We can't make government work unless we know what we want government to do. We can't get anywhere unless we first decide where we want to go. We might have a great driver, the finest car and terrific roads, but if we take Highway 5 north from Los Angeles we will never get to Miami.
A political system affects a society's economics by encouraging or
discouraging productive activities. For years and years the United States of
America has been the envy of the world. To maintain that standard of living
we must maintain the most beneficial political system in the world. That
system is capitalism.
In this country, we recognize that human beings have certain unalienable rights which are not gifts from government but are natural to all human beings. In the United States of America an individual has the freedom to act according to his own judgment and in furtherance of his own goals as long as he doesn't violate the rights of his neighbors. Government, on the other hand, has only those rights delegated to it by its citizens for a specific purpose.
(A-1) List six rights, or duties delegated to the United States government by citizens.
Perhaps you wrote down government's right to use force to defend citizens from enemies abroad and from criminals at home. Besides apprehending and punishing criminals the government has a duty to protect and enforce voluntary agreements between parties. Did you think about our judicial system?
Courts of law are necessary to the peaceful workings of a free society. One person’s decision to change his mind after a contract is made may cause harm to a second person. A society cannot function if one person receives a benefit and then refuses to pay for it. The first person would end up keeping the benefit by force, not by the voluntary consent of the second person. This would be a violation of the second person's rights.
Political rights are rights to action. They are based on a code of ethics and define the individual's relationship to government. The right to contract, to bear arms, and to vote are examples of political rights. They are often called natural rights because, as the founding fathers put it, they are unalienable rights.
Economic rights are rights to things. Economic rights are also based on a code of ethics. The ethic is equality; equality of things rather than opportunities. The code says that no one, no matter how irresponsible their own behavior, should go without certain basic things. Economic rights are rights to things like health care, employment and education.
(A-2) Describe three political rights and three economic rights not already mentioned.
Property rights and the right of free trade are moral principles which define and protect an individual’s freedom of action. They are also political rights. During the Great Depression in the 1930s, the concept of economic rights was substituted. All kinds of things were promised, but at the expense of one individual over another. Rights to fair wages, fair prices, rights to jobs, shelter, food and so forth are bogus as there must be someone to pay the wages, to sell the goods, to hire the workers, to build the houses, to produce the food and these people have rights too.
(A-3) In your opinion, how should one determine what is fair? If you don't already know, look up "free market" and describe how the market system determines fair as used in the preceding paragraph. How is fair determined in our country today? Give specific examples.
Rights belong to individuals, not groups. There are no consumer rights, farmer rights, children rights, unborn rights, worker rights, employee rights. If more than one person is involved, voluntary consent must be obtained from every individual member of the group. No person may make a claim upon others without their voluntary consent. Each individual may choose, but no one is entitled to force his or her choice on another. Government is force. In a truly civilized society citizens deal with one another by reasoned discussion, persuasion and voluntary consent.
(A-4) Do you agree with the preceding paragraph? Why or why not?
People who put the highest premium on individual freedom believe government's role is limited to providing protection so people can live and work together peacefully for their mutual advantage. This is one definition of capitalism.
(A-5) Write three different definitions of capitalism. Consult several dictionaries, encyclopedias or ask the people around you. Give the source (citation) for each definition.
Political rights provide opportunity but do not guarantee the outcome of that opportunity. The Declaration of Independence promises only the pursuit, or the opportunity for happiness. One view of government is that it exists to ensure Americans have the liberty to take advantage of their opportunities. Another view is that government should provide the means ----things necessary to achieve happiness--- like housing, jobs and health care that we mentioned earlier.
The election and reelection of Ronald Reagan suggest that, at least in 1980 and 1984, a social goal of a majority of voters was equal opportunity. Ten years later the goal is less clear, but on p 309 of their highly acclaimed 1993 book, Reinventing Government, David Osborne and Ted Gaebler suggest that the quest today is for equal outcomes:
Even the most carefully structured markets tend to create inequitable
outcomes. That is why we have also stressed the other half of the equation:
the empowerment of communities. To complement the efficiency and
effectiveness of market mechanisms, we need the warmth and caring of families
and neighborhoods and communities. As entrepreneurial governments move away
from administrative bureaucracies, they need to embrace both markets and
community.(A-6) In your opinion, is the manipulated outcome in the following illustration "good for the nation"?
Of course. A can slow down and he and B can cross the finish line together. This is the manipulated outcome.
(A-7) Make up two examples of your own. See that the opportunities are equal in both but make the outcome equal in one case and the outcome unequal in the other.
