The Basic Things A Government Should Do

The gov’t’s fundamental role is to facilitate improvements in the lives of the overwhelming majority of the humans living in that country.

By David Grace (www.DavidGraceAuthor.com)

Overview

This column is an examination of the role of government in a developed country and is a follow-up to my column Both The Left & The Right Are Wrong About The Role Of Government

This column argues that role of the government in a developed society is to provide:

  • A physical infrastructure — roads, bridges, parks, etc.
  • An institutional infrastructure — courts, institutions supporting commercial and financial transactions, property recording, patents, etc.
  • Physical protection — police, military
  • Basic Services — water, sewage, fire protection, primary education, etc.
  • Disaster Prevention & Recovery — support to citizens in the event of flood, fire, earthquake, epidemic, disability, etc.
  • Remedies for huge imbalances in bargaining power that adversely affect large numbers people
  • Protection from people acting in ways that unreasonably injure their neighbors

The Tribal Imperative

Humans are a tribal species.

Sometimes, the tribes are family based. More often they’re geographically based. But whatever the common thread, humans always form tribes.

We gather in villages, towns, cities. We instinctively pledge ourselves to groups. You can call the tribe a gang or a community or a country, but you can’t escape it. Tribes are in our blood.

In addition to gathering in groups because of our genetic, tribal heritage, we also gather in groups because we’ve learned that groups are always more powerful than individuals, that there is strength in numbers.

All Tribes Make Rules

The first thing a tribe does is evolve a set of rules. They may be written or unwritten rules, codified rules or cultural rules, but every tribe has rules.

Go into the deepest jungle, the most remote wilderness and find the most primitive tribe. That tribe will have rules, and anyone who violates those rules will find themselves either banished or dead.

Tribes Consolidate

For reasons of power, protection, pursuit of wealth, etc., adjacent small tribes become absorbed by bigger tribes. This baron conquers that neighboring baron and takes over his land. The city expands its power and takes over the entire valley.

The Italian city-states merge into a country. Wales, England, Scotland and Ireland end up merging into the United Kingdom. The thirteen colonies become the United States.

Gangs evolve into tribes. Tribes evolve into warlords. Warlords evolve into kings. Kings build governments. The form of those governments may be monarchies, oligarchies, dictatorships or representative democracies.

Human tribal instincts combined with the massive increase in power and wealth provided by coordinated, group action make the formation of governments inevitable.

The larger the tribe, the greater its power, the more complicated its rules, and the bigger its government.

Fundamental Things Most People Expect The Government To Do

If you want to know what the role of government is, you have to ask:

What are the fundamental benefits people expect to get from being part of the tribe/community instead of living alone in the wilderness?

  • Infrastructure — things like roads, utilities, courts, schools, a financial system, and registration of property.

Everybody understands that communities are expected to do things like this.

  • Protection against violence and crime — police and the military
  • Help for citizens when they are unable to help themselves

While people will argue about the floor and ceiling for this sort of activity, most people don’t want to see flood or fire victims, orphaned children, or blind and disabled people starving to death on the public streets, so this idea of the tribe/community providing some sort of a limited “social safety net” for its members who are unable to care for themselves is understandable.

  • Protection against being treated unfairly in business transactions
  • Preventing people from doing things that unreasonably damage their neighbors

Protection Against Being Treated Unfairly in Business Transactions

Wait a minute. How do you define “fair” and “unfair”?

When we say that people think they should be treated fairly, we mean that both buyers and sellers think they should pay or receive an amount somewhere in the ballpark of what a person in their position would have negotiated with someone on the other side when both sides had relatively equal bargaining power.

If two reasonable parties have

  • relatively equal bargaining power,
  • each has an equal desire to make a deal, and
  • each has the equal ability to walk away from an unsatisfactory proposal,

the terms that those two parties eventually agree on can be said to be “fair” and each party to that deal can be said to have been treated fairly by the other.

Let’s call those sorts of “fair” negotiated prices and terms Equally Negotiated Terms in and that sort of a “fair” deal an Equally Negotiated Transaction.

What Happens When The Parties’ Bargaining Power Is Vastly Unequal

The problem is that the stronger the bargaining power of one party and the weaker the bargaining power of other party, the more one-sided and onerous the terms will be and the more unfairly the weaker party will feel he/she has been treated.

Nobody expects every transaction to be perfectly equal, but if at some point the price and terms become so far from what the Equally Negotiated Terms would be, the vastly weaker party will think that he/she has been treated unfairly and that the other side should not be allowed to do business that way.

