selfish. Explain the reasoning of that statement. Do you agree or disagree? Explain why.

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There is a discussion over the role of the government in a free economy. The government should not unduly put intense control over the organization. It may cause undue hardships in functioning of a business. However, there are circumstances that necessitate their interference in the working of an organization. The government should provide financial assistance for the survival of the organization.//

A free market economy is an economy, in which the government does not control the market. The government has no role in the regulation and legislation of economy. The role of the government is neither restrictive nor in promoting the economic activities. Every organization is free to run its business in terms of products, import, export, price, etc. There are circumstances in which, the government needs to control the economic activities, so the major damage to country's economy can be eliminated. Following are few of the situations, where the government needs to bailout failing business:

In case of inflation, some industries are subject to get affected by the inflation resulting into lower production. In this case, the government should bailout these industries for survival so that they can contribute to the ...

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Drilling in the Alaskan Wilderness

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Case # 82:

DRILLING IN THE ALASKAN WILDERNESS

Category: Environmental ethics

Drilling for oil in Alaska's Arctic National Wildlife Refuge (ANWR) has been a source of contention among policy makers for years. In 1980 Congress expanded ANWR by 9.5 million acres, with 1.5 million acres (known as section 1002) set aside for the study of petroleum production potential. In 1987, 1991, and 1995 legal measures to drill in the 1002 area were proposed and defeated. The issue was raised again when President George W. Bush made drilling in section 1002 part of his national energy agenda. The events of September 11, 2001 have resulted in intensifying the debate.

Proponents make three major arguments for drilling in ANWR: (1) In light of recent economic downturns and the unstable diplomatic situation in the Middle East, the U.S. must increase domestic oil supply in order to decrease dependence on foreign oil. (2) The area occupied by wells and drilling equipment has shrunk by approximately 60% since the development of the Prudhoe Bay oil field. Developments in drilling technology allow a single pad to tap multiple oil pockets at distances of up to four miles. These advances have minimized the environmental impact of petroleum extraction. As evidence, production supporters point to the fact that despite fears to the contrary, the caribou herd in the Prudhoe/Kuparuk oil field region has increased in population. (3) Most Inupiat Eskimos in the area favor oil leasing for the economic opportunities exploration may provide.

Opponents of drilling counter that (1) even if section 1002 produces the maximum projected amount, oil consumption will continue to rise exponentially. Conservation (such as increasing vehicle fuel efficiency), rather than expanding production, note the opponents, is the only long-term solution. (2) The negative ecological impact on the area outweighs any potential benefit from oil production, in the opinion of the opponents. The plain of section 1002 provides critical calving area for a caribou herd five times as large as the Prudhoe/Kuparuk herd in an area one-fifth the size. Development in this areas, the opponents contend, would push the herd into the foothills where calves would be prone to predation and starvation from scarcity of resources. (3) The opponents point out that not all Native Americans favor drilling. The Gwich'in Indians, for example, consider the area sacred. The Gwich'in also subsist on caribou and fear the negative impact that petroleum production might have on the herd.

The controversy remains unresolved. Since control of the Senate switched last year, Majority Leader Tom Daschle (Democrat, South Dakota) has vowed to defeat a bill passed in the House of Representatives that would tap ANWR. On the other hand, Chairman of the House Resource Committee Jim Hansen (Republican, Utah) argues that in light of the September 11 terrorist attacks drilling in ANWR is more important than ever, and has urged the Senate to pass the House energy bill in the interest of national security.

Notes:
Eighth Intercollegiate Ethics Bowl at The Annual Meeting of the Association for Practical And Professional Ethics in Cincinnati, Ohio on February 28, 2002

________________________________________

Author Information
Name: Robert F. Ladenson
E-mail: [email address removed by system]
Homepage: http://www.iit.edu/departments/humanities/
Institution: Department of Philosophy Illinois Institute of Technology (IIT), and Illinois Institute of Technology (IIT), and Faculty Associate, Center for the Study of Ethics in the Professions (IIT)
Web site: http://ethics.iit.edu/
Copyright: Association for Practical and professional Ethics

QUESTIONS:

Introduction
? Who are the stakeholders in this case?
? What are the interests of the stakeholders?

Legal Analysis
? Do any of the environmental laws from the eGuide apply to this case?
? If they do apply, analyze the legality of the government's actions in this case.
? If the laws do not apply to the actions in this case, explain why they do not apply.

Ethical Analysis
? If the decision maker applied the categorical imperative theory in this case, what would the result be, and why?
? If the decision maker applied the utilitarian theory in this case, what would the result be, and why?
? If the decision maker applied the rights theory in this case, what would the result be, and why?
? If the decision maker applied the justice theory in this case, what would the result be, and why?

Conclusion and Recommendation
Based on the above, as well as what you have learned about ethical theories and foundations of moral development, what is your final recommendation to the corporation regarding this case? Your recommendation should be at least two paragraphs and include at least three reasons, with specific references to course material, stating how you arrived at that conclusion.

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