How did the government support business?

Answer 1

The government supports businesses by providing the environment for business to succeed, and can sometimes gets involved in directly spending money on businesses:

First, a government provides a set of laws that govern how a business can be formed, protect intellectual property, and provide for enforcement of contracts. Without a government court system, people and businesses would have nowhere to turn when they are wronged, whether they are the victim of a crime, a copyright violation, or a broken contract.

Second, government provides a system of exchange which allows people and businesses to buy and sell goods and services without resorting to a barter system. Governments standardize and print money; without a standard currency, trade and business would grind to a halt, as no good or service would have a set value, and people would need to pay for goods and services with barter items, rather than cash or credit.

Third, government provides for the common defense of a country. Without a government-run military, people, businesses, and their interests would be vulnerable to attack and exploitation by other countries.

Fourth, government provides an educated workforce for business, which is becoming more and more important as technology becomes more advanced. In most of the world, government provides education through high school, and has a central role in college and university education. State governments set up universities to train their population, while the federal government has a number of programs (grants, loan guarantees, oversight, and loans) to help citizens go to college and acquire the skills they need for the labor market.

Fifth, governments provide the infrastructure that businesses need to make money. Ports, railroads, roads, bridges, highways, air traffic control, electrical power plants and transmission lines, and so on are all in part or in whole run and funded by government programs.

Finally, governments often support certain businesses directly, through fiscal policy. Governments can spend money on buying goods and services from certain businesses; this is called government contracting, and it is a huge industry in the United States. Governments can provide tax breaks and loopholes for certain businesses, such as the breaks given in the United States to oil and coal companies, or the incentives offered to manufacturing companies which hire in the US. In some cases, government will spend money directly on a business, such as in the US bank bailouts (TARP) signed into law in 2007, or the practice of state and local governments paying for sports stadiums which will be operated by private companies.