(A-8) Is either scenario good for the nation? Explain.
New York's One Nation Many Peoples curriculum hopes to de-emphasize the content of social studies and heighten the critical thinking of grade-schoolers with questions that "equip them with the moral sensitivity to ask: "Is my economic well-being at the expense of the well-being of others. What can I do and others do to promote greater economic fairness and equity?"
The Declaration of Independence states that all men are created equal. Just what that means has been debated by men of goodwill for over 200 years. We know that people are born into unequal circumstances. Health, wealth and the nurturing abilities of the surrounding adults vary from the beginning. Americans, born into poverty, have become heroes and role models. Abraham Lincoln is an example. Helen Keller rose to meet extreme physical challenges. Both had access to nurturing adults. The lack of nurturing adults may be the hardest obstacle to overcome.
A report known as Code Blue was issued by a commission of educational, political, medical and business leaders. It said "Never before has one generation of American teenagers been less healthy, less cared for, or less prepared for life than their parents were at the same age." Since 1950, teen suicide has increased by at least 300 percent and is now the second leading cause of death among adolescents. The teen homicide rate is up 232 percent since 1950 and it is the No. 1 cause of death, at least among 15-19 year old minorities. According to the report 25 percent of black males are in prison or under court supervision. One third of high school seniors get drunk once a week. The average age for first time drug use is 13. Behavior is the cause of all this suffering --behavior involving drinking, drugs, violence and promiscuity.
On July 23, 1993 ABC interviewed three mothers whose dead sons were victims of random or mistaken-identity shootings. The women had responded by helping to fight the conditions that breed violence in society. One had founded an organization called Mothers Against Gangs. Another was spending her time attacking the root of the problem which was epitomized by the question she asked as the program ended: "Why does a 15 year old kill my son?" From the preceding interview the audience understood that this was a rhetorical question. She blamed society for poverty, crime, lack of jobs and so forth. The lack was in society----not in any one person. The fault was not in the young men and women who pulled the trigger. They were also victims. This explanation ignores the extraordinary achievers who have come from neighborhoods with high unemployment, steeped in poverty and crime.
(A-9)
In your opinion, how much of a role does the neighborhood play in
determining a person's destiny?
How can the same neighborhood make one person productive and the other
person destructive?
Could the values of parents and early mentors be a determining factor?
(A-10)
Religion and volunteerism have always played a large role in American life. They provide the balance capitalism and a free market society require in order to function compassionately. There is evidence that limited government is possible only to the extent that it is coupled with a strong moral force. In her 1992 book, Alternatives, Helen Rogers uses the terms soft-power and hard-power. The police-power of the state represents hard-power. Soft-power is defined as the nurturing, caring instincts and institutions in American society. The code related to economic rights works on soft power----inner conviction and morality. Government works on hard power----it uses force from the outside: police, court system and the military.
(A-11)
Hard power example: Dan is forced to send child-support checks to a
state agency.
Soft power example: Bob is also divorced but he voluntarily
supports his children.
What motivates each of the men?
Could they both be motivated by the same things?
Which, if any, of the following motivators might not apply
except for the power of the state?
(a) love (b) obligation (c) fea
(A-12) Give three of your own examples of hard power and three examples of soft power. What is the motivation in each of your six examples?
Moral principles are concepts that help us choose a course of action. We need moral principles to determine right from wrong. Without moral principles there would be no way of knowing what is essential to judge a situation and what is irrelevant. We would not even know what to consider.
For example, a person with moral principles might consider the following when tempted to take a joy-ride in a convertible; top-down, keys inside, parked in the lot of a large shopping mall:
A person in the situation just described, who holds no moral principles, might go through the following exercise:
Once moral principles are abandoned, abstract concepts such as ownership and property rights disappear. Property rights underlie all other rights and, as we discussed on page one, are rights, not to an object, but to action capable of producing that object. (Property rights and the right of free trade are moral principles which define and protect an individual’s freedom of action. p 1) Property rights have been defined as a guarantee to an individual that if he is successful at earning property he will own that property and be free to keep it, use it or give it away if he so desires. Once moral principles are abandoned, honesty and justice also disappear. Justice cannot be legislated; it comes from the hearts and minds of the people and must be freely given.
(A-13) Show the process a person with moral principles might go through in deciding if he/she should rob a bank? Write down the questions that might be considered?
(A-14) Go through the same exercise with a person who has discarded moral principles. What might this person consider?