When a large number of people believe that they are being treated unfairly they’re going be upset and angry and they’re going to do something about it.

That’s not a good situation for any society and the “something” they do about it may be very bad for lots of people.

Every rational society wants to avoid this.

Governments Require Common Transactions That Affect Many People To Have Provisions Close To The Equally Negotiated Terms

In cases where grossly unbalanced bargaining power has or will result in terms that are very different from the Equally Negotiated Terms, terms that are very different from terms that most people would consider to be fair, the government often requires provisions that move the transaction loser to what would be the Equally Negotiated Terms.

This legislative modification of contractual terms is designed to promote commercial transactions whose provisions more closely match what the Equally Negotiated Terms would have been for a transaction of that type.

Wage & Working Conditions Example

For example, assume that all the employers of unskilled labor in a certain country were represented by one person and all the unskilled laborers were represented by another person. Assume that all of the employers and all of the laborers agreed to only work under the terms negotiated by their two representatives.

The two sides would negotiate and eventually agree on basic employment terms. Those terms would include minimum wage rates, rules for overtime, vacation and sick leave, medical care for on-the-job injuries, etc.

Such a negotiation would be an Equally Negotiated Transaction and we would consider those to be Equally Negotiated Terms.

Now, consider the real world where each employer knows and follows what the others are paying and the laborers are fragmented and too weak to negotiate employment terms in any meaningful way. Their terms of employment will be very inferior to the “fair” Equally Negotiated Terms.

To equalize that massively unequal bargaining power, the community steps in and makes up for the huge imbalance between the bargaining power of the unskilled workers and that of the employers by requiring the terms of employment to more closely match what the parties would have agreed to in an Equally Negotiated Transaction, namely, a minimum wage, overtime rules, sick leave, worker’s compensation, etc.

Credit Card Usage Example

If all the banks on one side and all credit card users on the other had each been able to appoint a representative to negotiate credit card terms, those Equally Negotiated Terms would have included limits on the amount and timing of late fees, the ability to challenge charges, limited liability for unauthorized charges, etc.

Since that was not realistically possible, the government acted to partially equalize the bargaining power of the credit-card users and the banks by establishing rules for late fees, challenging charges, liability for unauthorized charges, etc.

Again, because the credit-card users had vastly weaker bargaining power than the banks, it became the government’s job to impose transactional terms on the use of credit cards that were closer to what would have been the Equally Negotiated Terms if the parties had had equal bargaining power.

Preventing People from Doing Things That Unreasonably Damage Their Neighbors

If a business produces toxic waste and it can get away with dumping that waste into the stream that runs through its property, it will. If it can spew the toxic gas from its factory, it will.

The problem is that the factory is making higher profits by polluting its neighbors’ crops, land, air and homes without their consent.

Those neighbors expect the government to prohibit the factory from damaging their property and their health in order to make more money, and the government does so by enacting environmental protection laws that require the factory not to pollute.

The noise, traffic, and pollution from the operation of a commercial business in a residential neighborhood damages the surrounding homeowners. Homeowners expect the government to prevent their neighbors from damaging their enjoyment of and the value of their property by opening an auto body shop or night club next door to their house.

The government does that through zoning laws.

When people live in groups the actions of one can easily damage others, and it’s the government’s job, through nuisance laws, zoning laws, toxics laws and the like, to stop people living in a community from acting in ways that unreasonably damage or impair their neighbors lives and property.

Summary

So, in addition to the basic governmental functions of

  • Protecting citizens from violence,
  • Creating and maintaining a physical infrastructure
  • Creating and maintaining a legal and commercial infrastructure
  • Providing relief in the event of natural disaster, illness or disease

Governments make the lives of the bulk of the people living in the country better by

  • Reducing the negative effects of extreme imbalances of bargaining power that cause material loss or damage to large numbers of people, and
  • Restraining or prohibiting conduct that unreasonably damages the health or property of other people living in the community.

The far left wants the government to do everything in the mistaken belief that that will result in the weak and the poor becoming stronger and richer.

Other than the military and police, the far right wants the government to do almost nothing so that the rich and powerful will be set free to become even richer and more powerful no matter how much damage their unrestrained conduct does to the majority of the human beings living in that country.

Those in the middle want the government to do the basic things that allow the overwhelming bulk of the human beings living in that country to become safer, freer, healthier and more prosperous than they would have been if they were living isolated and alone.

— David Grace (www.DavidGraceAuthor.com)

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David Grace

David Grace

Graduate of Stanford University & U.C. Berkeley Law School. Author of 16 novels and over 400 Medium columns on Economics, Politics, Law, Humor & Satire.