We Don’t Need No Stinkin’ Government, Or Do We?
By David Grace (www.DavidGraceAuthor.com)
Ideologues love to come up with theories that, by and large, don’t work in the real world and, making matters worse, they invent nice-sounding slogans endorsing their failed notions.
In the last election cycle we kept hearing the myth that things would be so much better if “The government would just get out of ‘our’ way and let us do what we want.”
Another nonsense slogan promoting a fantasy ideology.
The More People You Get Together In One Place The More Ways Someone Will Find To Screw You Over.
Let’s start with the basics.
In all human activities overhead costs and risk of harm increase exponentially with institutional size.
If you have a little two-person company things are pretty simple. Get to ten people and you need a financial person to handle the payroll and the accounting. Move up to one-hundred people and you’re going to need an HR person, a financial officer, a marketing manager, and more.
The bigger a company gets the more employees it will have who aren’t directly involved in actually making its products and lots more ways will appear where things can go wrong.
In a platoon everybody carries a gun, but ramp that up to a regiment and things change drastically.
Less than 40% of the U.S. soldiers in Europe in WW II were actually combat troops. The remaining 60% were either assigned to logistics or administration.
The bigger an organization gets, the more other peripheral stuff it has to deal with.
The fact of life in the real world is:
In any human organization, complexity and risk of harm increase exponentially with size.
If you’re living alone on a tropical island you don’t need a government. You can’t hurt anyone and no one can hurt you.
Move to an 1870s farm where the closest civilization is a town of a few hundred people a couple of hours away. Your ability to hurt anyone is very limited. You can’t pollute your neighbor’s land or water very much. You’re growing most of your own food. There is no electricity, water or sewage systems to deal with, no big corporations you depend on.
The harm you can cause others and the harm others can cause you doesn’t extend much beyond bandits and horse thieves.
Now put yourself in a city of a hundred thousand people where you depend on others for water, food, manufactured goods, electricity, communications, etc. Lots of people can hurt you and you can hurt lots of people. Your danger to others and their danger to you has exponentially increased over what it was on that isolated, little farm. Who’s going to protect you? Who’s going to protect them from you?
Next, you’re in a city of two or three million people who have access to explosives, toxic chemical and biological substances, and military weapons. You’re in danger from poisoned or polluted water, contaminated food and medicine, identity theft, and communicable diseases to name only a few of both the risks you face from others and the dangers you pose to others.
You have a government because when you shove a lot of people together in one place you need a mechanism to protect you from them and them from you.
A Little Historical Perspective
A brief review of the damage wrought by monopolies in the late 1800s and the contaminated products commonly sold in the early 1900s demonstrates the vast harm that unregulated business has, can and will do.
The profit motive did not eliminate the trusts of the 1880s. Just the opposite. Cartels are far more profitable than competition and in an unregulated world the trust business model defeats the competitive business model.
The government, not the Market, eliminated cartels through the Sherman Anti-Trust Act.
The Market didn’t protect people from contaminated food. It encouraged contaminated food because in the short run contaminated food is cheaper to produce and is a more profitable product.
The government, not the Market, restrained contaminated food via the 1906 Meat Inspection Act and The Pure Food And Drug Act.
The Market did not eliminate child labor. It encouraged it because it was very cheap and thus very profitable. The government eliminated child labor through the Fair Labor Standards Act.
Competition by its nature forces business to descend to the lowest level playing field. Government standards not only increase the safety, effectiveness, and performance of products for the benefit of consumers, they also benefit business by protecting it from having to compete against cheaper unsafe, shoddy and inferior products.
Regulations raise the level of the playing field to the benefit of producers who would like to make a quality product.
The Market Does Not Eliminate Harm From Bad Products
Injury To Consumers In The Near Term
To some degree, over the long term the Market can punish a company for inferior or unsafe products. To some degree over the long term, but at an unacceptable cost suffered by the public during the short to medium term.
The Disconnect Between Who Profits & Who Is Punished
But even the certainty of a distant financial punishment does not deter companies from choosing to engage in abusive practices today because there’s a disconnect between the executives who profit from the abusive business practices today and the shareholders who eventually suffer the punishment from that bad conduct years in the future.