People today are reluctant to impose their values on others. We have schools where teachers are afraid of indoctrinating students with their own personal beliefs and therefore fail to participate in class discussions. In one instance, a student found a lot of money and returned it to the rightful owner. Everyone in the class told the student what a stupid move that was and declared they would have kept the money for themselves. The teacher was silent, offering no guidance to the class and no encouragement to the student who had returned the money.
How do young people acquire morals and responsibility if these things are not taught? Parents used to see that their children were taught morality and responsibility. Nurturing parents used to teach by example or by accompanying, or at least sending their children to church or a similar institution for indoctrination. We know that a home with nurturing parents is becoming the exception rather than the rule. As a society, where does that leave us? Are we asking schools to fill the void? In a diverse nation such as ours, there are many views concerning morality and responsibility. How does a school system determine which view of morality to teach?
(A-15)
By secret ballot determine how many members of the class
have cheated between one - five times at anything.
How many have cheated more than five times?
Never cheated?
How many think it is ok to cheat sometimes?
Write down the resulting four numbers.
Now ask participants to write down the kinds of things where it is OK
to cheat, if they think there are any.
(If there is class discussion you might want to define "OK", "cheat" and ask "cheat whom?" For instance, is cheating on a diet the same as cheating on a test?)
Ask yourself the following or use these questions for classroom discussion, but don't write the answers:
Perhaps we should recognize that there are things of value besides money. What if society encouraged people to take pride in spending extra time nurturing a family, cultivating friends, studying? What if society promoted these things by giving the same amount of respect to those who engaged in them as they give to those who accumulate vast amounts of material wealth?
(A-16) Make a list of 10 things you value. How might society encourage two of these?
Legislators determine what is in the public interest and use subsidies to promote those things. Subsidies come in all shapes and sizes. They may be disguised as grants, loans, loan guarantees, insurance, investments, procurement contracts, vouchers, rewards and awards. Through them we encourage and discourage activity. For example we give grants to artists and students and tax breaks to encourage the development of low-income housing, and small business start-ups. Urban homesteading in many states help people buy houses inexpensively if they agree to renovate them. "Set asides" were legislated to stimulate minority business and farm subsidies to preserve a way of life. Welfare and social security payments sometimes have the perverse effect of subsidizing poverty. We subsidize educational facilities, some hospitals and most medical schools.
The $20 million handout, long enjoyed by the producers of honey in this country, is a subsidy that many administrations have tried, unsuccessfully, to eliminate. It is almost impossible to undo a government program even after the need for it is long gone. In 1986 H.P. Rogers wrote the following on page 30 of The American Deficit:
There are eleven thousand sugar farmers in the U.S. who receive what amounts
to a government subsidy equal to 4 to 6 times the world price of sugar. The
sugar users far outnumber the growers but the users' sugar expenditures are
only a tiny fraction of their overall budgets and therefore the incentive for
the average sugar user to campaign for lower sugar prices is very small
compared to the high per capita incentive the growers have to campaign to
limit foreign sugar imports.
Noted economist, Milton Friedman says there is no shortage of water in California. Eighty percent of our supply is given away to farmers to grow alfalfa and cotton which the government purchases at more than market price.
(A-17) Who is the government? If the government is you and your neighbors would you give farmers water for free and then overpay them for their produce?
Leroy Jones, Ani Ebong, Girma Molalegne and Rowland Nwankwo are former cabdrivers who want to start Quick Pick Cabs, a new taxi company in Denver, Colorado. But the state Public Utilities Commission hasn't approved a new-license-application since 1947. The three existing firms are, in effect, subsidized by consumers who are denied the lower fares new competition would provide.
This is one question the Foundation researchers will answer for you.
In the late 19th century, a single street railway company was granted a franchise to operate, creating a monopoly in virtually every American city. In 1914, the jitney bus came on the scene. A jitney was a modified model T Ford which carried up to a dozen passengers. It got its start in Los Angeles by offering higher speeds and more flexible routes than the street railway system. Jitneys became too popular for their own good. They began to take business from the streetcars–the same streetcars that city governments had come to depend on for tax revenues. Jitney's were outlawed and competition in urban transportation almost disappeared. For about 25 years streetcars had the urban transportation market pretty much to themselves.
By 1944, strictly regulated bus lines were carrying more passengers than streetcars. And then taxis came along. They were strictly regulated as to number, kind of service they were allowed to provide, fares charged and the number and kind of passengers they could serve. But taxi companies welcomed the regulations which assured them monopoly privileges where fares were stabilized and part-time drivers were forbidden. Only the consumers were harmed. In New York City, the price of a taxi medallion, needed to do business, reached $100,000 way back in 1985.
