Contrary to the economic right’s dogma, government expenditures, and public investment are not less valid than private ones. It is incredible to hear tax cuts cure all crowd argue that government expenditures don’t create “permanent jobs”! Where…what is a permanent job in our culture? Which job is more permanent and which, particularly of late, the more productive, a school teacher or a mortgage banker?
In 1696, The Scottish Parliament passed the “Act for Setting Schools”, motivated by the Presbyterian Church’s view that the Bible should be directly accessible to all. The Act required that each parish should establish a schoolhouse and hire a teacher.
In a stroke, one of the most backward, insular and impoverished places in Europe began a transformation. By 1750 it is estimated that 75% of the male population of Scotland could read, and every town of any real size had a lending library. Paper making and publishing became a principle industry. A national survey done in 1795 showed that nearly twenty thousand people, out of a population of one and a half million, made a living in writing and publishing, while over ten thousand people were employed teaching. Scotland’s Universities became preeminent learning institutions and assumed a leading role in the enlightenment. Within a century of the Act, Scotland was transformed from a subsistence economy into a nation of manufacture, trade, and learning; Adam Smith’s living laboratory.
The Scotish concept of universal education migrated to the rest of Europe and came to America along with the Scotish model for Universities where both played no small role in this nation's growth and prosperity. It is a powerful illustration of the power of public investments to grow and economy, build a middle-class, undermine poverty and build a nation. Only a public program can assure universal education.
But the power of public investment is not limited to education. Transportation facilitated by maritime aids to navigation, charts and harbor, canals, river navigation projects, roads and highways, and airways; communication by regulation of airwaves; legal structure and the courts; public health related facilities such as sewer and water, all these represent public investments in infrastructure essential to a modern economy. It is the presence of such foundational elements that make the difference between developed and undeveloped economies, not the genetics of the population, as the right tacitly assumes.
The interstate highway system and the construction of a national railroad system were both moon shot scale projects in their time, one entirely a public sector project the other facilitated and subsidized by the public sector. When aeronautical advocates wanted to develop air transportation they went to the post office and Congress. Government not only designed and maintains the infrastructure that has made commercial aviation practical but it has substantially underwritten the principle technological achievements employed. Government money and programs inspired and financed the modern computer, the silicon chip, freeze dried food, nuclear power, Velcro, the and yes the internet, which Al Gore, in fact, played a material role in. Indeed the laughing off of his claim to such a role is a measure of just how brainwashed the American public has become about the role of government in the economy.
Government has brought us public sanitation and safe drinking water, all but eliminating whole classes of infectious diseases that use to decimate urban populations. Vaccine programs, food inspection, all manner of public safety programs, police, fire, and defense. The idea that the government is irrelevant to our well-being and our economy is absurd. The idea that public money is inherently wasted is an economic illusion promoted by private interests that view government as competition for consumer dollars and or those fixated upon lower taxes for the wealthy.
The economic right likes to talk about $500 defense department toilet seat as symbolic of public waste, but now we have been exposed to the $1,400 private sector waste paper baskets. These are humorous irrelevancies though compared to the big time squandering the private sector is capable off. Confining ourselves to recent history, the so-called S&L crisis of the late eighties, which vaporized nearly a trillion dollars in wealth requiring a bailout of the saving and loan industry, was a warm-up for the more recent economic disaster when we had to bail out the banking industry at large. The savings and loan industry was deregulated to “get government out of the way” as we later deregulate the banking industry for the same purpose. As a result, a system that provided stable and affordable home financing and safe, dependable investment income for millions through local operated financial institutions for decades was destroyed.
These macro-scale “free market” driven catastrophes have arisen from destructive private sector exploitation of complex under-regulated markets. If we elect people to public office who do not believe in government, we should not be surprised when we don’t get government.
On the micro scale, one could nominate Enron, General Motors, Lehman Brothers, AIG as recent examples of free market errors and mismanagement that eclipses any conceivable waste occurring in government operations. Every day private sector business go bankrupt, each such event arguably represents an erroneous allocation of resources. Markets make mistakes; private sector entities make mistakes. The private sector is not always efficient in the allocation of investment dollars; it is not always frugal, and it is certainly not always in the service of the public interest.
The public sector is necessary to our well-being, it jobs are as valuable as any others, and its dollars spends like any other. It is no more, perhaps less prone to error and waste in its operations than the private sector, at least so long as it operates in its native environment.
We should prefer the private sector to the public in respect to all things that the private sector can do because of its inherent democratic character, because of the political risks involved in an excessively large government and because of the autonomic decision-making processes of the market place. However, the market place cannot provide many necessary goods and services, and only collective action can provide a sense of collective purpose, a collective identity, worth and direction for society. If we never act in unison, then we are not a nation.
The economy and economic activity is the sum total of private and public economic events. A tax is not a drag on economic activity unless it is not spent, any more than any other allocation of money. We have been grossly under-investing in its public sector for decades. We have significant infrastructure needs; education is massively underfunded, and we have short changed primary public research. Investments in these areas have always paid dividends that exceed the financing cost associated with borrowing to fund them, which means we collectively make a profit on them. Until the public mind is deprogrammed and reeducated about the proper and necessary role of government in the market place, economic equity, vitality and stability will suffer. We cannot hope to construct progressive economic policy if the public continues to be deluded with conservative economic mythology.