The executives benefit today and the shareholders suffer years from now.
Decisions based on short-term profits to Group A aren’t deterred by long-term losses to Group B.
Higher quarterly profits increase short-term stock prices. Higher short-term stock prices increase executive compensation.
The pressure on management to increase short-term profits is intense and unrelenting.
We’ve built a system that’s operating in negative-feedback mode.
No Amount Of Profit Is Enough
Moreover, there is no upper limit on profits. There is no “enough.”
We have created a corporate system that recognizes no purpose other than perpetually increasing short-term profits without any effective system of restraint other than government regulations.
There are mechanisms that could be enacted to rein-in corporate bad behavior:
- Prohibiting short-vesting executive stock options;
- Making executives and directors personally liable for a portion of corporate fines and penalties;
- Legislatively redefining executives’ and directors’ fiduciary obligations to include obligations to customers, employees, vendors and the public;
- Legislatively redefining the term “shareholder value” to include metrics such as product quality and safety rather than only the stock price.
But those things are opposed by the same people who rant about need to get the government “out of our way.”
The same tools that might reduce the corporate bad behavior that spurs government regulations are opposed by the very people who are upset about government regulations in the first place.
A Day In Your Life
Contrary to the fantasy, “We don’t need no stinkin’ government,” in the environment we have created the only real source of protection for the public is the government. I wish it weren’t.
Of course there can be and probably is over-regulation. But that doesn’t mean there should be no regulation or that all regulations are inherently a bad thing.
If you think that you don’t need the government and that it’s just getting in your way, let’s take a look at how you and the government interact every day.
- Your alarm wakes you. The electricity that powers it is required by the government to be of a specific voltage so that your appliances are not fried. The government requires that it be available at a reasonable cost so you aren’t without power or overcharged for it.
- The government court system provides a mechanism for you to recover your losses if the power provider damages your property from power spikes or if your food is spoiled because their power fails.
- You take a shower with water supplied by a government facility. The water is required to be clean and free of toxins by various government agencies.
- You press a button on your coffee maker and turn on your stove to scramble a couple of eggs. The gas supply is delivered at specific pressures and without impurities at the order of government agencies. The coffee maker doesn’t blow up or electrocute you because it is required to meet government safety standards, and if it doesn’t the government provides you with a court system to recover damages.
- The eggs and coffee are required to be correctly labeled, produced in clean facilities and uncontaminated by poisons or bacteria.
- You check your phone to make sure your flight this afternoon hasn’t been cancelled. The phone operates on frequencies allocated by the government to make sure that they are interference free. The government oversees the carrier to make sure it provides the promised services and doesn’t levy unreasonable charges or overcharge you.
- You drive to the train station over roads that are built and maintained by the government. Traffic is controlled by signals and rules enacted and enforced by the government to make your trip safer. Government police patrol the roads to arrest people who break safety rules or who haven’t received the training required to drive in a safe manner.
- Your car contains air bags and other safety devices required under government regulations. The government requires it to be fuel efficient in order to reduce your operating costs and to keep your air clean. It can’t exceed certain dimensions so that it will be fit on the highway along with other vehicles.
- You top off the tank on the way to the train station. The gas is dispensed from pumps required by the government to be built and operated in such a way as to be safe from fire and to deliver the amount of fuel promised. The fuel is dispensed from underground tanks required to be built in such a way that they will not leak gasoline into the groundwater.
- You board your train into the city. It’s operated by a government agency that requires it to have certain safety equipment and not travel at an unsafe speed. The engineer must have passed a government licensing exam and maintained his competence. The government rules also prohibit him from taking drugs, drinking alcohol, or using his cell phone while on duty.
- The train does not make a profit. It’s subsidized by the government in order to keep ticket prices low and make it economically feasible for you get to your job to earn your living.
- The train and the tracks are inspected by a government agency to prevent derailments and crashes.
- If the train does crash the government will investigate the crash, publish the results and make or recommend changes to the rules to prevent future similar problems in the future.