However jitneys are coming back in various disguises. Commuter vans have multiplied across the county, providing some of the flexibility and with about the same capacity of the old jitneys. In 1982, Indianapolis allowed the operation of seven 14-passenger jitney vans. San Diego, in 1983, placed 326 jitneys into service. Homeowner associations have started their own transportation services to supplement or avoid the local public-transit system. In some area apartment complexes charge each resident a small annual fee and operate shuttle buses. The El Segundo Employers Association in Los Angeles, has van pools searching local neighborhoods which transport the 65,000 employees of participating firms. This may be the transportation wave of the future.
(A-18) Do you think government officials could do a better job than you or your friends and family in determining who should or should not receive subsidies? Why or why not?
(A-19) State your opinion in the following instances and explain "why or why
not".
Should a 2-earner family subsidize a 1-earner family by offering rebates on
their taxes?
Should a 1-earner family subsidize a 2-earner family by offering child care
credits?
Should artists be subsidized by tax dollars?
Should people without children subsidize education?
Should people without cars subsidize highways?
Should businesses provide the funds to subsidize their competitors?
Should wheat farmers in the Midwest subsidize the water of rice farmers in the
far west?
This is not a clear cut area. You may have had some trouble deciding who should subsidize whom or what and why. The following quotes from Reinventing Government (RIG) will give you some idea of how our elected officials are coping with these decisions.
Overall, federal, state, and local governments buy nearly $1 trillion worth of
goods and services every year ––18 percent of the gross national product. ...
New York City buys payroll processing services from banks that make
investments in low-income neighborhoods. Los Angeles gives preference to
contractors who provide day-care facilities. Many governments set aside a
percentage of their procurement for minority-owned firms or small businesses.
_ The federal government seeks to prevent financial panics by providing
insurance for depositors in banks and savings and loan institutions. It also
administers systems of unemployment insurance, worker compensation insurance,
and medical insurance for the elderly and poor. The state of Illinois fights
racial segregation by authorizing the creation of home equity districts in
Chicago, which can offer insurance against price drops caused by sudden racial
turnover. RIG p 337
The Michigan Strategic Fund has invested $12 million to $15 million in equity
to catalyze the formation of private sector business and industrial
development corporations. Pennsylvania's Ben Franklin Partnership has
invested in five private seed capital funds. Many states encourage their
public pension funds to invest in venture capital. The federal government
held stock in Chrysler during the bailout. RIG p. 341
(A-20) List five activities which the federal government subsidizes.
The Agriculture Department's Federal Crop Insurance Corporation gave the green light to farmers in 1990 to insure a safflower crop that had no chance of growing, according to a GAO report (Government Accounting Office). The report listed $14.8 million in claims, including an indemnity of more than $1.5 million to one farm and an average payment of $105,304. Senator Bob Kerrey referred to it as "the safflower fiasco".
As for gasahol––It would be more cost efficient to burn straight gasoline and simply pay a direct subsidy to corn growers.
A multimillionaire who owns six car dealerships in Miami received a $5 million Community Development Block Grant (CDBG) from the federal government because some of its dealerships happened to be located in urban areas that could use a little sprucing up.
(A-21)
Who gets "the good deal?"
Who or what decides?
Comment stating whether you approve or disapprove of the way subsidies work.
A few years ago the number of rice growers in Yolo County, California, increased, not due to an increased demand for rice, but because people figured out how to take advantage of the rice-subsidy system. In 1986, 50 rice producers received government checks for more than $1 million each. However the maximum government subsidy to a single grower was $50,000 a year. How then could even one producer, let alone "50 rice producers," receive $1 million in subsidies from the federal government?
The key was in knowing the exact number of acres to plant in order to qualify for that subsidy. The $50,000 cut-off assumed only small growers would benefit. But all a large grower had to do was plant the qualifying number of acres and then rent similar parcels to "new growers." The rent paid by the new grower to the owner of the land was a handsome sum because each rented parcel was automatically worth $50,000 even if the "new grower" knew absolutely nothing about producing rice.
(A-22) Assume the law says every rice farmer who plants at least 100 acres qualifies for a maximum subsidy of $50,000––lesser subsidies for fewer acres planted. Assume that Farmer Joe owns 10,000 acres. (100 times the amount needed to qualify for a government subsidy.) Explain how the government ends up paying $5 million in subsidies for rice grown on Farmer Joe's land. How many other growers would Farmer Joe have to rent parcels to in order for the government to incur a $5 million liability? (Understand that Farmer Joe does not get the entire $5 million--- but the government pays it!)
