In the meantime, environmental experts and major business players will also have to work in conjunction with government especially during these trying times to help rev up the economy. Framework for Economic Policy and Issues I. The U. S. economy’s current position in the business cycle The U. S. economy’s current position in the business cycle is bleak. In contrast to the long stretch of economic boom dating back to the early 1980s, the country is facing one of the most challenging economic situations in years.
Several firms, including leading auto makers, are experiencing sales slump. Dwindling consumer confidence has also been affecting most other businesses. Notwithstanding numerous job cuts and cost-cutting measures employed by firms since the recession was felt, and despite the discouraging economic outlook which may be gleaned from such realities as an unstable housing market, some sectors – notably small business operators – still nurture high hopes that things will get better.
The overall economic scenario looks gloomy, prompting many businesses and the government’s economic think-tanks to devise countermeasures to stay afloat. Given reports that “America could look forward to a mild recession in the first part of 2009, giving way to sluggish recovery by year-end” (Ip, 2009, p, 63) and the forecasted unemployment rate rising to 2. 7 percent or higher, (Ip, 2009, p, 63) data suggests that the US, under the new Presidential Administration, is in for a tremendously tough challenge. II.
Corporate Social Responsibility and the profit motive Companies nowadays adopt the triple bottom line approach which looks not just at the economic aspect of running a business but also the social and environmental requisites demanded by the public at large. About a decade ago, most firms have been wary or hesistant to practice corporate social responsibility (CSR) at the expense of economic profit, resorting merely to plain rhetoric and empty claims that CSR is at the core or DNA of their corporate culture.
These days, fueled by discerning clientele and a growing realization that being energy-efficient, environmentally and socially responsible bodes well for long-term business viability, many firms have taken the cudgels for corporate social responsibility through eco-friendly measures and activities designed to plow back to society its earnings. Recent studies have shown that “companies that score well on various environmental metrics also demonstrate above-average return on investment and stock performance,” (Karabell, 2008, p. 24) thereby debunking the age-old notion that a contradiction exists between being socially/environmentally responsible and reaping business profits.
Some examples of successful companies that have shown that thinking about public good and reaping profits can meld harmoniously are Toyota (with its introduction of its hybrid car Prius), Google, Dupont, and many others. These firms have proven that there need not be a contradiction between CSR and the main task of maintaining business viability through profit. III. Economic policies that may avert pollution
To a large extent, countries have been relying on private sector-led environmental initiatives to curb greenhouse gas emissions, one of the major challenges facing societies today. One of the palpable economic policies that may avert the problem of pollution is the imposition of charge taxes on greenhouse gases emitted by firms’ pollution-generating activities. “A properly designed carbon dioxide charge system could enable the U. S. to achieve in a cost-effective way an internationally set emissions reduction goal” (Stavins, 1993).
On a broader context, the US government’s key agencies may also work in conjunction with highly committed international organizations and environmental advocacy groups and respond to the climate change crisis by sustaining efforts of investing in renewable energy sources and taking the lead in substantial reduction of its own greenhouse has emissions by setting out to “implement an economy-wide cap-and-trade program for carbon emissions – more specifically, reduce greenhouse gas emissions by 20-30% below 1990 levels by 2020” (Eschenburg, 2008, par. 6).
Passing sound legislation to limit carbon emissions, alongside business-led initiatives aimed at sustainability, is vital. IV. Economic principles to guide corporations in executive compensation plans For an economy to recover, business entities, particularly leading firms that help fuel overall growth, must operate on the principles of meritocracy and corporate social responsibility. As far as executive compensation is concerned, most chief executive officers (CEOs) judiciously balance a company’s revenue stream with its human resource compensation policies.
Amidst an economic downturn, compensation plans for top management may require some rethinking. While attractive compensation that a reputable firm may offer serves to lure and retain top talent, whose skills may be put to strategic use in setting directions and maintaining the firm’s competitive edge, there are also mid-range companies that need to realistically refrain from hiring new high-salaried top managers. Executive compensation, particularly of consultants that offer specialized skills, also depends on other factors like a firm’s size and operating earnings.
In times of recession or continuing sales slump or decrease in profits, reducing executive pay packages, particularly bonuses, make much a lot of sense. V. Conclusion It may be gleaned that the US is one of those countries which has seen extraordinary changes and met herculean challenges over the past several years. The challenges that currently face the new Administration require committed focus and action centering on sound economic, social and environmental policy strategies and legislation. To a large extent, responding to these challenges requires the steadfast support and cooperation of global agencies/institutions.
References Eschenburg, H. (2008) Compilation of foreign policy proposals for the next President. Retrieved February 14, 2008, from http://www. connectusfund. org/blogs/compilation- foreign-policy-proposals-next-president Ip, G. (2009). Pick your scenario. The Economist – The World in 2009. 63. Karabell, Z. (2008, August). Now green means business. Newsweek, CLII(6), 24. Stavins, R. (1993). Yes: green taxes would reduce pollution and support economic growth. Retrieved February 12, 2008, from http://ksghome. harvard. edu/~RStavins/Papers/Yes_Green_Taxes. PDF.