Fooling The Taxpayer

Dues are $10 per month to the local book club. Taking a third of what I earn is not quite in the same league.

Umm…guys, there’s some truth in that thought.

Consider the Interstate Defense Highway System. Do you really think that the states, on their own, would have created an interconnected web of highways on that scale? (If that had been the case, we’d STILL be paying tolls on every highway.) Do you think that our transportation industry would have been able to feed the industries and homes of (geographic) middle America as effectively without it?

Consider the Rural Electrification Administration, which brought electric power to a huge expanse of America that was, quite literally, in the dark after sundown. When the REA was founded, only about 10% of rural Americans had electric service. Do you really think that private industry would have reached those communities and (no offense intended) hinterlands within decades? My suspicion is that the inverse economies of scale–the balance sheet doesn’t always add up when delivering power to 20 houses over 20 square miles–would have kept much of rural America powerless for decades. (As an additional bonus, the REA left a legacy of community cooperatives (electric co-ops) which have thrived as independent, subscriber-owned businesses. My parents still receive subscriber dividend checks from the co-op that served the town of my youth.)

Along the same lines (and from the same era) as the REA, how about the Tennessee Valley Authority?

While we’re at it, we should remember the technology transfer process in general, from NASA and NSF research to the private sector. There are entire companies–if not entire industry sectors–built around technologies developed in government research.

Remember the original GI Bill? An entire generation of servicemen, many of whom would not have otherwise been able to afford collegiate education, became that generation of educated workers which, in many ways, drove this nation through the 1950s and 1960s. (My father was one of these – a farm kid who turned the GI Bill into a BSEE and a Signal Corps career stretching 24 years.) Again, there was no way that the private sector was going to make that happen.

Consider the FAA. Can you imagine trying to navigate this nation’s airways without a single consistent means of air traffic control? (”domino effect” point – without that infrastructure, companies like FedEx and UPS would have found rough going, yes?)

I’ll even go so far as to throw the National Endowment for the Arts (NEA) into the discussion. My small (population 1000) hometown secured a one-time NEA grant of $10,000 to found a community theatre. (I helped write the grant proposal as a high school junior.) We were self-sufficient after that first season, and the theatre we founded celebrated its 25th anniversary in 2005 with three full-time paid employees and a membership in the hundreds. Despite the potential for controversy, culture and the arts definitely help our society to thrive, don’t you think?

Even the much-maligned USPS has its successes in this area. There are hundreds, if not thousands, of small businesses which depend on USPS service.

It can certainly be argued that government overreaches in many areas, but that should not blind us to its successes in (entirely appropriate) large-scale endeavors. In such instances as those I’ve mentioned, I definitely believe that we have thrived because of government.

bbartlog wrote:

Anyway, the problem with all your examples is that you point to the success without considering the cost. Yes indeed, the REA brought electricity to many people; the GI Bill resulted in widespread education; the FAA does do its job. But at what cost? What would have been done with that money if the government had not spent it? The benefits to the taxpayer of having a few extra dollars is largely invisible; we don’t have any great capital works to point to if ten million people each have $50 extra. We shouldn’t be quick to assume that the benefits are greater than the costs just because the benefits are visible and dramatic.

We can apply the ‘return on investment’ argument to every expenditure, can’t we?

If you really want to run cost/benefit analyses, we have to consider such things as combined effects. For instance, I live in a state where rural areas are home to manufacturing concerns, in large part because of reasonably cheap power (thanks, REA/TVA) and their proximity to major highways (thanks, Interstate). There are more than a few “movers and shakers” in the business world who started their first businesses with SBA loans, and there are millions of families who secured good housing with VA/FHA loan guarantees; I would offer those programs as “help to thrive” examples that are closer to your “ten million people with an extra $50″ suggestion.

I certainly agree that many government programs do not reach this level of success, but I don’t think the ROI argument holds much water on truly large-scale programs of the sort I cited. The original point–with which the original post above disagreed–was that we thrive because of common services provided by government. It’s very difficult to argue against such a proposition when we’re the richest nation on earth (by several different measures, not just financial). The common thread is, of course, infrastructure; the government seems to function best when providing the sandbox in which the private sector can play.

I think the USPS actually does a good job, but that’s partly because they have a mandate to be profitable and partly because of their limited monopoly. But it should tell you something that in areas where others are allowed to compete with them (parcel post, overnight shipping) they haven’t done nearly so well.

From my (admittedly limited) reading on the subject, I suspect that this is because, while FedEx and UPS are allowed to pick and choose the distribution of their resources, the USPS is required to serve the entire nation. The same notion applies to comparisons in other areas; for instance, comparisons between public and private schools fail (in my opinion) because the private schools can practice competitive admissions while the public schools are required to serve (almost) all comers. In fact, this “all comers” requirement neatly invalidates the ROI argument you made above to a significant degree.