A 1983 Wharton study showed there were 23.2 billion mass-transit passenger rides in 1940 when the industry was largely in private hands. But after WW II rubber and steel became plentiful and Americans developed a love affair with the automobile. To survive, bus companies knew what they had to do. They had to raise fares, adopt distance-based pricing and eliminate low-ridership routes. But the federal government prevented this with more regulations and price controls forcing 194 companies out of business between 1954 and 1963 and leaving the rest as easy prey for takeovers by state and local government. In fact the federal government encouraged takeovers. The Urban Mass Transportation Act of 1964 (UMTA), provided federal grants to enable cities to buy their local transit companies. Private monopolies became public monopolies and before long over 90 percent of transportation became government owned and operated. The nationwide transit deficit which amounted to $880,000 in 1963 climbed above half a billion dollars in less than a decade.
UMTA added federal subsidies –– $50 billion over 20 years –– which worsened the problem so that the annual deficit hit $2 billion in 1978 and went on to triple to $6 billion by 1985. Years of federal operating subsidies encouraged inefficiency, high operating costs and further insulated public-transit monopolies from the cost-effectiveness a healthy dose of private-sector competition would bring.
By 1983, transit had gone public and passenger rides had fallen to 8.2 billion –– leaving the industry serving about one third of its former number of passengers. Employees did not drop in the same ratio. Private transit had 242,000 employees in 1940 and under public providers, the number of employees fell only to 195,000. This left the industry more than twice the number of employees per passenger than under the private system.
Seventy-three percent of the federal subsidies between 1970-1980 went for increased employee compensation. Wages rose faster than labor costs in comparable occupations and faster than in other public-sector job categories. Entry level stock clerks earned $30,000 their first year with the Washington D.C. Metro system. At that time the wage of transit stock clerks was substantially more than first-year policemen and firemen. In many cities, transit bus drivers were earning more than $35,500 and token sellers in New York City were making $21,888/year in 1978, while higher-skilled tellers in nearby banks were making under $12,000.
The wage explosion can be traced directly to Section 13c of the UMTA. That section protects local transit employees from any adverse effects of programs involving federal capital or operating subsidies. This, in effect, gave unions a veto power over all local transit decisions.
Strapped transit systems couldn't use cheaper part-time drivers during the peak ridership periods because of government regulations. High drivers' wages forced transit systems to turn to larger vehicles in order to get as much out of each driver as possible. But having them drive one 60-seat bus instead of three 20-seat buses meant the frequency of service declined, and with that added inconvenience, ridership dropped even further. Studies have found that riders are twice as responsive to convenient service, like more frequent scheduling, than they are to lower fares. Apparently they will leave their cars for convenient service, they will pay for convenient service but government laws and regulations prevent convenient service.
(A-23) Unions prevented the hiring of part-time drivers. Name two other things unions did that made it impossible for operators to cut costs and operate systems efficiently.
(A-24) Ask three taxpaying adults if they have heard of Section 13 of the UMTA? If they haven't, tell them about it and the effect it has had on transportation. Write the names of the three adults you contacted.
(A-25) Riders want convenient service. Explain why 60-seat buses work against the consumer.
If the poor are to be subsidized, it might be cheaper and fairer to use vouchers or another form of direct-user subsidy than to have a low-fare structure that would subsidize all passengers, those able to pay and those not.
(A-26) Would you prefer vouchers to uniformly low fares? Why or why not?
The word government is from a Greek word, which means to steer. The job of
government is to steer, not to row the boat. Delivering services is rowing,
and government is not very good at rowing. E.S. Savas
(W)e need a vigorous, a strong, and a very active government. ... a
government that can and does govern. This is not a government that does; it
is not a government that administers; it is a government that governs.
Peter Drucker
Osborne and Gaebler were heavily influenced by E. S. Savas and Peter Drucker as the preceding quotes found in Reinventing Government show.
Subsidies are excellent examples of steering. Bringing groups together to focus on a specific problem is another. Some states operate labor-management cooperation teams. When Bruce Babbitt was Governor of Arizona, he got groups focusing on latchkey kids and the result was more than 100 after-school daycare programs. Mayor Ray Flynn convened an Infant Survival Summit in Boston in 1990 to develop a response to the rising black infant mortality rate. When Art Agnos was Mayor of San Francisco, he got that city's churches to help care for the homeless population.
The following are all examples of steering:
Governments steer by using studies. In 1989 the Federal Reserve Bank of Boston released the results of a study which showed bank lending patterns and led to a public demand for increased lending in minority communities. The 1964 Surgeon General's findings concerning tobacco smoke dramatically changed the smoking habits of millions of Americans over a 30 year period. Studies on cholesterol, exercise and breast implants have swayed behavior.
