Government in Your Business

For the foreseeable future, governments will take a keen interest in how executives manage. In the U.S., industries and sectors representing more than a third of the nation's economy-including financial services, automobiles, health care, and telecom-are being reshaped. But don't expect a return of old-style regulation, which would stifle innovation. Government will coax businesses rather than curb them by offering incentives for desirable conduct. Private-sector managers will need to develop a new mind-set and skill set so they can partner with government rather than fend it off. Change has actually been on the horizon for years. It's the culmination of several long-term trends, such as a deepening distrust of business, greater ties between the interests of business and society, and decreasing regulatory control across national borders. Over time, economies worldwide will settle on versions of the system that's beginning to emerge in the United States. Governments will make use of taxes and tax credits to promote wanted behavior, such as investing in renewable energy or hiring veterans, and to discourage unwanted behavior, like emitting excess carbon. They will also take a more active role in coordinating public and private interests through rules on how businesses and individuals are compensated. Reprint R0907L