How should a Limited Government promote the General Welfare?

An individual, in promoting his own interest, may injure the public interest; a nation, in promoting the general welfare, may check the interest of a part of its members.” – Friedrich List

“The government must not interfere with private enterprise… business and markets are what determine value… the government should not pick winners and losers” – I’ve heard the arguments, and it is certainly true that the Solyndra debacle is a poignant example supporting this perspective.  Nevertheless, although I am a limited government advocate, I respectfully disagree with the premise that the government’s limited role requires that it abstain from being involved in promoting private industry.

The greatest advances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government.” – Milton Friedman

I agree that government takeover of industry hinders it, I understand that the existence of government contracts increases the potential for corruption, and I recognize that the taxing of people to pay for government pet projects encourages undesirable lobbying and money campaigning by businesses and special interests.  Yet even with these truths noted, in my humble opinion, history demonstrates a nation’s government must be actively involved in industry if a people are to stay employed, if a society is to grow, if a nation is to thrive.  We must try to minimize corruption, encourage transparency, keep our government accountable – but we will never excel by refusing to acknowledge its proper role.

We can’t talk about community values without being prepared to invest in those very same communities.” – Joe Lieberman

If a government fails to provide a direction for the markets, neglects to steer the business economy by funding internal projects, refuses to recognize that it is a customer providing voice, value specifications, and regulations under which the private enterprise operates… if instead, a government relies on capitalism alone to determine the right answers, embraces the free market so unquestioningly that it does nothing to ensure the prosperity of its people, relies on solely business to be the engine of the nation…  Well, in my humble opinion, that’s when a society begins to lose its middle class, that’s when it begins to need credit to survive, that’s when a state begins to fail.  The large wealth gaps and poor infrastructure in many South American, African, and other “limited government” minded states provides interesting case studies.

Where globalization means, as it so often does, that the rich and powerful now have new means to further enrich and empower themselves at the cost of the poorer and weaker, we have a responsibility to protest in the name of universal freedom.” – Nelson Mandela

For America to get back on track, we must again realize what it took to establish our motion.  Yes, we would not have flourished without great industrialists like Carnegie, Rockefeller, Gould, and Morgan… but we mustn’t forget that our engine was sustained by government investment in ports, highways, universities, and science.  Our thriving years and broad middle class were not only created by industrialists, they were nurtured by government investments in both the society and in the people – to include schooling, GI bills, college grants, research development, and business contracts.

Government of the people, by the people, for the people, shall not perish from the Earth.” – Abraham Lincoln

The May 2011 Economist puts US spending on infrastructure at 2.4% of GDP with Europe at 5%.  The Feb 2011 Economic Times notes that India has increased internal infrastructure spending to 9%, with China pushing 11%.  As a result, the United States now ranks twenty-third overall for infrastructure quality between Spain and Chile.  South Africa announced Sep 2012 that it is increasing its infrastructure allotment from 4% to 8.6% GDP.  As the US borrows money to spend on welfare programs, military budgets, and retirement entitlements – all the while cutting taxes on its successful – other nations are rightfully investing in their future.

No man should bring children into the world who is unwilling to persevere to the end in their nature and education.” – Plato

If the America of old is to be reborn, we must be willing to invest in it.  And I would propose that in order to be able to invest in our future, in order to actually balance a budget which promotes the future Us, we must willing to eliminate government entitlement programs, drastically reduce our military budget, increase tax revenues from our most successful, and instill an Import Credit System to address the trade deficit.  But first and foremost, we must come together on a shared vision as to what a limited government is supposed to do.

“Man is not free unless government is limited.”Ronald Reagan

No government should do more than it must, but regulating the capitalists, providing the environment under which private industry operates, and steering the nation’s direction via government funded projects are things it needs to do.  Our government is meant to lead.  This being said, I completely subscribe to the idea that the government’s investment should be via the private sector.  History demonstrates as much, and the lesson is not lost on present day Russia and China.  Europe is learning it this very day, and we must as well.  Although the government should not do the project, it should tax so as to pay for it.  Putting government agencies “in charge” of both determining and carrying out our investment projects creates a government monopoly of an industry… stifles competition… breeds corruption… promotes inefficiency.

Nothing is so permanent as a temporary government program.” – Milton Friedman

But if we interpolate these truths about government programs to mean that the government should remove itself completely, if we then decide that the government should not do anything to promote the society, we misapply the principle.

