Monday, August 15, 2011

Get Out of Business, America!

Do we dare to ask this question? Do we dare to answer this question? What is a Business? If we do, we might find the beginning and the end of our fiscal troubles: we might gradually get to a permanently balanced budget.

The business of America is business, it has famously been said.  That is the source of the mental confusion that has gradually led to our present troubles. Let us unpack this messy statement.

Is America a business? It seems to me this is a horrible statement. It is ugly, since is it leads to confusion. It is not true, since America is not a business.

America is many things to many people. For me, America is the embodiment of the ideal of a life lived to the fullest of one’s abilities. For me, America is the embodiment of life lived in the fullest of all possible liberties. And, yes, I do believe that to live a full life and to be free I have to have, not an extended hand, but a jingle in my pocket.

I do believe in private property.

I believe that private property has to be kept separate from public property; and I believe that common goods are to be kept out of the market.

Let us start from common goods. All goods that are essential to life are common goods. They are sacred and ought to be inviolable: air and water are two such goods. They become ours only when we use them.

Hence, no one ought to acquire control of common goods—no, not even the government ought to acquire control of common goods. They belong to the community as a whole. Hence they offer the opportunity of introducing economic democracy into the process of administering them: water systems ought to be owned and controlled by the local population.

The important distinction here is the ownership of water systems as distinguished from the ownership of water.

Are there public goods? Yes, of course. What are those goods? They are the goods that, by definition, are owned by the government.

All the property that is essential to conduct the obligations of a government is to be owned by the government. We cannot have landlords in public affairs. Landlords tend to intrude themselves into the lives of their tenants.

This is a huge discussion all by itself that needs to be postponed: What is an essential function of the government? Hence what is essentially to be owned by the government—any level of government.

The general prescription to our current woes then becomes quite simple and direct: America get out of business. The way America has gotten into business is two-pronged: granting subsidies and granting tax deductions. Both approaches have to be carefully scrutinized.

The list is long and complex. That is another way of saying that the list has been growing on the basis of great many rationalizations. Let us not waver in our resolve; let us be staunch.

The rule is simple. A business has to be financially self-supporting. It has to meet the so-called market test.

Here is where I would start on the road to sanity. First, on the elimination of subsidies granted to the nuclear industry. Clearly, this is an industry that has been growing from the get-go on the milk of government subsidies. And what do we get in return?

I submit that the nuclear industry is affecting questions of death. The dangers are enormous. The shortcomings are evident. When nuclear waste has a life-time of twenty thousand years, I ask the question: What is the government that has lasted twenty thousand years? Because, let us not kid ourselves, we need a government to send the man with a Geiger counter to check the status of that waste.

My next item is an industry that affects matters of life: the agribusiness. Why in the whole wide world have we gotten into the habit of paying farmers for not growing food? No, this is not a matter of survival. Once the government granaries are full, let the market decide whether the farmer has made a mistake in overproducing.

My third item is the oil and gas industry. Rather than letting them pay for using wealth that is common property of the entire nation, we give them subsidies in the form of oil depletion allowance.

The main rationale here is that without such subsidies, we are going to pay through the nose at the pump. Good, it’s my reaction. First, it might be cheaper to pay at the pump than to pay taxes to the government to keep the price at the pump low. There are too many leakages in this circuitous road to obtain a lower sticker shock at the pump.

Without subsidies and a higher price we might drive less. Is not that a big fat plus? Is not that a giant step toward energy independence?

Gas, oil, and the car have gotten a way of affecting our entire way of life, from birth to death and everything in between. Should the government make these choices for us? Or are we grown-up and responsible enough to make these choices for ourselves?

Talk of energy independence, and you touch upon a major sore point of our government policies today: In the name of chasing after energy independence, we have gotten quite dependent on a bunch of foreign nations.

The Fathers of our nation can only say: We told you so.

Then there is the reverse of this medal: if we do not give subsidies to our industries, other countries will overtake us. We will no longer be Number One.

Just stop and think. What does that mean in the first place? But then think seriously about the consequences. If we stop our corrupt and corrupting practices, and other countries step up on their gas pedal toward granting larger and larger subsidies to their industries, let them.

They will eventually reach the sorry state in which we are in today. Be sure about it. Good luck to them.

Two general issues. First, how much can we “save” by reducing subsidies? I would say that is the wrong question. Whether it is a dollar or a zillion of dollars, it does not matter. The issue is one of public policy.

And one dollar at a time, you surely reach zillion dollars.

Then there is a question of time. This is a most serious question. The proposed policy cannot be implemented overnight. But let the industry decide this question. Indeed, let us publicly ask of each specific private industry: How long do you need to be weaned of the government milk?

We can then double the amount of time requested and be most happy and effective with the decision.

All this would still recognize the need and the efficiency—if they are there—of Research & Development projects (that is science) as well as insurance projects (that is safety).

Get out of business, America. The market is not your place. The Acropolis, the City on the Hill, is your place.

(c) 2011. Carmine Gorga, PhD, is president of The Somist Institute and author of numerous publications, including The Economic Process (2010).

Separate we are powerless. TOGETHER we can reach that point on the atlas. Please, go to the side bar if you need some inspiration.

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