Looking Past Profits for a Healthy Society
By Jon Green
“The federal government is in financial disarray. It spends more than it makes and its investments are not based on sound financial principles.” — Kelly Campbell, “5 Reasons the Government Should Be Run Like A Business,” U.S. News
Proposals to treat our government like a business in which we choose to invest and from which we expect to realize short-term gain has led to calls for a balanced budget amendment, privatization or abolition of the social safety net and low, flat taxes because businesses need only focus on profit and efficiency. If society really was just a business transaction between two otherwise unaffiliated parties acting in their immediate self-interest, then such proposals would have merit: we could “become more efficient” by downsizing and doing less with much less. But government is far more than a business transaction: it provides the means for private prosperity, and also the protections for social capital and a well-functioning society, which do not always maximize financial gains in the short term.
In the state of nature, it is advantageous to engage in reciprocal action for protection and long-term gain. Continued reciprocity generates social capital, the willingness put long-term gain ahead of short-term interest. But reciprocal action is vulnerable to cheating; I can choose not to return a favor and reap benefits at little to no immediate cost. In the business community, cheating (failing to honor a contract, for example) is either rewarded by being ignored or punished by a refusal to engage in future reciprocal action. This form of punishment does not work in a society because one cannot just walk away from unreturned favors. Members of a society are constantly forced into collective situations and are unable to choose whether or not to buy the product offered by the state without leaving it altogether. Governments are constructed to set up incentives and constraints around larger-scale reciprocal actions to prevent failure to reciprocate. For example, if the Internal Revenue Service was abolished and taxes became optional next April, how many people would pay? Disaster would ensue when our society would be unable to maintain its military, schools, highway construction and other basic governmental functions. While all of society is obviously better off when taxes are collected, few members pay their dues willingly. Therefore, government is required to impose collective action.
Attacks on the social safety net and other proposals to curtail large-scale reciprocal actions are based on a perverse individualism that discourages the critical interdependence that this nation is built upon. As a society, we have decided that although it may cost money, it is in our long-term interest to provide all of our citizens with a basic floor of economic well-being. We decided that every citizen deserves a shot at a successful career, so we established public school systems. We found it unacceptable that half of senior citizens lacked health care and a third lived in poverty, so we established Medicare. Abolishing these social establishments may help a hypothetical America, Inc. realize short-run financial gain, but the social costs outweigh the financial benefits. This is evidenced by the strong positive correlation between a country’s engagement in large-scale collective action and their ranking in the United Nations’ Human Development Index. There is more to a nation than turning a profit: helping those who cannot help themselves, even at a financial loss, is a moral responsibility and a measure of a country’s worth.
“Businessment” ideology invites statements such as, “I shouldn’t have to pay property taxes to fund public schools if my child goes to private school,” “those old people don’t need Medicare” and “if it doesn’t directly affect me, why should I bother?” This mentality ostracizes the rest of society, establishes boundaries around the individual rather than the community and rejects the idea that a society’s success depends on cooperation with others. It fails to recognize that an educated workforce is in everyone’s financial and moral interest, as is a reciprocal responsibility to take care of those who took care of us. If we are going to accept this ideology and become a nation of prosperity that does not help the poor, then we will have to acknowledge that we are too cold, too selfish and too isolated to continue to be considered a first-world country.
If you want an organization that makes decisions based purely on market fundamentals and “sound financial principles,” I invite you to open an eTrade account. If you are so bound to your individual liberties that you would reject your responsibilities to your fellow citizens, then I invite you to live in a cave with your head in the proverbial sand and avoid the possibility of finding yourself in a collective engagement. If you wish to do so, however, you will have to use roads funded by your neighbors’ taxes to get there. American government, at its core, is not a for-profit enterprise. It is the arbiter of the large-scale social engagement that makes us a first-world country.
“Governments that buy too heavily into the idea that customers are a higher form of life than citizens risk losing the participation of taxpayers as partners.” — Katherine Barrett and Richard Greene, “Consumer Disorientation,” Governing