Double Standards #2 – Welfare

Here is another example of a common double standard widely supported by economic conservatives.

Keep in mind that we all have double standards. It’s part of the friction of living in groups. And we’re all pretty righteous about our own double standards. Things get petty and can be bothersome, but we usually, eventually, work things out, because we need to get through the day.

In the United States, at both the state and national levels, over the last few decades a particular double standard has become more and more apparent: Business welfare is good. Working class welfare is bad

Here is the conservative line about “Welfare”, as stated by any number of nationally prominent Republicans:

The government needs to cut expenditures, particularly “entitlement programs” such as Medicare* and Social Security**, but pretty much all social welfare programs. If the government fails to do so the economy will collapse, as the government does not have the revenue to pay for these programs. In addition, giving people something for doing nothing simply encourages a feeling of entitlement and leads to increased crime.

OK. Let’s accept these arguments, shall we?

But then, I don’t see any reason why they should be limited to “entitlement programs”. If the arguments are true, shouldn’t they apply to businesses too?

How about if these business executives follow their own advice?

Businesses should not receive special support from government. Any benefit a business receives from government should be paid for***: businesses should pay a tax or a fee for those services the government provides, in direct proportion that the business benefits from that service. Any other cost/use relationship would be unfair, as it would either put an unfair burden on the business (when the fees/taxes paid exceed the benefit) or give preferential unearned benefits (“welfare”) to the business.

Examples of services the government provides businesses: a legal system that is essential to the creation of contracts. A court system that is essential to enforcement of contracts. A free press which maintains a vibrant communications system for transacting business, particularly advertising and on-line services. A public road system that makes it possible for people to get to work, to shop for products and services, and for the delivery of products. A public school system that prepares potential employees for work. A police force that protects business property and people from harm

Shouldn’t business pay their fair share for these services the government provides us all?

And why should the rest of us pay for bailouts for businesses “too large to fail”? A group of investors selects a management team that runs the business into the ground, and then expects a government bailout to cover their bad debts. Can you think of a better example of “welfare” or of a group with a sense of “entitlement”?

Perhaps the conservatives are right: if businesses paid for the benefits of government, instead of letting the working class foot the vast majority of the bill, the economy would be more balanced.

After all, giving businesses something for doing nothing simply encourages a feeling of entitlement and leads to increased crime.

What do you think?

Notes:

*Medicare is paid for primarily by a tax on income. As with any insurance, benefits are based on coverage and need. Medicare is not health care–it is health insurance, which is not the same thing.

**Social Security is completely paid for by a tax on income. As with any pension plan, the “benefit” bears a direct relationship to the amount paid in (Social Security taxes) by the recipient, and how long ago the tax was paid.

***It is well documented that many businesses, particularly very large corporations, pay little or no income taxes, even in years where they make record profits.

Double Standards #1 – Debt

My parents stated the principle. “What’s sauce for the goose is sauce for the gander.’

George Carlin clarified the practice, “If it’s mine, it’s stuff. If it’s your, it’s shit.” As in, “Get your shit out of here! I need room for my stuff.”

We all have double standards. It’s part of the friction of living in groups. And we’re all pretty righteous about our own double standards. Things get petty and can be bothersome, but we usually, eventually, work things out, because we need to get through the day.

But when the government is paralyzed by double standards it goes beyond petty and bothersome.

In the United States, at both the state and national levels, over the last few decades a particular double standard has become more and more apparent: Business debt is good. Government debt is bad.

Here is the conservative line about the government, the budget and the national debt, as stated by any number of nationally prominent Republicans:

Government should not spend more than it takes in. Going into debt is bad. The government needs to eliminate the deficit and to pay off the national debt.

To do so, according to these same prominent Republicans and any number of conservative pundits, The government needs to cut expenditures, particularly “entitlement programs” such as Medicare and Social Security, but pretty much all social welfare programs.

And, of course, the government should not raise taxes, as raising taxes during times of financial slowdown will stifle the recovery.

OK. Let’s accept those arguments, shall we?

But then, I don’t see any reason why they should be limited to our government. If they are true, shouldn’t they apply to individuals and businesses too?

How about if these prominent Republican business executives follow their own advice?

Businesses should not spend more than they take in. Going into debt is bad. They need to eliminate their deficits. Therefore, businesses can buy only what they can afford to pay for with cash: no new buildings, no new machinery, no stock for sale, no purchases without the cash to pay for them.

And the other aspects of responsible economics: they should cut expenditures, particularly “entitlement programs” such as executive bonuses and golden parachutes, but pretty much all expenses beyond basic salaries and materials and processing expenses.

And, of course, they should not raise prices, as raising prices during times of financial slowdown will stifle the recovery.

How’s that for returning to sound economics and strengthening the economy?

Of course it eliminates lenders, and terminates most of the financial industry.

Well, as my parents said, “You can’t make an omelet…”

What do you think?

On Corruption In Governments

On the news today a comment was made about the difficulty of establishing a democratic way of life when the government is corrupt. The subject of the comment was one of the Middle Eastern countries that has recently had its first open election and is struggling with the transition.

It occurred to me that we in the United States are having the same difficulty.

We commonly think of corrupt (always foreign) governments as being riddled with officials who take money from criminals to sway the courts, make laws favoring the powerful, give special treatment to the wealthy, or otherwise give preferential treatment to those who have money and power.

Once again, the double standard: If it happens there, it is corruption. If it happens here, it is “the free market”.

In either case, the wealthy give money to the politicians and in return get preferential treatment in laws, taxes, and liability for their actions. In so doing, they increase their wealth and power, and become more entrenched in their positions and their corruption.

If you doubt this, think for a minute: if any business administration did as poorly as the Congress of the United States in addressing its responsibilities, how long would they be tolerated?

I submit to you: the government of the United States is as corrupt as any government in history, if somewhat subtler in some of its workings.

What do you think?