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BUL 4130 - Chapter 1 Law as the Foundation of Business...

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Chapter 1: Law as the Foundation of Business Several explanations attempt to show why national economies are weak or strong: o Dependency Theory: Argues that the economically strong nations exploit the resources & labor of weaker nations through trade. Nations with stronger economies invest and trade much more with each other than they do with nations having weaker economies, & international trade usually accounts for only a small fraction of national income in even the poorest countries. o Natural Resources: This also explains economic prosperity. o Education & Technology: Certainly important to the continuing economic strength of wealthy nations, but in some parts of the world, well-educated people have a few job opportunities, & powerful technologies are easily transferred between countries. o Climate: Some geographers have thought that climate helps explain whether nations are economically strong or weak. They believe that when temperatures average too hot, people are less able to work, especially outdoors. o Private Market: The presence or absence of a modern private market is the single most significant reason why some economies are strong & others are weak. o Law & Legal System: An adequately enforced system of equally applied law is increasingly recognized as a necessary foundation for strong, productive economies. No nations with weak economies have adequate legal systems, & all nations that have these systems are economically strong in comparison. Three concepts establish a necessary framework for the most effectively functioning market in the modern nation: o Law – The social forces that hold together societies that range from custom & religion to law & economic ties. Know by everyone as being intended to tell members of society what they can or cannot do. Law is made up of rules & these rules are laid down by the state & backed up by enforcement. Law is a formal social force, meaning that laws come from the state & are usually written down & accessible so those who need to understand & obey them can. o The Rule of Law – Only in democracies is there true concern for the rule of law, which goes beyond merely thinking of law as governmental commands
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backed up by force. They apply to all or most members of society and they apply to various groups in the same way. Special interest groups attempt to persuade lawmakers to benefit these groups to the expense of others. o Property – is a legal right that allows you to exclude other from your resources. It makes what is yours “yours”. o Three ways of applying the exclusionary right of property are: Public Property – applies to public resources owned by the government (or “state”) like roads, public buildings, public lands, & monuments. Private Property – applies to resources that you own as an individual.
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