Let me offer a couple scenarios to illustrate my thinking:

A) Let’s say the actuaries at an enterprising Insurance Company were to determine that, for an investment of $X amount of dollars in land purchases, levee constructions, and run off reservoirs, they could so dramatically lower the likelihood of mid-west flooding that they could make their investment back in less claims only 7 years after project completion.  From that point forward, if premiums remained unchanged, they would reap huge benefits in their bottom line as a result of their investment.  The American people would no longer have to endure flooding and, after the investment paid off, the company would make record profits, employees could see higher wages and benefits, promoting other industry, etc.  Let’s say that the numbers were sound and the win-win was undeniable.

B)  Let’s say that a car company saw that, for an initial investment of $Y dollars in service station natural gas storage construction projects, pump allocations, natural gas transportation lines, and auto-assembly re-tooling, they could produce an automobile and supporting fueling system that would allow the American citizen to fill with natural gas at any service station and travel up to 600 miles on a tank that would cost only $9.  Let’s say their business minds determined that the resulting automobile revolution would rapidly cause gas stations to convert more and more pumps and would usher in a new era of automobile.  Not only would the country see cleaner air, less hazmat spills, get off of foreign oil, and tap into one of America’s most abundant resources, but the resulting demand for natural gas automobiles would be so overwhelming that the company would get their investment back in only 10 years by selling natural gas automobiles and conversion kits.  The project would lower the cost of living for every American driver, profits for the company would soar after 10 years, states would be able to eliminate smog tests… Let’s say that the numbers were sound and the win-win was undeniable.

Would either of these projects ever take place?  Would these private companies ever begin the implementation?  Would the American people ever benefit from these private sector solutions?  I humbly submit that the answer is a resounding No… and here’s why:

The insurance company that invested $X in preventing mid-west floods from occurring during heavy rains and high river seasons – they are not the only provider of flood insurance to the mid-west.  The car company that invests $Y in converting service stations to allow for natural gas fills and provides natural gas automobiles – they are not the only maker of cars.

What will happen is that the insurance company, after it all but eliminates flooding in the Midwest, will find that its competitors can now lower their premiums.  Similarly the automobile company, after dedicating all it had to create its vision of American citizens driving cleaner and cheaper automobiles with $9 fill ups, would find that, at the moment they were done refitting all the gas stations with natural gas pumps, establishing their distribution lines, and beta-testing their product, their competitors would now offer natural gas automobiles. The American citizen, the consumer, you and I – we would benefit from the better systems, the lower premiums, the stable communities… but as the private companies would never be able to reap the rewards of their investments, they will never embark upon them.  As such, the American citizen is left to endure floods and high fuel costs… to pay for expensive flood insurance and smog prevention programs.

Progress is a nice word. But change is its motivator. And change has its enemies.” –
Robert Kennedy

If government funding is not used to help create the environment in which we want the capitalists to operate, if the initial costs of desired societal changes are not borne by us, then the capitalists will simply continue to operate in the current environment.  It is not the capitalist’s place to determine the environment – it is their place to excel within it or to change it when to do so means profit – and this is why even a limited government has a crucial societal role to play.

“If you do not change direction, you may end up where you are heading.” – Lao Tzu

In new industries or in those that have little barriers to entry, the government can simply try to prevent monopolies to encourage private side growth and innovation.  But we mustn’t define this as the government’s only role.  For our society to thrive, our government must, through a fair, transparent, and as incorruptible system as we can best employ, be allowed to promote private industry, to provide a direction, to hire private enterprise to provide us with our future country.  Fresh water desalinization plants, nuclear power facilities, energy grid updates, highway systems, schools, Hoover Dams – many of these investments would never have occurred if they were not promoted by government spending.  We simply would not be a 1st world nation if we did not have government funded projects.  This is something even the most vocal proponents of limited government once understood, and a lesson we must re-discover in our day.

It is just as important that business keep out of government as that government keep out of business.” – Herbert Hoover

A country whose government does not encourage private industry to do things will end up a nation of minimal investment in its future – a nation with a wealthy few, a mass of struggling, a monstrous debt, or, in our case, all three.  I am not an expert on natural gas automobiles or flood prevention, and I’m not claiming that our country needs to do these things.  But I don’t think it takes an expert to see that We the People should embrace a government who is chartered to promote private industry, expected to, particularly during times of high unemployment.  It is not desirable that government agencies and bureaucracies do the work, but I believe it is the government’s role to ensure we have work to do.

Far and away the best prize that life has to offer is the chance to work hard at work worth doing.” – Theodore Roosevelt

Limited Government is one that maintains the military necessary to ensure security, provides an opportunity for all to live, learn, and grow to adulthood, and makes sound investments so as to allow its citizens to promote our collective future.  I fully support those Americans who have recognized that it is time to end government welfare programs, government retirement programs, union mandated and no-bid government contracting – time to take the power of the dollar out of the government’s hands.  But please my friends, don’t take this to also mean that we stop investing in ourselves, for we must continue to invest in our young, in our able, in our future if we are to survive.

