Text 27: forms of businesses in the u.S.A.
Businesses in the U.S.A. may be organized as one of the following forms:
« individual business
• general partnership
• limited partnership
• corporation
• alien corporation.
An individual business is owned by one person. A general partnership has got several owners. They all are liable for debts and they share the profits.
A limited partnership has got at least one general owner and one or more other owners. They have only a limited investment and a limited liability.
A corporation is owned by persons, called stockholders. The stockholders usually have certificates showing the number of shares which they own. The stockholders elect a director or directors to operate the corporation. Most corporations are closed corporations, with only a few stockholders. Other corporations are owned by many stockholders who buy and sell their shares at will. Usually they have little interest in management of the corporations.
Alien corporations are corporations of foreign countries. All the corporations are to receive their charters from the state authorities. The charters state all the powers of the corporation. Many corporations try to receive their charters from the authorities of the State of Delaware, though they operate in other states. They prefer the State of Delaware because the laws are liberal there and the taxation is rather low. Such corporations, which receive their charters from an outside state, are called foreign corporations.
All the corporations require a certificate to do business in the state where they prefer to operate.
TEXT 28: FEDERAL RESERVE SYSTEM OF THE U.S.A.
Federal Reserve System is the central banking system of the United States of America, set up by the Federal Government in 1913. On account of the vast area of the country, and the greater difficulties of travelling at that time, the country was divided into twelve Federal Reserve Districts, each with its own Federal Reserve Bank.
There are also twenty-five branches of the Federal Reserve Banks to serve particular areas within each district. The activities of the Federal Reserve Banks are coordinated through the Federal Reserve Board of governor's in Washington. The Board exercises general supervision over the Federal Reserve Banks.
The Federal Reserve Banks hold the reserves of the member banks, i.e. the commercial banks which are members of the Federal Reserve System. The FR Banks supply the member banks with currency if necessary and act to them as lenders by rediscounting bills. The Board determines the reserve requirements of the commercial banks. The Board too really determines discount rates. The Board discount rate corresponds in nature to the English Bank rate, though the Federal Reserve Banks do not always have the same discount rate.
The Federal Reserve System, in collaboration with the Government of the U.S.A., determines monetary policy and, aided by the Federal Reserve Banks, carries it out.
All national banks must be members of the Federal Reserve System. Incorporated state banks including commercial banks, mutual savings banks, trust companies, and industrial banks, may also join the System.
Incorporated state banks are those which have a charter from the state to act as an individual.
Mutual savings banks are savings banks owned by their depositors. Industrial banks make loans for the purchase or manufacture of industrial products.
TEXT 29: TWO TALES OF TRADE
There is probably never a good time to be unskilled and poorly educated, but the late 20th century has been particularly harsh for those worst equipped to get a job. In America and Britain, the gap between the earnings of university graduates and the less educated has been rising sharply for several years. In other wealthy countries with less flexible labour markets, the rise in age inequality has not been so marked; but the least educated are still less likely, in relation to the best, to be in work than they were a decade ago. Many people see the hand of freer trade, especially trade with developing countries, in all this. It is a common fear that jobs in rich countries are under threat from developing countries where wages are lower.
The widening gap is a fact. Yet a huge amount of economic research has produced scant evidence that trade has had much to do with it. Instead, the wider gap seems to be due mostly to technological advance, which has boosted the productivity and wages mainly of the better educated while leaving the least educated lagging.
The trade economists argue that trade affects wages through the prices of imports and exports. Suppose that a rich country, which has a relatively large proportion of well-educated workers, starts trading with a poor country that has plenty of uneducated labour but relatively few graduates.
Then both countries will specialize according to their relative strengths - the rich country in making things that use more brainpower; the poor country in industries that use relatively less. Both countries are made better off. But the least educated workers in the rich country may lose out. Why? Because the relative prices of the goods they make are forced down by import competition, and this pushes down their wages.
The labour economists, however, argue that trade affects the labour market mainly through the volume of trade, not through prices. The idea is that by importing goods, a country is essentially importing the labour used to make those goods. Imports of goods made by low-skilled workers thus have the same effect as an increase in the supply of low-skilled workers: they drive down wages. Thus changes in a country imports and exports can be used to estimate the effect on the demand for local workers. From that, the impact on wages is worked out.
