第29篇
Business: how to serve the society more efficiently
One very important inquiry in managerial economics concerns the interrelationship between the firm and society. Managerial economics can help to clarify the vital role business firms play in our society and to point out ways of improving their operations for society’s benefit. A business enterprise is a combination of people, physical assets and information (technical, sales, coordinative and so on). The people directly involved include stockholders , management, labor, suppliers and customers. In addition to these direct participants, all society is indirectly involved in the firm’s operations because businesses use resources otherwise available for other purposes (including air and water), pay taxes if operations are profitable, provide employment, and generally produce most of the material output for our society.
Firms exist because they are useful in the process of allocating resources, producing and distributing goods and services. If social welfare could somehow be measured, business firms might be expected to operate in a manner that would lead toward maximizing some index of social well-being. Just which bundle of goods and services as well as which distribution pattern for the bundle would maximize social welfare is a complex, actually unanswerable, question. It is, however, one of the most vital questions facing us today.
The traditional way of handling this matter in the United Stated has been through the economic and political systems. The economic system produces and allocates goods and services through the market mechanism. Firms determine what consumers desire, bid for the resources necessary to produce these products, and then make and distribute them. The participants—suppliers of capital, labor and raw materials—must all be compensated from the sale of the output. Further, the firm competes for the consumer’s dollar with other firms in the same and other industries. This process is “natural” in the sense that it occurs in all human societies as they develop.
A difficulty arises in the course of this development. Certain groups are likely to gain excessive economic power permitting them to obtain too large a share of the value created by firms. To illustrate, the economics of producing and distributing electric power are such that only one firm can efficiently serve a given community. As a result, the electric company could charge high prices and earn excessive profits. Society’s solution to this potential exploitation is rate regulation. Prices charged by electric companies and certain other monopolistic enterprises are controlled and held down to a level just sufficient to provide stockholders with a “fair” rate of return on their investment. The regulatory process is simple in concept; but in practice, it is costly, difficult to operate, and in many ways arbitrary. It is a poor substitute for competition, but a substitute that is sometimes necessary.
The second problem in the economic development of society occurs when a limited number of firms serve a given market. If the firms compete with one another, no exploitation occurs; however, if they conspire with one another in setting prices, they may be able to obtain excessive profits. The antitrust laws are designed to prevent such collusion, as well as to prevent the merging of competing firms whenever the effect of the merger would be to lessen competition substantially. Like direct regulation, the antitrust laws contain arbitrary elements and are costly to administer, but they, too, are necessary if economic justice, as defined by the body politic, is to be preserved.
The third problem is that, under certain conditions, firms can exploit workers, so laws designed to equalize the bargaining power of firms and workers have been developed. These labor laws require firms to submit to collective bargaining and to refrain from certain “unfair” practices.
The fourth problem by the economic system is that, in their production processes, firms may impose costs on society; for example, by dumping wastes into air or the water or by defacing the earth, as in strip mining. If a steel mill creates polluted air, which requires people to paint their houses in three years instead of in five years or to have their clothes dry-cleaned more frequently or to suffer lung illness, the mill is creating a cost to society in general, or a social cost. The steel company should be required to install pollution-control equipment or to pay fines equal to the social cost of the pollution; otherwise, the steel company is gaining at the expense of society, because the company is not paying its full social costs. Additionally, failure to shift social costs back onto the firm results in an economically inefficient allocation of resources between industries and firms. Currently some of the practices being applied to avoid this include the establishment of emissions limits both for manufacturing processes and for products that pollute (for example, autos), as well as the imposition of fines or outright closures of firms that do not meet these standards.
All the measures discussed above—utility regulation, antitrust laws, labor laws, and pollution control restrictions—are examples of actions taken by society to modify the behavior of business firms and to make this behavior more consistent with broad social goals. Since these social measures all constrain firms, the economy of the United Stated could be called a constrained –enterprise system as opposed to a free-enterprise system.

30 Something about telephone
When imaginative scientists first suggested the possibility that one person could speak directly to another over a long distance, few people took them seriously. Among the few who did was a Scots-born American named Alexander Graham Bell, who was one of the first to develop a telephone in 1876. Now the most common means of voice communication in the world, the telephone of today, is infinitely more sophisticated and effective than the crude instrument developed by Bell, and it is being used in ways he could not possibly have foreseen.
One area that is rapidly expanded is communications service “on the move”. Because America is such a highly mobile society—a society on wheels—telephones in cars and trucks are becoming as essential as those in homes and offices. Industry officials have predicted that mobile communications service will soon be more competitive in many respects than the service provided by telephones that do not move.
Another area rapidly developing is overseas telephone service. In 1927, when overseas telephone service was inaugurated with a radio telephone call between New York and London, the occasion was heralded as “thrilling”. Today, many telephone users regard international calls as routine, and overseas service, thanks largely to undersea cables and communications satellites, has undergone extraordinary improvement. Transmission has been made clearer, charges have been greatly reduced and dependability has been improved. Overseas telephone service has now been extended to nearly 350 countries and areas throughout the world.
The introduction of direct distance dialing in 1951was one of the most significant developments in the effort to improve long-distance service. Direct distance dialing is not only fast and convenient for the caller, it has also enabled telephone companies to handle the extraordinary growth of telephone use that has occurred since the 1950s. between 1950 and 1973 the number of telephone in the United States tripled, with the addition of 90 million telephones. For the Bell Telephone System alone, long-distance calls in the same period have increased from 1.4 billion to 8.5 billion, and indications have shown that long-distance calls will continue to increase significantly in the years ahead. In 1972, 77 percent of the 8.5 billion long-distance calls were dialed by the customer.
Another very significant development in telephone use is in the area of data communications. Here is an example of how medical data are being transmitted. In a small town in the western part of the United stated about 300 people gathered in the local school to undergo tests for lung diseases. The procedures followed marked a major advance in detecting diseases by providing almost instantaneous computer diagnosis over long-distance lines. First, technicians at the school used touch-tone telephones to send vital statistics on the person being tested to the computer, which was located in a hospital 60 miles away. The individual then exhaled into a spirometer, which measures volume and rate of air exhalation, and these measurements were automatically transmitted to the computer. The computer instantly calculated the results and within two seconds relayed them back to the testing center. Normally, it takes hours or even weeks to evaluate spirometer measurements. By utilizing a computer and data communications, however, the time lag is reduced to seconds. Moreover, people in a remote community are put within arm’s length of the most up-to-data medical facilities available.
For many people the most exciting development in recent years is picturephone service. Picturephone services, which will become available commercially at the beginning of this century, is being used by large business corporation; but it will no doubt spread from the office to the home. It is already clear that the next best thing in telephone service is going to be picturephone call.
Possibly the most significant research now being conducted is in the use of the laser beam in telephone communications. This wonderful light, first produced by scientists in 1960, can beam continuously and with extraordinary intensity. Instead of using light to see by, telephone researchers are thinking of way to use light to communicate by. In other words, they are thinking of using light as radio waves to transmit telephone calls, television programs and data messages from one point to another, with the expansion of picturephone service and high-speed data communications between computers, present message-carrying capacities may soon become inadequate. If it turns out to be technically and economically sound, the laser might prove to be a major breakthrough in telephone communications.
Current research in telephone communications is so extensive and changes are coming about so rapidly that no one can predict with accuracy what the telephone of tomorrow will look like. But there is at least one prediction that can be made with assurance: there will be more and more telephones in the future, and the will be much better than present ones.