A Case for Public Spending
When thinking about public spending it is helpful to think about gender relations and the fight for gender equality.
Over the last hundred years or so, the roles of men and women have changed significantly in Western countries. Before the era of greater gender equality, it was never the case that women were simply unimportant. Rather, they were insufficiently rewarded and regarded. With greater respect and monetary compensation came more involvement for women in public and private life. Public and private sectors of the socio-economy are similarly fraught with the confusion of role and regard. Yet this too can change.
Public spending has been both compatible and central to viable economic growth, even in the United States.
But, the public sector has been the target of a successful neo-conservative attack, beginning with Ronald Reagan’s declaration of “government is the problem,” which has diminished its credibility in the public mind and in the operating framework of policy analysis during the last twenty or thirty years. At the same time, belief in the unfettered market has grown to holy writ status, as the first condition for determining and achieving national well being. And so, we are asked to consciously accept great suffering for the many to achieve great profit for a few. Even more unjust is that those making the profit determine the amount of and justification for the suffering of others. In this way poverty is inevitable and reform is a worn bandage.
If we regarded the elimination of poverty (1 in 6 Americans as reported in The New York Times) as of equal importance to the generation of profit, the following quote from an article in the Economist (7/16/09) entitled Financial Economics: Efficiency and beyond would be a mandate for the public sector, not solely for private enterprise as it was intended:
“Financial economists also need better theories of why liquid markets suddenly become illiquid and how to manage the risk of, “moral hazard – the danger that the existence of government regulation and safety nets encourages market participants to take bigger risks than they might otherwise have done. The sorry consequences of letting Lehman Brothers fail, which was intended to discourage moral hazard, showed that the middle of a crisis is not the time to get tough. But when is?”
The same argument could be made for public spending to reduce and even abolish poverty. The risk of “moral hazard” here might be a disincentive to work or the creation of undue dependency. Of course, there will be scoundrels and there will be failed schemes just as is the case with bogus corporate book-keeping and balloon bonuses. The question is how we engage and when. The Economist presumes a role for government, but it is a role entirely thought of in relation to profit. This need not be so.
Currently in the United States, the debate over health care reform is limited to well-established channels of discourse that thoroughly restrict the zones of action. The so-called “public option” is feared because it would “destabilize the marketplace” and potentially kill the private insurance industry. The public purse and policy is then essential, either as insurer or regulator, for the industry to be viable. The health insurance industry is, like the student loan industry, a public choice—not necessarily a permanent one.
Indeed, mixed economy has been our modus operandi at least since 1913 when the establishment of the Federal Reserve created what amounts to a public-private partnership, in which the business is encouraged to maximize its upside and the government is required to maintain stability and ensure against the losses that result from private buccaneer adventures. Current economic conditions have required serious government stimulus to the economy, involving bailouts to many companies, including the giant of American industry, General Motors (GM). The big automobile company complains that its heavy health insurance obligations to workers cripple it. It seems logical that government help directed toward that expense would be both salutary to the company and allow for an investment, through bailout dollars, in a model government healthcare program. The twenty billion federal dollars invested in GM might then have been used to take over the health insurance obligations of the company, which it could not afford, and, at the same time, produce both a more competitive carmaker and the basis of a government partnership in the maintenance of robust commerce. Instead, the opportunity was missed — “stimulus” is not yet up to the task of averting repeating crises.
To return to the gender analogy: for many years, gender relations in public life were rigid and conventionally defined, just as the command of “free market rationality” on economic thinking, rigidly narrows how we consider and deploy the private sector. If we followed that rigidity and its justifications, we might well have chosen to keep women servile for fear of disincentivizing men. buy used domain names . We aim to strike a balance, correct as necessary, and demonize as little as possible. Change was necessary and change involved realigning the relationship of the component but undeniable parts.