I received an email from someone who disagreed with my recent post, One’s Debt to Society. I encouraged the writer to post it on the blog but he declined, stating that he only wanted to correct the error in my thinking. I will respect his request for anonymity and just call him Al.
Al scoffed at the notion (see One’s Debt to Society) that corporate success is not dependent on government support. He points out that corporations hire workers educated by government schools, ship products on government roads, and even sell their products to recipients of government aid. As he put it, “the degree of corporate dependence on government is scandalous…progressives see the corporation’s dependence on government as obvious…we question the intellectual capacity of conservatives who don’t understand [this].”
Al is partially correct, but has slipped into a deeper truth. Let’s take his claims one at a time:
1. “Corporations hire workers educated by government schools.” Unfortunately, this is true. Taxpayers spend an average of about $150,000 per student to provide 12 years of the public school regimen. Would these students be better prepared for the workforce if their parents could spend these funds on private schools of their choice? The notion of vouchers is more complicated than I want to address here, but suffice to say that the evidence is strong. Consider drop-out rates, mediocre test scores, and Constitutional illiteracy, and very few Americans would choose the public school option if they weren’t already financed through their taxes.
2. “Corporations ship products on government roads.” True, Al, but you forget that Americans pay about 50 cents per gallon in gas taxes; truck drivers pay about 55 cents for diesel. Ostensibly these taxes are supposed to pay for the maintenance of our roads and bridges. In general, I have no problem with the gas tax if the funds it generates are used as the sole source of highway construction and maintenance. In this way, individuals pay for roads in proportion to their usage. Of course, corporations don’t really pay taxes in the long run, but simply transfer them to consumers in the form of higher prices. Businesses don’t succeed because governments pave roads. Governments pave roads because consumers demand products and services businesses provide.
3. “Corporations sell products to recipients of government aid.” Al didn’t use the word welfare but I well. Again, he is correct here, but he misses the greater point that welfare for some Americans is financed by the productivity of others. If this bothers anyone on the left, they why don’t they propose a drastic reduction in “government aid” programs?
Al is weaving several truths and half-truths into a flawed narrative, and missing the big picture. Al referred to corporations 13 times in his email and never referred to taxpayers, but referenced government 17 times as if it creates its own wealth. While government (through taxpayers) should play a limited Constitutional role, Al cites the burgeoning welfare and government control of education as support for his claim. He fails to acknowledge that progressives (and moderates)–not strict conservatives and libertarians–are largely responsible for these programs. Put another way, progressives have created some degree of business dependence on government through the tax code, regulations, welfare, and the like. Businesses have no choice but to adjust their behavior to meet the government demands, at which time they are told to be grateful because of this dependence. Of course, some businesses actively pursue dependence on government, a topic I addressed in earlier posts on crony capitalism. Al seems to view crony capitalists as progressive business owners who have learned to work with government. I see them as corrupt.
I have heard Al’s line of reasoning from others in the past. To Al and others on the left, if you really think it’s scandalous that corporations profit from government, then why not help us dismantle the programs that create the dependency? The truth is that progressives want to increase individual and business dependence on government, not decrease it. Society is indebted to individual achievement and initiative, not the other way around.
BTW, Al, please feel free to post your responses on the blog. Some of the readers might not agree with you, but they are eager to counter your best arguments.
“Al” sounds like a lot of educated liberals I know. They think they have all of the answers but don’t see the intellectual deficiency of their own views. Free enterprise makes all of their progressive policies possible, but they want to kill the goose that laid the golden egg.
Al is correct that there is a dependency factor between business and government. But he is wrong about who depends on whom. It is government who depends on business. Liberals know their precious government cannot exist without the taxes derived from business. They are parasites who must have their corporate hosts. This rankles them to the extent that they have great disdain for business, capitalism, even the economy and they try to explain their failures viz a viz the economy while trashing the successes of the business community who support them. Now they have taken it a step further by claiming those successes as their own.