When a nation goes down, or a society perishes, one condition may always be found; they forgot where they came from. They lost sight of what had brought them along.” – Carl Sandburg

It is this belief, this view of what limited government means, that leaves me without a party… causes me to write this blog… for our inability to comprehend the proper role of government is why I believe we are failing as a nation.  We have two wrong choices to choose from –  one advocating that we eliminate government investments, and the other advocating that we invest in government.  They are both wrong.

The mortal enemies of Social Security and Medicare are those who, in contempt of the plain arithmetic, continue to mislead Americans that we should change nothing.” – Mitch Daniels

So there is my view of what our society’s limited government should look like.  To yours truly, a Limited Government is one which provides necessary services via the private sector.  Our Government should simply provide every American citizen a Health Savings Account to get needed medical care and then let the health industry compete for our dollars.  It should provide every child an Education Savings Account to get educated, trained, and prepared for the job market, and then let the schools compete for our dollars.  And then it should provide us with jobs by investing in private enterprise to better our society – it should regulate, monitor, and hire the capitalists to hire us.  Period.

Under capitalism, man exploits man. Under communism, it’s just the opposite.” – John Kenneth Galbraith

Seems so simple to me now, the right way for a society to function:

Tax what we must from those capitalists who succeed… so as to continue the society which allowed them to do so.

If government welfare worked, I’d be a Socialist.  If government replacement of private industry worked, I’d be a Communist.  If we still lived in a day where any man could claim acres of free land, I’d be a Libertarian.  If tax breaks on our wealthy was the best way to combat unemployment, I’d be for it.  As for me, I’m for what works.  And, in one man’s humble opinion, the best way to do it is to tax our successful, and then give them their money back to hire us – to fund private sector projects that help our society at large.  That is how a nation thrives.  As I look around at our monstrous debt, shrinking middle class, and the unsustainable course of unwieldy government programs… as I hear our two political parties arguing only how the other platform doesn’t work… and as I see our people voting in vain for whatever broken platform best suits them… I hope and pray, for our children’s sake, that we will come together behind a shared vision of what limited government means.

As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.” – Adam Smith

Today, there are those who own, those who lend, and the rest of us – there is the Lord, the Serf, and the Outcast – and no free land for a child to claim.  If man is relegated to simply relying on the natural business cycle to allow him a job, particularly in today’s age of robotics and computers… if our government does not actively work with private industry to create a middle class, particularly in times of high unemployment and economic slow downs… if we don’t let the government set the stage and challenge the capitalist, we will lose our middle class.  We will become a bankrupt and broken people with a few who have thousands of millions and the many who are destitute… and we are well on our way.  The widening wealth gap, the high unemployment rates despite tax cuts on our wealthiest and corporations, the angst from the struggling middle class who have to pay for those who don’t work, the debt we are accumulating as we try to provide minimum services to our poor and elderly using unwieldy federal programs, all the while our wealthy call for an elimination of inheritance tax so that they can maintain their position from generation to generation… it is all indicative, to me anyway, that in today’s flat and fully populated world of multinational businesses, what we are doing isn’t working.

We have a system that increasingly taxes work and subsidizes nonwork.” – Milton Friedman

In my humble opinion, the way a society of today will work best is by taxing our successful enough to fund the necessary projects in which to hire us.  Our government encourages our successful to remain so by taxing the winners and playing again – not by taking over the industry, not by guaranteeing its citizens they will be taken care of, not by borrowing, and not by encouraging the winners to really win in hopes that they will hire more.

A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward.” – Franklin D. Roosevelt

If we leave the wealthy wealthy and borrow to give people food stamps, healthcare, and housing aid, we will bankrupt ourselves… that is the lesson of our day.

A liberal is a man who is willing to spend somebody else’s money.” – Carter Glass

This is why I humbly suggest a New Deal.  I don’t like taxes anymore than anyone else, but we need to embrace the best system, and come together on both our vision of limited government and our tax philosophy going forward.  In today’s flat world, we need to have a competitive corporate tax rate so companies don’t simply re-locate headquarters.  At the same time, we need to impose an import credit system so that if they do, or if a corporation is based in a country that is not importing from us, then they have to pay for import credits in order to export to us.  We need to embrace fair trade and a world economic model.  But we also need to accept the notion that taxes from our successful will be used by our government to promote private industry jobs – to keep us gainfully employed, to provide for the future.  We need either government welfare or government investment, and I would much prefer we opt for the latter.  In my opinion, it is the only option that works.

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”Adam Smith

Yours in Faith for a better America and a better World.