- When you get to the city you notice that your nose is getting stuffed up. You take a decongestant that is manufactured under regulations that guarantee that it is both safe and effective without side effects that might cause you serious injury or death.
- As you walk through the crowded street you do not catch typhoid fever, cholera, small pox or any of the numerous other communicable diseases because government agencies are tracking outbreaks of such diseases and are working to halt them as well as working with private and public organizations to develop medications and procedures to reduce or eliminate the disease.
- You get to your building which is not on fire because the government required that it be built to strict safety standards and which required the owner to equip and maintain the building in accordance with fire prevention rules. Similarly, the elevator doesn’t crash because the government required that it be built and maintained in accordance with safety standards.
- You meet your assistant when you enter your office. She, like you, was trained at a university built and operated by the government. As citizens of your state the tuition you paid for your education was fraction of the actual cost of that education with the balance being paid by the government.
- After college you took and passed the CPA exam and received a license from the government attesting that you met basic standards of knowledge, skill and training. That license allowed your employers and clients to be confident that you were qualified to do the job.
- After your morning’s work you went to the airport to fly to your business meeting. Government employees provided security so that people didn’t bring bombs or weapons on the plane which itself flew routes organized by a government agency in a way designed to prevent mid-air collisions. The plane was built, equipped, operated and flown in accordance with government safety regulations.
- You paid for your ticket with a company credit card. Under government rules you were protected from unauthorized charges and fees and guaranteed the right to protest charges you felt were unjustified.
- The plane was not attacked by bandits or hostile powers because the government protected it with both civilian and military forces.
- After landing, you were not at high risk of being robbed or attacked on the way to your customer’s office because of the protection provided by government police.
- The tip you gave the cab driver was authentic currency because of the anti-forgery efforts of government agents.
We could also talk about:
- Municipal waste disposal systems
- Fire departments
- Public hospitals
- Safe and effective medical equipment
- Physician licensing and training
- Vetting the safety and effectiveness of new drugs
- Funding medical and technological research
- The patent system that gives business the incentive to create new products
- The military whose presence prevents hostile powers from invading the country
- The absence of mobs of sick, starving, elderly people and beggars because of social security, Medicare and other safety net programs.
- Government mandated clean air and clean water
- State and national parks
- Customs agents and port authorities that facilitate trade and fight contraband
- Government insured bank accounts and regulations to stabilize the financial system;
- Zoning laws that prevent your next-door neighbor from opening a body shop in his garage
- Pollution laws that prevent the refinery across town from belching toxic gasses into the air that you breath
And on, and on, and on.
Dodging Taxes Does Not Make You A Hero
So don’t tell me that you don’t get anything in exchange for your taxes. Don’t hold up Donald Trump paying no taxes as some kind of a hero.
To a greater or lesser degree we are benefited by government standards in almost every aspect of our lives, from the purity of the food we eat, the certification of the schools that educate our children, the control of crime, the safety of the machines we use, the prevention of abuse by the banks, insurance companies and other businesses we cannot function without.
It’s not perfect. Regulations don’t work well all the time, e.g. Flint, Michigan, but they work infinitely better than no rules at all.
Do you want to live in a country where the food and water can be contaminated by anyone who’s decided that they can make a quick profit by doing so? Where the banks, insurance companies, and utility companies can levy any charges and enforce any rules they want? Where airplanes are not required to have safety equipment or regular maintenance?
I know I don’t.
None of us wants to wake up one morning and find out that our life savings are gone because our banker was a crook.
When the government decided that it didn’t need to regulate Wall Street, the banks’ maniacal pursuit of short-term profit at all costs wrecked the financial system and cost millions of people their homes.
Before you blindly repeat the Republican’s slogan that government is bad and business rules are unnecessary, you need to figure out an alternative system that will protect customers, employees, vendors and the public from the corporate pursuit of short-term profit at all costs more effectively than government regulations.
I would love to see an effective and efficient alternate system.
I would love to see Customer Controlled Companies (CCCs) replace Investor Controlled Companies (ICCs) but until that happens, as expensive and inefficient as it is, the government provides the only protection we have against lots of bad stuff.
–David Grace (www.DavidGraceAuthor.com)