My grandson, who is growing up in a liberal household, is visiting this week. When Chick Fil A made the news, his reaction was to come down on the side of the critics of Cathy. I mentioned thar the issue was not about Cathy’s stance on a social issue, rather it is about his company being denied a business license because of it. In order to participate in an economy managed by the left, you must conform to certain political and social beliefs. When they get the power, they use it to bring people in line, to heck with the economy, jobs, and common sense for that matter. They certainly don’t want bigots in their communities never mind that they run the best fast food company in the business.
The economic juggernaut aka the USA did not happen because the government paved the way. Rather the government got out of the way and let the free market work with minimum intervention. Or that’s how it used to be. The left has it right where they want it except for one thing. They control education and now health care. But they don’t have the biggest prize of all: private enterprise. How long will it be until “you didn’t build that” becomes “you don’t own that”? We will know a lot more this November.
This is AL. I’ll grant you that Washington and corporations need each other, but corporate America cannot survive without the government. This is not bad and it’s the only way it can work. If corporations ran the schools then only the wealthy and connected would get a good education. If corporations delivered the mail then people in rural areas would not get service. If the federal government didn’t enforce CAFE standards then Detroit would only build gas guzzlers nobody could afford to drive. The “free market” works but only to a point. It would wander around aimlessly without some rational guidance from government.
The market works quite well. You can get a Fedex delivery anywhere. People wouldn’t buy big gas guzzlers if they couldn’t afford them. The car companies would then be forced to make more affordable cars or they would go out of business. Agree there is a role for gov’t in something like pollution. Some regualtion is necessary. I don’t think anyone is representing that we want a lawless society. The perverse thing is that when the gov’t intervenes too much, the market gets distorted. Case in point – USPS just defaulted on a large pension payment. Case in point #2: the recent housing crisis.
Al is arguing that, without government intervention, corporations would choose to act irresponsibly and adversely to the best interest of society. This is a flawed philosophy. Corporations cannot make cars that no one will buy. Mail service has been available for rural areas since before the automobile. You weren’t always able to have delivery at your door, but that is a luxury, not a limit to service. Corporations would deliver mail in the cheapest, most profitable and most efficient manner. That might mean that someone in Eagle Butte, SD may have to go to town to pick up their mail, because delivery to their door would be cost prohibitive. If corporations were only interested in caring for the rich there wouldn’t be WalMart; only Nordstrom. Why would corporations only serve the rich? They would immediately limit their customer base to < 10%; an impossible competitive situation. Corporations and businesses of all types exist to serve the maximum number of customers at the lowest cost with the highest profitability. That is what satisfies the vast majority of society. Government succeeds when it prods and fosters the best (not perfect) environment for buyers and sellers as a whole. Liberals desire government to exist to make sure every single person gets the same thing. This is not practical, achievable or sustainable except at the expense of personal liberty. American history is saturated with individuals and beliefs that reject the sacrifice of personal liberty.
Government should exist for the benefit of society AS A WHOLE; not, for the benefit of THE WHOLE OF SOCIETY. A subtle word difference, but a gigantic philosophical difference. The problem with "the whole of society" is that some will not achieve, will not become wealthy, will not have meaningful work, will not own a house or go to college. And, that is what scares liberals; the concept that not everyone becomes a Rockefeller, Trump or Carnegie. But, it won't be because of lack of opportunity, only a lack of execution on the part of the individual. Liberals don't like that. I would prefer that my personal liberty allow me to pursue my dreams at the risk of failure and poverty than to be content with existing as equally miserable as the next fellow.
Al, thanks for posting. I am afraid we are getting distracted by the discussion of public schools which you refer to casually as government institutions. Since John’s thread started with a discussion of Obama’s remarks on business several weeks ago, I assumed we were focusing on the upcoming national election. Some facts. The Federal goverment contributes about 10% to public schools, including student loans and free lunches. The U. S. Dept of Education, started in 1979, has a budget of $68 billion per year. Public schools are largely the function of state and local governments, paid for by state and local taxes. I don’t think parents of school children think of them as government schools or at least didn’t until the federal government became involved. Public does not mean government. And goverment does not necessarily mean the Federal government. For sure, the Postal Service is a Federal institution but I don’t know that it is a major issue in the campaign.