In a stroke, one of the most backward, insular and impoverished places in Europe began a transformation. By 1750 it is estimated that 75% of the male population of Scotland could read, and every town of any real size had a lending library. Paper making and publishing became a principle industry. A national survey done in 1795 showed that nearly twenty thousand people, out of a population of one and a half million, made a living in writing and publishing, while over ten thousand people were employed teaching. Scotland’s Universities became preeminent learning institutions and assumed a leading role in the enlightenment. Within a century of the Act, Scotland was transformed from a subsistence economy into a nation of manufacture, trade, and learning; Adam Smith’s living laboratory.
The Scotish concept of universal education migrated to the rest of Europe and came to America along with the Scotish model for Universities where both played no small role in this nation's growth and prosperity. It is a powerful illustration of the power of public investments to grow and economy, build a middle-class, undermine poverty and build a nation. Only a public program can assure universal education.
But the power of public investment is not limited to education. Transportation facilitated by maritime aids to navigation, charts and harbor, canals, river navigation projects, roads and highways, and airways; communication by regulation of airwaves; legal structure and the courts; public health related facilities such as sewer and water, all these represent public investments in infrastructure essential to a modern economy. It is the presence of such foundational elements that make the difference between developed and undeveloped economies, not the genetics of the population, as the right tacitly assumes.
The interstate highway system and the construction of a national railroad system were both moon shot scale projects in their time, one entirely a public sector project the other facilitated and subsidized by the public sector. When aeronautical advocates wanted to develop air transportation they went to the post office and Congress. Government not only designed and maintains the infrastructure that has made commercial aviation practical but it has substantially underwritten the principle technological achievements employed. Government money and programs inspired and financed the modern computer, the silicon chip, freeze dried food, nuclear power, Velcro, the and yes the internet, which Al Gore, in fact, played a material role in. Indeed the laughing off of his claim to such a role is a measure of just how brainwashed the American public has become about the role of government in the economy.
Government has brought us public sanitation and safe drinking water, all but eliminating whole classes of infectious diseases that use to decimate urban populations. Vaccine programs, food inspection, all manner of public safety programs, police, fire, and defense. The idea that the government is irrelevant to our well-being and our economy is absurd. The idea that public money is inherently wasted is an economic illusion promoted by private interests that view government as competition for consumer dollars and or those fixated upon lower taxes for the wealthy.
The economic right likes to talk about $500 defense department toilet seat as symbolic of public waste, but now we have been exposed to the $1,400 private sector waste paper baskets. These are humorous irrelevancies though compared to the big time squandering the private sector is capable off. Confining ourselves to recent history, the so-called S&L crisis of the late eighties, which vaporized nearly a trillion dollars in wealth requiring a bailout of the saving and loan industry, was a warm-up for the more recent economic disaster when we had to bail out the banking industry at large. The savings and loan industry was deregulated to “get government out of the way” as we later deregulate the banking industry for the same purpose. As a result, a system that provided stable and affordable home financing and safe, dependable investment income for millions through local operated financial institutions for decades was destroyed.
These macro-scale “free market” driven catastrophes have arisen from destructive private sector exploitation of complex under-regulated markets. If we elect people to public office who do not believe in government, we should not be surprised when we don’t get government.
On the micro scale, one could nominate Enron, General Motors, Lehman Brothers, AIG as recent examples of free market errors and mismanagement that eclipses any conceivable waste occurring in government operations. Every day private sector business go bankrupt, each such event arguably represents an erroneous allocation of resources. Markets make mistakes; private sector entities make mistakes. The private sector is not always efficient in the allocation of investment dollars; it is not always frugal, and it is certainly not always in the service of the public interest.
The public sector is necessary to our well-being, it jobs are as valuable as any others, and its dollars spends like any other. It is no more, perhaps less prone to error and waste in its operations than the private sector, at least so long as it operates in its native environment.
We should prefer the private sector to the public in respect to all things that the private sector can do because of its inherent democratic character, because of the political risks involved in an excessively large government and because of the autonomic decision-making processes of the market place. However, the market place cannot provide many necessary goods and services, and only collective action can provide a sense of collective purpose, a collective identity, worth and direction for society. If we never act in unison, then we are not a nation.
The economy and economic activity is the sum total of private and public economic events. A tax is not a drag on economic activity unless it is not spent, any more than any other allocation of money. We have been grossly under-investing in its public sector for decades. We have significant infrastructure needs; education is massively underfunded, and we have short changed primary public research. Investments in these areas have always paid dividends that exceed the financing cost associated with borrowing to fund them, which means we collectively make a profit on them. Until the public mind is deprogrammed and reeducated about the proper and necessary role of government in the market place, economic equity, vitality and stability will suffer. We cannot hope to construct progressive economic policy if the public continues to be deluded with conservative economic mythology.
