The Government is NOT a Business!
There seems to be an endless supply of simplistic complaints about government programs, spending, and accounting along the lines of “if I ran my business that way, I’d be out of business!” Well, yes. That’s the idea. The government is not a business. It is there to provide the services necessary to underpin society, not to provide profitable commodities. It is not there to accumulate profits, it runs on tax revenues that fluctuate naturally and necessarily in response to the needs and the capacity of society. The government “deficit” is an illusory and malleable number that essentially means very little in real terms. The deficit is an attempt to estimate a static number based on very dynamic factors – like a Farmer’s Almanac estimate of the temperature at 3 pm on August 23, 2014 based on this year’s record-high temperatures. But somehow it’s become a Holy Grail to some parts of the wonkosphere. Here’s the deal folks – when people aren’t working, they still need to eat and pay the bills. Thus the need for government support goes up as tax revenue goes down. Voila! Deficit. Then when those people get back to work, the reverse happens. Voila! Surplus.
I’m not sure when the understanding of the mirror roles of government and private business diverged, but I suspect Sandra Day O’Connor is on to something. Since retiring from the Supreme Court, she has taken up the cause of re-introducing civics education into the schools. I truly hope she succeeds, because I hear a de-volution of understanding of how government works, what its goals are, and why the government and the free market occupy separate scales on the weigh-station of society. They (and we) HAVE to understand this, and have to let both operate in their own spheres – and nary the twain shall meet.
All unexpected changes in the innumerable economic influences will affect deficits and surpluses, and in both directions. If the elderly suddenly stop seeking treatment for everything, then the demand on Medicare and Social Security will go down = less deficit. If foreign nations embrace labor regulation and reduce global labor arbitrage so that manufacturing moves back to America = less deficit. War = more deficit. Drought = more deficit. These are the natural fluctuations that are addressed by the tax system, not some newfangled boogeyman. Taxes will go up, the deficit will come down, you put your left foot in and you shake it all about.
Our taxes right now are historically low, despite the apoplexy of the GOP and the Tea Partiers, which is contributing to the deficit. As is the fact that our social need is nearly historically high. So deficit numbers based on high need for services and low input of taxes are bound to be exaggerated. Not untrue, just not quite the whole story. Once our need drops or tax revenue rises, the deficit boogeyman will shrink. Thus it is, thus it has always been, thus it shall always be.
Also largely lost in this clamoring cacophony of complaint is the fact that the very “big government” the Tea Partiers claim to detest is up to 30% larger than they know about, largely because of something some call the “shadow government.” This creepy-sounding phenomenon is a byproduct of elected officials caving to Tea Party-style paranoia and special interests in an unholy alliance of mutual misunderstanding that has given us the privatization of services that should never have even a scent of a profit motive. The one that gets me is the prison industry. States and the Feds have outsourced prisons to private companies, ostensibly to “smallen” government. What has resulted is a profit-driven business that operates on the corporate profit model rather than on the government necessity model. These companies literally hold people’s lives in their hands – their education, training, future, and present existence depends on being profitable.
And where does the constant flow of bodies come from that keeps this profit machine turning? Recidivism. The “prison-industrial complex” thrives on turning people out with the assurance that they will come back. And all evidence indicates that they are doing a bang-up job of it. As for the cost savings, there are relatively few studies available, and the GAO has found the results largely inconclusive because of differences in evaluative factors and some studies using hypothetical public institutions.[1] One in Colorado found the supposed equivalency of cost to be questionable because lower-level inmates were moved to high-security private facilities to increase the maintenance costs (and thus the profit to the company).[2]
In an excellent article for CNN Money, D.M. Levine highlights the minimal or negative savings in private-over-public prisons and many of the true costs of these savings. (http://money.cnn.com/2010/08/17/news/economy/private_prisons_economic_impact.fortune/index.htm). Exempt from state oversight and largely free to shuffle prisoners to other states, private prisons are free to use low-paid and less-trained staff, cut corners wherever they can, and take their profit at the expense of those who desperately need the services that are most often cut. They also operate with only the slightest flicker of transparency, whereas state agencies are bound to be transparent and accountable.
And if the cost to the inmates doesn’t concern you, the cost to your neighborhood should. When prisoners are returned to the streets without drug treatment, job training, or basic skills, what do you suppose happens? They re-offend, often simply because they lack the capacity to do anything else. Poof! Back to the slammer with you. What happens to the mentally ill? Returned to the street without care or diagnosis at even the abysmal level of state facilities because transfer to a hospital would cut out a bed-charge and good doctors are expensive. All on the taxpayer’s dime, which finds its way directly into the pocket of the prison owner. Over and over again.
Overall, the cost-savings seem largely illusory, the benefits questionable, and the profit motive disturbing. But don’t talk to the Tea Party about that – they seem content with a “smaller government” at any cost, even though the government still has to pay for the private systems, and is often paying more. Whatever, we like it! Why? We don’t really know – but we do, and we’re LOUD!