As to upcoming election, Obama opposes and Romney favors school choice. That is the only difference I have heard on education. Romney is not proposing that corporations take over public schools. That might be a good dining room topic, but I can’t see that it has anything to do with assessing the candidates for president in 2012.
Al- you overestimate the success of government. Poor kids get a poor education with states running the schools. UPS delivers to 99.99% of the country. Ford doesn’t need Obama to tell them to build a high MPG car. Ford is going to build what people want. All the government can do is restrict freedom
David, liberals don’t think that every person should get exactly the same thing. They acknowledge individualism and understand that people have different talents. Giving the same opportunities will not provide the same results because people have different talents to fulfill the opportunities. Not everybody can be Rockefeller and this is understandable. Social liberals do believe that social justice is part of liberalism and that it is the government’s role to handle issues such as health care, education and unemployment, which are considered human rights, to support those who are in need. This is solidarity. As far as I know, government programs did not make any of its recipients Rockefeller, Trump or Carnegie. They just help people keep their head over the water.
Aliza – with all due respect, you live in a dream world. Government has produced Rockefellers…just ask Harry Reid, Barney Frank, Chris Dodd and even a few on the Republican side. Second, health care, education and welfare are NOT human rights. I don’t know where this notion comes from, but (refer to my post in an earlier discussion) rights are general, not specific. The specifics are the manner in which we pursue our rights, and they are, by no means, guarantees. Third, I own a business and can’t get anyone to work. Why? Because (and this is straight from their mouths) working would interrupt their government check and they make more on welfare than they do working for a living. Why? Because we aren’t “meeting needs”, we are providing a lifestyle. And, it doesn’t matter how much you pay them. Even if you paid them more than the government pays them, why would they work for more when they can live on less for free?
“You may say I’m a dreamer
but I’m not the only one…”
economics work in the real world, not in dream worlds. the idealistic policies of dreamers have destroyed the dreams of millions of hard working people in this world.
Where would we all be without dreams? The “American dream”; “I have a dream…”
What you call “the idealistic policies of dreamers” is a reality in most of the modern industrialized democracies in the world.
Aliza, how are your “modern industrial democracies” doing financially? France, Italy, Greece, Great Britain, Ireland, Portugal, even Germany. Which one do you admire most and why? What is going to become of them when they can no longer pay for these social rights? Will the UN, the IMF or heaven forbid the US have to pick up the tab?
Arthur, the whole world suffers now from the global economic slowdown, including the U.S.
I read that Sweden starts to think about reducing some of the very generous social rights it provide to its citizens, but we are talking about a country that provides paid parental leave of more one year. And so does Norway.
Aliza, if your theory holds water, bad economic times is when you need strong welfare programs. But Sweden is a good example. They have also reduced unemployment benefits from 5 to 3 years. Their social programs are funded by high taxes, the second highest in the world, up to 60%. These cutbacks are necessary because they can’t raise taxes. And they can’t print money since they don’t have their own currency.
The Swedes voted in these high taxes and are willing to pay them, at least up to a point. Everyone who works pays taxes. In this country, the liberals want to tax only the wealthy, which doesn’t come close to funding even the current welfare programs. They say nothing about the 49% who pay no income tax at all. In addition, they cut the payroll taxes in the last two years which go directly toward funding social security and medicare. In Sweden, the politicians were hosest with the people about what it would take. In this country, we want half the people to get a free ride, pay for it with debt, and stick future generations with the bill. Do you think Obama should have reduced the payroll taxes? Do you think both candidates should tell us the truth about what taxes will be necessary to pay for these programs?