There is no doubt that politics is the main determining factor in a country’s socio-economic organization. Political interference in both private and public lives of citizens- whether directly through legislation or indirectly through incentive policies influence how social and economic institutions are structured and managed (Weede, 1996). In the economic sector, particularly, government policies are very crucial in determining investment patterns and property ownership systems, both of which impact significantly to the national economic status. Economic policies, however, are determined by the kind of the dominant political regime in a country. For instance, the latest statistics portray that China’s communist regime enjoys high support that comes from citizens who are positive about its political as well as economic futures (Chen, Zhong and Hillard, 1997). By comparing the political regimes of China and USA as well as the dominant business practices they encourage, the paper argues that the US is preferable for a business investment.
A political regime, by definition, refers to the type of governance prevalent in a country. It involves the set of all the political structures which make up a state (Gasiorowski, 1995, 882). The two common regimes in most states are the totalitarian and democratic regimes, which in turn disintegrate into unique governance systems that distinguish one country’s political system from another. For instance, although socialist-communist regimes like China are not clearly totalitarian, their push for a classless society limits individual freedom on economic engagements, thereby portraying subtle abuse of state powers. In this regard, most socialist governments have historically been ardent supporters of communist economic policies, which priotize societal needs over those of the individual. Accordingly, they implement economic policies that exert control over individual ownership of property (Jamali, Kirsten & Wunnava, 2007). Likewise, democratic regimes are generally capitalist in their economic agenda, which ensures a free playing ground in the economic set up.
Socialist regimes are generally known to adopt a communist economic agenda. Thus, as a socialist nation, the People’s Republic of China’s political organization is based on a powerful central government that controls all the major institutions of the economic sector (Zhao, 2008, p. 69). Perhaps due to its high population, China is founded on the Marxist ideology which argues for the collective and equal distribution of national resources. Economic control policies are very common in situations where the government intends to regulate socio-economic inequalities, especially in a diverse socio-economic environment (Fearon, 2003). Under Mao Tse Tung, China took a communist path which placed huge hindrances on entrepreneurship, which is a major element of capitalism. Thus, while the communist system exerts control over property ownership and investment, the capitalist model is liberal and non-restrictive over private control of property. The former favors a communal, collective ownership with the state at the helm of control, while the latter advocates for a free market in which the individual has unlimited rights to property ownership. Accordingly, a communist regime tends to be more repressive and conservative through the use of state apparatus to enforce public policies that regulate and control economic investment at both individual and corporate levels, thereby hindering the rate of investment and economic growth.
The free-market aspect of the US economy is reflected by the Forbs Fortune publications, which trace the richest men in the world and their geographical distribution. It is telling that a larger percentage in the hundred richest lists comprises of individual investors from capitalist countries, with the US at the apex. It does not concern the government that Bill Gates’ fortune is enough to feed millions of lower class families in America. The spirit of capitalism, as it were, is for the entrepreneur to maximize profits while meeting due obligations such as the payment of workers wages and government taxes. The overall effect of a free-market economic policy is ensuring unrestricted investment and high economic growth. At the same time, it attracts new investments while encouraging innovation, which contribute significantly to a country’s technological and economic advancement, as well as political stability.
In America, government powers are distributed equally among the three branches of the government, namely the executive, the legislature and the judiciary (Uphoff & Ilchman, 1972, 176). The executive power is exercised by the presidency, while the legislative power is exercised by Congress, and judicial power by the Supreme Court. Each of these three branches checks on influence of the other two over political and economic issues of national concern, with the effect that none enjoys more power than the rest as is the case in totalitarian regimes. Consequently, the lack of absolute powers on the part of the executive creates a political environment in which the rights of the individual are protected. Indeed, the US’s political system is molded around the famous Declaration of Independence document drafted by her founders, which emphasizes on the importance of individual freedom in the pursuit of happiness. This aspect (individual freedom) is imported into the structuring and organization of the US economic sector, which is generally liberal and free of government interferences over property ownership. For instance, land in China is owned by the state, unlike the United States, in which the constitution protects the people’s possession of property, including land. According to the Chinese constitution, all the land in the cities is under the ownership of the government (Ho, 2005, 109). Similarly, mineral resources, forests, land that is unclaimed, waters and mountains are owned and managed by the government. Granted, the US government controls most natural resources such as water masses and forests. However, the distinguishing factor here is the political ideology informing governmental control of natural resources. It could be authentically argued that the Chinese government, being a socialist-communist, is more interested in regulating the distribution of resources so as to avoid their accumulation in the hands of the minority (Barro, 2004). The US policy, on the other hand, is more geared towards preservation as opposed to managing economic inequalities. Similarly, the US government, by adopting a capitalist ideology, encourages the privatization of industries and other key investments (Stern, 2009, p. 78). This system allows the development of a vibrant private sector, which plays a major role in most countries’ economy.
Regardless, the superiority of the US in this regard is demonstrated by the federalist system, which grants a broader field of democracy by dividing regions into states, and then affording individual states some degree of autonomy, which is crucial in regulating trade within and between states. This model offers a an economic environment that addresses unique issues relevant to a single state, as opposed to the People’s Republic of China which enforces universal policies to all provinces. Generally, the US government encourages free trade, free markets, minimal interference in commercial activities and light taxation to its citizens. Thus, doing business in the US becomes easier since states are able to make economic reforms that are favorable to their residents.
Lack of a strong multi-party democracy makes China’s government resemble a one-man show, which can greatly dictate economic policies according to party interests (Woodward, 2004). The communist party dominates the Chinese government, with a higher percentage of governors belonging to the Chinese Communist Party (Wibowo, 2000, p. 23). On the other hand, the United States is an established multi-party democracy, with the Republican and the Democratic parties exerting relatively equal influence on national issues. Therefore, it is very unlikely that unpopular economic policies will be forced upon the people by one party. The tight rope upon which the Obama Health Bill walked before making it to Congress, and finally getting ratified shows how representative democracy in the US differs from China, hence affording a more reliable form of voicing the interests of various groups in society. This kind of system allows for the opposition to effectively keep a check on the government from time to time, therefore ensuring the smooth running of the government.
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