President Clinton has long been a champion of Community Development Corporation banks, (CDC) where subsidized lending institutions pump seed money into inner-city neighborhoods. The most famous example is the privately owned South Shore Bank in Chicago.
The Community Reinvestment Act (CRA) was passed by Congress in 1977 and amended in 1989 with the intention of equalizing access to financing by requiring banks to make loans in low-income neighborhoods. Government dollars once poured into the cities through federal Community Development Block Grants but the current alarm over the federal deficit has shrunk those funds. Any seed money will have to come from private lenders, either by force or incentive.
Under the law, federal regulators have a mandate to review and rate bank
portfolios regularly to make sure banks are focusing efforts on the needs of
low-income neighborhoods. The ratings are made public, and banks with low
ratings can have a difficult time winning permission to branch out, merge or
otherwise expand their activities. Governing April, 1993 p. 41
The trouble is, the CRA law is ambiguous. It fails to specify just how much of a bank's portfolio must be invested in CRA loans and is vague about which activities qualify for CRA credit. Most bankers favor the idea of states passing their own laws specifying the activities that qualify as CRA projects. However conforming to state law does not necessarily mean a bank conforms to federal law. Many officials are happy that the law, no matter how vague and cumbersome, seems to be having a beneficial effect because more loans are being made in inner-city neighborhoods. Nations Bank has pledged $10 billion in CRA activities over the next ten years and Bank of America has promised $1.2 billion a year.
(A-27) Is this one of those areas where the ends justifies the means? What do you think?
Cities are trying to help in various ways. Providing information about the city's own plans to invest in a certain area may make it easier for banks to feel comfortable about their own commitments. Information and communication is always useful. The District of Columbia created a series of maps that overlaid areas of investment with the city's various programs. This, according to Catherine Bessant, in charge of Nation Bank's CRA program, who was quoted as saying, "The banks can see clusters where several programs overlap and can then key in on those areas for their CRA loans." Some cities are putting their deposits in banks and designating the accrued interest as a guarantee fund for specific CRA loans made by that bank. Other cities are subsidizing interest rates for low-income borrowers even further and others are helping these potential beneficiaries with their down payments.
(A-28) Since only low-income borrowers qualify for subsidies, do you see an unintended consequence here? Please explain.
In 1989, Syracuse, New York, started a Housing Partnership consisting of government, nonprofit agencies and the private business sector. City redevelopment programs focused on targeted neighborhoods: A park was renovated and a deteriorating movie theater was purchased and demolished by the city. Regulators brought power to bear when a bank with a weak CRA rating, attempted to purchase a smaller bank with a reputation as an "active inner-city lender." A challenge to the potential merger was dropped only after the larger bank agreed to sign onto the Housing Partnership.
(A-29) The CRA is a classic example of government's attempt to steer. Some people view the CRA as a stick that works and others view it as form of black mail. What do you think?
All our leaders should adopt the long-range thinking needed to steer properly, according to Osborne and Gaebler. They claim that governments have begun to shift to systems that separate policy decisions (steering), from service delivery (rowing). On page 34 of RIG they say
Suddenly there is less money for government ---- for doing things, delivering
services. But there is more demand for governance --- for leading society,
convincing its various interest groups to embrace common goals and strategies.
This is yet another reason why our visionary public leaders now concentrate
more on catalyzing and facilitating change than on delivering services ----
why they provide less government, but more governance.(A-30) Give a one sentence definition of steering and rowing as used above.
Most people in government, when encountering a societal problem, ask "How best can government solve it?" rather than "Should government solve it?" It comes down to which you prefer to get things done; the public or the private sector? In Reinventing Government, Osborne and Gaebler enumerate the following strengths and weaknesses of the public sector:
There are management costs when services are provided by government employees, of course, but generally governments feel when they let a contract to a private company they have to hire special contract managers. On the other hand, advocates of the private sector claim it lets us pick and choose from a greater variety of solutions, at less expense and at a more efficient pace. Some prefer private over government solutions because government must resort to force in order to get things done, and they would rather see persuasion and generosity used to address the woes of our society.
