Romney Rhetoric

Every election cycle we see two kinds of rhetoric reappear: 1) Let's run government like a business and 2) Don't elect Tax and Spend liberals/democrats whatever. Both of these statements are demonstrably false and, depending on how they're phrased, range from the misleading to the deceptive.

The most recent foray of this sort have been the Mitt Romney ads. My state, Massachusetts, had the silly stupidity to elect this clown to office. Romney is on the same wavelength as Reagan was when he was governor of California and the only reason he didn't cut the same sort of swathe of destruction here was a very democratic and powerful legislature. Now, he's taking that show on the road. One thing's pretty clear: it's very unlikely he'll manage to carry his own state in the primaries which shows how bankrupt his ideas are up here.

The first idea, that you can run government like a business, is absurd. Government is, in part, the catchall of all necessary society activities that business doesn't want. Pony up for roads and bridges? Well, business is ready to take your money to do it but it's not about to pay for it on its own.

Government's job is infrastructure: the water in which we swim. It is intended to maintain the environment in which we all operate. Schools, hospitals, financial mechanisms, transport-- all of these have a base infrastructure upon which they operate. Many corporate systems have an investment in people not understanding this. Big Pharma, for example, likes to publicize how much money is spent bringing a drug to market. This is one way they can justify the high cost of drugs in the US. What they don't publicize is the science behind the drug they choose to bring to market is often funded by the NSF or NIH and that a sizable portion of that process is preparing the market for penetration in the form of advertising and physician junkets. Not that clinical trials are cheap. They aren't. However, many of them are administered in other countries where either regulation is less or the health system is publicly subsidized.

When infrastructure is put in the service of profit, bad things happen. My own particularly favorite example of this is for profit hospitals and public health.

Any system, be it an engine or an institution, must have enough capacity to manage the range of its required activities. If you need a car to be able to drive at eighty miles an hour, you have to build in that capacity. Even if most of the time you don't use it and putter around grocery store parking lots. A hospital is no different. If you require a hospital to be in a position to manage, say, epidemics, you have to maintain spare capacity. Spare capacity is expensive-- it means empty beds. Empty beds means less revenue-- anathema to a for-profit institution. For-profit hospitals, then, either downsize the hospital capacity to be in line with revenue or increase the available services to bring the hospital up to capacity. The result, as we've seen in the last couple of decades, is that even minor epidemics of flu or other viruses swamp the hospital system.

Private enterprise isn't going to pick up an activity just because it's societally good. Capitalism is amoral and expecting moral behavior from it is a lost cause. That's where government comes in and creates an environment where the morally blind engine of capitalism operates in a moral environment. So: in point one, running government as a business means no government at all.

The next, closely related aspect of anti-government rhetoric is the tax and spend fallacy-- closely related to the big government, bad, little government, good, fallacy.

First, let's remember what government actually does: not much. There are very few agencies that don't operate through government contractors. The SEC, FDA and FAA are all independent agencies but even here significant private contractors contribute heavily. Consequently, the expense of government is, in part, the responsibility of those contractors.

The federal government is more efficient than you might imagine. The first line item in the federal budget is servicing the national debt. The second one is the defense department. These two are followed by the special appropriations for the war in Iraq. The first line item that pokes up after these are entitlements such as Medicare, etc. DHS is down in that area. Everything else the government does must use what's left. When I did this exercise about eight years ago, the entire meaningful budget of the US government was about 300 billion dollars out of a 1 trillion dollar budget. To get some perspective, Citigroups assets as of 12/31 this year was reported to be 2.2 trillion dollars. I defy any corporation to do what the federal government does on that kind of money.

There is a true tax and spend problem but it is not what is being referred to in the rhetoric. It is best exemplified by Mitt Romney's term here in Massachusetts. It goes like this:

Step 1: Get elected on reducing taxes and downsizing government. Usually, this involves pointing at some financially trivial but emotionally disturbing waste of money.
Step 2: Downsize those portions of infrastructure support over which you have control. This often includes, as in Romney's case, roads and bridges repair or other unnecessary governmental activities.
Step 3: Move on to higher office or the private sector and use your time of Step 2 as a symbol of your success.
Step 4: Vilify your successor (or other similar successors) for "taxing and spending" when they attempt to repair what you've left undone.

It's a great system.