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Is Government Really 'The Solution'?

Tuesday, June 19, 2012

Additional government action is facing tough obstacles today. But is conservative 'propaganda' really to blame?

In a recent Washington Post op-ed, E.J. Dionne scolded his fellow liberals for refusing to admit what the Republicans have been saying all along: That liberals think government is the solution. “Why don’t Democrats just say it? ...government creates jobs—yes, really—and also the conditions under which more jobs can be created.”

He listed several reasons liberals relish an active federal government. Unfortunately, he also ignored a few questions important to the debate—and if the conservatives are as wrong-headed as liberal thinking implies, those issues need to be addressed, not ignored. Otherwise, both sides will continue to talk past each other. Until the conservatives’ questions are addressed, it is disingenuous to blame conservative “propaganda” for the alleged problem of too-small government.

According to Dionne’s op-ed, federal government action since our country’s beginning has created prosperity, grown the economy, advanced the arts and sciences, and built our transportation and education infrastructure. Further, liberals say, when private-sector investment slows or stops, the government must step in with infrastructure investments to “prime future growth.” Lastly, the government should intervene to prevent or minimize layoffs; in hindsight, the main thing wrong with President Obama’s original stimulus package was that it wasn’t big enough, and too many state and local employees have been losing their jobs as a result.

Why do liberals, as the op-ed title says, think that 'government is the solution' even when it has a track record of mismanagement and inefficiency?

Notice the absence of one critical item on the liberals’ list of government’s duties and accomplishments, a duty that the government has consistently fulfilled for two centuries. That duty is national security: providing a protected, stable environment within which the private sector can evolve, adapt, and grow. Conservatives understand that a secure environment has enabled American prosperity and economic growth, and that the best possible success government can achieve in national security is the prevention of costly wars—which in turn is the best indirect investment a nation can make in infrastructure. But, curiously, investing in security wasn’t mentioned in the liberals’ list above. Was that omission intentional, or was it unintentional—and what does the omission imply with regard to the defense budget?

Next, Dionne implies that active government can jump-start the economy by investing and hiring during a slump. Conservatives might agree in some cases—for example, certain types of infrastructure can be excellent investments. But more unanswered questions remain. Do liberals think it possible that government intervention might have contributed to the economic slump in the first place? For example, when the government’s regulators start treating regulated firms more like friends or future employers, it's called “regulatory capture” and it breeds crony capitalism, which only makes things worse. In that case, why should yet more regulators be desirable, instead of an alternative approach that would better align risks with potential rewards?

Regarding infrastructure: If it’s a top priority, why wasn’t it a larger portion of the government’s 2009 stimulus package (see the numbers in the Washington Post and the New York Times)? For that matter, why should necessary infrastructure investments become a priority only during economic downturns?

Do liberals think it possible that government intervention might have contributed to the economic slump in the first place?

Many conservatives also doubt the effectiveness of bureaucracy. The Financial Report of the U.S. Government, particularly the auditor’s report, confirms the government’s reverse-Midas touch: Perennial inefficiencies, lack of internal controls, lack of coordination among bureaus, and duplication of effort are ubiquitous problems. That is one reason conservatives tend to favor private-sector solutions where possible—again, with proper alignment of risks and rewards, instead of more government intervention—and, where that’s not possible, to confine government to its short list of duties, such as defense and justice. Why do liberals seem to disagree? Why do liberals, as the op-ed title says, think that “government is the solution” even when it has a track record of mismanagement and inefficiency?

Further, do liberals see the same “sticky bureau” problem conservatives see, that many “temporary” programs have a strange way of becoming permanent? In the private sector, nonperforming firms and failed products or services tend to die off. Do liberals agree that the same thing should happen with failed or obsolete programs and nonperforming bureaus? Or do they think preserving government jobs should be the proper goal, regardless of results and performance?

And lastly, if liberals look to FDR’s wisdom, why do they forget that he was solidly against the idea of powerful public-sector unions? Why do contemporary liberals not consider that the voters of Wisconsin might, at last, have seen the wisdom in FDR’s advice?

E.J. Dionne is correct that liberals’ desire for even more government action is facing tough obstacles. He blames liberals for allowing themselves to be intimidated by conservative “propaganda.” But until liberals give honest answers to conservatives’ legitimate questions, the liberal agenda will almost certainly continue to face obstacles that are tough, if not insurmountable.

Steve Conover retired recently from a 35-year career in corporate America. He has a BS in engineering, an MBA in finance, and a PhD in political economy. His website is www.optimist123.com.

FURTHER READING: Steve Conover also writes “What Our Grandkids Actually Want,” “Austerity or Growth: A False Dilemma,” “A Tax Increase without the Pain,” and “The Debt Ceiling Distortion.” Marc A. Thiessen reports “How will Defense Sequestration Harm National Security? Let Me Paint You a Picture.” Mackenzie Eaglen says “Sequestration Will Cause Irreparable Harm to National Defense.” Kevin A. Hassett contributes, “Cut to Grow.”

 

Image by Darren Wamboldt / Bergman Group

 

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