Whatever the actual outcome of privatized services, the bottom line remains that some functions of society must be performed out of necessity, not out of profitability. The truth is, where capitalism operates properly, the private sector performs its duties quite well. But we cannot allow an overriding and unsophisticated “anti-government” furor to obscure the fact that a corporation is, by law, obligated to pursue the highest possible profits for shareholders. Other motives can and do subject corporate boards to lawsuits. The government, on the other hand, operates with a social welfare goal, and properly so.
Somehow we decided that the government should be run like a corporation – dragging in profit at all costs and only providing services that can be paid for with retained earnings. NO! Bad American! Don’t make me get the rolled-up newspaper. The government’s services are those that must be provided to members of a civilized society for the benefit of society. Health care, prisons, trash removal, roads, postal services, and education may have a role for the private sector as an option, but absolutely can NOT be provided solely to those who can afford it. We fought a whole war (remember – the Revolutionary one?) to cast off a social structure that accumulated wealth and access to only those who could afford it, leaving the rest to sink deeper and deeper into poverty, dragging the entire Empire down with it (despite what the nobility thought).
So I beg you, whenever someone decries “big government” or “out of control spending” ask them – how much are you willing to pay out of pocket to a private company to remove your trash? To treat your drinking water? To inspect your food? To guide your airplane through the skies? Yes, there are private options (gated communities opt to stay off the grid and pay private companies for roads and trash, but they are certainly not the majority, and they act as a whole community – not as individuals) but consider the social fabric; YOU may be willing to pay $1,000 per year for trash disposal, but what if your neighbors are not willing or able to do the same? Your block becomes clogged with trash, disease, and vermin. Yay for you – the government went away. And back we go to Colonial times (you know – like the Tea Party costumes) when you had to buy memberships into fire and police guilds. Anyone who didn’t buy in had to negotiate with the reps who stood outside and watched their houses burn. Good idea? How about if your neighbor failed to buy in. Ever seen a block of rowhomes go up in flames? All it takes is one person behind on his dues to bring an entire block of homes to ash.
What about police and 911 services? Should these be profit-driven? Do you want to be the person whose crime is too expensive to investigate? Where is the profit in solving murders? More importantly, where is the profit in solving them correctly. Is there a profit to ensuring your civil rights when you’re on trial? It’s far more expedient and far cheaper to simply dispense with some of the rituals designed to ensure the right person is convicted – is that what’s best for everyone? Sure it would reduce taxes, but do you want to be the one wrongly convicted because of a cost-cutting measure? You knew the victim, you have no alibi, you have no money for a defense lawyer, so away you go. Public defenders are so expensive, right? So you do it – go to court and stand in front of a judge, next to a prosecutor and detective who are instructed by the corporation to get this case closed and get you into a private-prison bed as soon as possible. You can check out a book on local procedures at the library, I’m sure you’ll do fine.
Ambulances? I envision a hierarchy of plans. You can buy in at the Gold rate down to the Wood rate. Since vehicles are expensive and personnel more so, there are probably only 2 or 3 trucks in the company, right? So imagine a bad, bad night when 8 calls come in from private subscribers. They have to allocate resources, right? Like any good corporation. So the Gold member in the gated community on the hill gets his truck, and the Silver member in the historic lakefront home gets her truck. Then the Bronze member who lives on the other side of town but is closer to the garage than you gets his truck, since gas is expensive and you’re also only a Bronze member. So your child who drank the stuff under the sink will just have to wait until a truck is available. Profit motive still looking good?
There are also things the government needs to do a better job of – like inspecting the food supply and enforcing immigration laws. Why are they failing? LACK OF FUNDING! Because we are so afraid of funding things that look like “big government” that we leave some of the most important functions anemic and hobbled. What do we fund instead? Wars. Endless, unplanned, unjustifiable wars against nations that (in recent memory) pose only the most tangential and theoretical threat to our own. Despite the soaring rhetoric of terror, the nations of Iraq and Afghanistan posed no immediate or even conceivable threat to our security. And yet we send trillions of tax dollars down the rabbit hole and complain about border security. We spend trillions on arms accumulations and the largest standing army in the world, just in case we decide to pop in on another war at a moment’s notice.
Here’s the facts kids: the government has multiple jobs to do for all of our benefit. All of those jobs cost money. We pay a relatively infinitesimal amount of tax compared to the value of the services we receive: police, fire departments, air traffic control, roads, water treatment and sewers, wildlife management, food and drug safety, the health care and retirement benefits that some people receive, food for the poor, housing safety for renters, labor protection for workers, harbor and shipping inspection, daily mail delivery, safe trucks on the highways with us on the morning commute, safe trains carrying millions of gallons of toxic chemicals and tons of cargo, and on and on and on. Complain about taxes and government all you want, but the fact is that the benefits FAR outweigh the costs. And while waste, ineffectiveness, and silliness certainly exist, and some functions absolutely need improvement, the solution requires a scalpel, not a sledgehammer. That’s all I’m sayin’.