Each side finds fault with the other's approach. Trade theorists dislike the labour economists' method because, they say, it is not just the number of toys shipped across the border that affects wages in the toy industry. The mere threat of foreign competition may be enough to force down prices and wages, whether or not imports are large. Nor, they say, is it right to assume that imports displace goods made by local workers one-for-one: if America made all its toys at home rather than importing them from China, the price would be higher, and hence fewer toys would be sold.
The labour economists retort that the trade economists' price-based studies also have flaws. Data on the prices of traded goods are often inadequate. And these studies may fail to distinguish trade from other factors that affect wages. As an economy grows and its people get richer, they spend a smaller share of their income on cheap clothes and more on fast cars. That would push down the wages of a textile worker compared with those of a design graduate; but it would have nothing directly to do with trade.
Despite these differing approaches, it is remarkable that both camps broadly agree that trade has done little to increase inequality, and that technology has played a far bigger part. Even so, there is still plenty of research to be done, and plenty to argue about. Faced with increased competition from abroad, firms can cut costs by replacing workers with machines: trade and technology then go hand in hand. Trade's impact is also hard to isolate when considering changes in the composition of an industry's workforce. Clothing firms in rich countries, for instance, now employ a higher proportion of designers and a lower proportion of sewing-machine operators than they used to. In part, this is a response to foreign competition, but it is also a reaction to changing tastes, and to the fact that production processes are easier to automate than design or marketing. But how much of each?
TEXT 30: A LITTLE LEARNING
Once, going to university was strictly for the elite. Now, higher education has become a mass-market business. Across 17 OECD countries, the average proportion of those aged 18-21 in higher education has risen from 14,4% in 1985 to 22,4% in 1995. The cost has risen too: finance for higher education accounts for 1,6% of GDP. In most OECD countries, by far the largest share of the cost of university is met by taxpayers. Economists take two contrasting views of all this. On the one hand, they regard higher education as a sort of intellectual sieve, designed merely to identify the brightest future employees, rather than to equip them with productive skills. On the other hand, economists regard education as an investment, which builds "human capital", making individuals more productive and thus benefiting society as a whole.
The sieving theory clearly makes some sense. Job advertisements specify "graduate wanted"; companies trawl campuses to recruit future executives; many countries have rigid academic requirements for particular professions. All this helps to explain two striking facts: everywhere, graduates earn more than non-graduates and everywhere, they are much less likely to be unemployed. The OECD reckons, for instance, that British women graduates earn 95% more than women with only secondary education. And the mean rate of unemployment in OECD countries in 1995 for people aged 25-64 was 7% for people who had finished secondary school but a mere 4% for graduates.
If sieving were all that higher education achieved, there would be little reason for governments to subsidise it. For one thing, many people would willingly pay to study if that brought financial gain (although there might be a case for government loans for those unable to pay their own way). For another, to the extent that the sieving process benefits society as a whole, there are surely cheaper ways to sieve than through universities.
In fact, few students leave higher education without learning something, and what they learn probably makes them better and more skilful workers. The most direct payback, in the form of higher earnings and better employment prospects, benefits individual graduates. Individuals weigh this benefit against the costs, including both tuition fees and the earnings they lose by studying rather than taking full-time work. Society also benefits from those higher earnings, which result in higher tax revenues and lower payments for unemployment benefits and income support. But the gains are much smaller than those to individual students.
What else could justify society's investing in higher education? The common answer is that society as a whole also earns benefits in the form of faster economic growth. Recent economic research has supported the existence of a link by emphasizing the role of human capital in promoting growth and innovation. Societies which invest more in education reap long-term rewards. Plenty of evidence suggests that economies, which invest little in education generally, perform poorly. But it is harder to quantify the relationship between growth on the one hand and investment in education, specifically higher education, on the other. If, because a country spends more on higher education, university attendance rises from 20% to 22% of the 18-21 age group, will the economy grow faster as a result? No one knows.
Two conclusions can be drawn from the OECD studies. First, more of the cost of higher education should be borne by individual students. This has been happening in America, where tuition fees have been rising much faster than consumer prices in general, and in Britain, where, starting from September, 1998 most students will have to pay J 1,000 ($1,651) a year in order to study. In America, where students typically pay almost half the cost of a degree, enrolment rates are the world's highest.
Second, some governments can readily cut the cost of university education without harming quality. German universities, which educate young people at an average cost of $8,400 a year, appear far cheaper than Canada's, which cost an average of $11,300. Yet, because young Germans often spend six years at university while young Canadians can choose flexible, high-speed courses, Canada's total cost per qualified graduate is less than half of Germany's. Society should invest in academia, but it should invest wisely.