(A-31) Considering their unique strengths, which sector would you prefer if you needed the following services? Why?
| Preventive health care | Education | Cutting edge health care |
| Mail or delivery | Protection from domestic criminals | Protection from foreign criminals |
| Food | Housing | Fire protection |
| Art of all kinds | Computers | CD Players |
| Clean air and water | Garbage collection |
Building roads in today's heavily regulated environment is difficult at best for the public sector, but private toll roads are almost impossible. Foreign banks have been more receptive than American banks to financing toll projects. Investors have to find loans, loan guarantees, letters of credit and equity capital in a market that has little experience with toll roads and a great deal of skepticism. When it comes to toll roads, drivers can choose to travel the old congested highways rather than pay tolls. Unlike the public sector private operators don't have access to other revenue sources to repay bonds if tolls are slow. Private firms have no eminent domain powers so it is harder for them to acquire land. There is the convoluted design and permit process to go through and the need to build consensus for things like setting the locations for interchanges, the impact on land use patterns, overall growth rates in the community not to mention air quality and the economy in general. It costs approximately $20 million to prepare all the required reports and set up programs to mitigate potential damages. Despite all this, the California Department of Transportation recently negotiated franchise agreements with four private groups to build toll highways.
Osborne and Gaebler assign government a large role in society:
If corporations are to succeed in today's super competitive global market,
they need the highest quality inputs they can get ---- the most knowledgeable
workers, the most ground-breaking research, the cheapest capital, the best
infrastructure. This makes government's various roles as educator, trainer,
research funder, regulator, rule setter, and infrastructure operator far more
important than they were 30 years ago.
On page 277-278 Osborne and Gaebler enumerate what they consider to be the
responsibilities of the federal government:
(A-32) Which, if any, of the four roles given by Osborne and Gaebler in the
preceding paragraph, do you believe are the proper business of the
federal government? Think of four other government roles and label them
"proper" or "improper" in your personal opinion.
There are, and always have been, serious proponents of government
intervention. Even among our founding fathers there were those with no strong
ideological commitment to a limited role for government and who in fact found
government's intrusion into the economy desirable.
Professor Walter Williams of the University of Washington, in his book
Mismanaging America derides hackneyed phrases that suggest that the
"government that governs least, governs best", or that the "unregulated free
market alone can do the job of protecting the welfare of citizens". Such
sentiments, he believes, fit well with America’s long-standing mistrust of
government, but they do not accord with current reality. Federal, state and
local governments in a modern society provide services ranging from law and
justice to educating our children to managing the overall economy. Continuing
“government on the cheap” is a formula for disaster. If the federal
government stays “broke," its efforts will keep going wrong.
(A-33) The federal government has an annual budget of over $1.5 trillion.
What is the annual budget of your state government? Make some phone calls
and find the annual budget for your city or county government.
(A-34) Argue pro and con that providing less of the nation’s wealth for
government’s use is, as the professor claimed, "a formula for
disaster?" Provide at least one concrete example for each side.
The following is from a speech given by Alan Keyes, one-time Assistant
Secretary of State and two- time candidate for U.S. Senate from Maryland:
The following can be found in Alternativespage 568:
Years ago Ralph Nader and Milton Friedman squared off with Professor Friedman
championing the individual's freedom of choice and Mr. Nader insisting those
who ride motorcycles be required to wear helmets in order to reduce their
chance of injury. He reasoned that since taxpayers foot the bill for public
ambulances, highway patrol and emergency medical facilities, they have the
right to make such demands.
Couldn't legislation expand to include bans on junk food, fats, violence in
entertainment, advertising, pornography, mandates for exercise, vitamins,
health check ups, immunizations, tests and special rules for pregnant women?
Already there are mandates on service providers, manufacturers and other
businesses regarding safety precautions (smoke detectors, fire extinguishers
etc.) as well as laws regulating the behavior of individuals. There are
restrictions on chemicals and other pollutants, and strict regulations
concerning the disposal of waste and mandates for cleaning up contamination.
Why not protect the mind and the soul as well as the body? Why not prevent
people from reading “trash," from listening to degrading music, from looking
at bad paintings?
(A-35) Do you think helmet and seat belt laws are reasonable? Give the
argument for the viewpoint opposite yours.
What about those who have little or no resources and engage in activities with
a social cost? According to the Rand Corporation, cigarette taxes in America
are now almost high enough to cover consequential social costs, but alcohol
taxes are not.
(A-36) List some consequential costs associated with alcohol consumption and
smoking. How are those costs passed through to taxpayers? How, in your
personal opinion, can we get the users of alcohol to pay their way?
(A-37) State two ways to avoid "sin taxes"; one concerning individual behavior
and one involving legislation. What argument might influence the state
to lower taxes on alcohol and tobacco?
(A-38) Consumers use legal products other than tobacco and alcohol that
frequently have harmful results. Name three products whose consumption
or use may require a tax as high, if not higher, than that currently
imposed on tobacco and alcohol. Would this, in your personal opinion, be a
good idea? Why or why not?
On pages 67 and 68 of Governing, April 1993 issue, Kent Jeffreys, director of
environmental studies at the Competitive Enterprise Institute wrote:
When Joe acts irresponsibly the consequences are frequently borne by Tom, Jane
and Harry. (A-39) Give three examples of your own where the responsibility for private
behavior is shifted from the individual to the public.
During President Eisenhower's first term, a commission found the "purpose of
government is to do for people collectively what the people cannot do for
themselves individually."
Many people feel that government is responsible for meeting needs. It need
not provide the services directly, but it must make sure they are provided.
Administrators often make a distinction between providing and producing. New
York's Governor, Mario Cuomo maintains, "It is not government's obligation to
provide services, but to see that they're provided." Others feel meeting
needs is not the role of government. They suggest that there is no end to
needs and that one person's need is another's luxury.
(A-40) Suppose Joe was told his taxes would be divided and distributed to the
four government agencies of his choice. He chose:
(A-41)How would you personally define the ideal role for government?
(1)Policy areas that transcend the capacities of state and local governments,
such as international trade, macroeconomic policy, and much environmental and
regulatory policy.
(2) Antipoverty policy, which requires investment in precisely those regions
with the fewest financial resources. To equalize each area's ability to
invest, the federal government must act.
(3) Social insurance programs like social security and unemployment
compensation. If we want equal benefits throughout the country, we cannot
expect rich and poor states to shoulder the same burden.
(4) Investments that are so costly that they require sizable tax increases,
which might discourage business from locating or staying in a city or state
(one obvious example is health care). States will avoid such
responsibilities, for fear of discouraging investment, unless the federal
government bears much of the financial burden. The federal government can
define the mission and the outcomes it wants, but free lower governments to
achieve those outcomes as they see fit.
The Founders knew that, worthy public servants aside, government by nature
tends toward excess. It is a necessary evil to provide for the common
defense, to promote the general welfare, to do those things, as President
Lincoln later said, that cannot be done by individuals and enterprises singly.
There may be times when we have to use this instrument, just as doctors were
once wont to include small amounts of arsenic in their prescriptions, but
massive doses can be fatal. ... we shall never have a government that is as
good as its people, and we should never wish for one.
What is self government about, after all? What is this society about? They
certainly are not about producing a utopia through the instrument of the
state. Even if government could produce all that it promises, we would not
want those results on the terms they are offered. They are terms that require
that we surrender a good that is more important than good results: our freedom
to make choices. We should still have enough pride in ourselves as
individuals and as a people to want to shape our own destiny. _ Right now we
are spending millions of dollars on reports that tell us how the government is
wasting our money when those reports themselves are a primary example of waste
because nothing is done about them, or because they are deliberately slanted
to please the agencies and departments they are evaluating.
We also have to hold government accountable for spending our money.
Politicians and bureaucrats talk a lot about 'government resources,' but they
are ours. Like greedy guests sponging off their host in a swank restaurant,
they are reading off a menu with no prices when they plan new budgets and new
programs. But we are the host. We foot the bill. We need to insist on seeing
all the prices up front.
There is a correlation between taking funds from government and loss of
freedom. Society would have little interest in restricting the freedom of
individuals if it did not collectively assume the responsibility for their
misfortunes. If government provides ambulance and health care services it
then has the right to make certain demands on the potential beneficiaries in
order to contain costs. Now there are seat belt and helmet laws for some
motorized vehicles and others are outlawed altogether. _ As Bruce Evans
(Director of the Foundation for Economic Freedom) put it: Constructive freedom
cannot exist without the context of principle and accountability. We are
exchanging the freedom our ancestors fought so hard to preserve for social
indulgence and the abdication of personal responsibility, morality and
accountability. We are not only agreeing to the intervention of government in
our lives, we are embracing it.
First, is there a problem that merits government intervention? Second, are
there more efficient ways to achieve the same goals?
(Once we agree that government has a duty to protect) the individual against
his own foolishness, no serious objections can be advanced against further
encroachments.
If Joe submits claims for every little scratch, the auto insurance
rates of T, J & H rise.
When Joe drinks excessively, T J & H may be injured in a collision.
When Joe abuses his wife and children, they are may abuse T, J & H.
When Joe fails to repay his college loan it is harder for T, J & H to get
student loans.
#1 defense--technology for SDI
Be specific and make four designations of your own.
#2 social services--- shelters for the homeless
#3 education--construction of new high school
and #4 infrastructure--specifically flood control.