Today, our government is really nothing more than a giant corporation, a corporation that exists for no other purpose than to provide public services to us, its citizens. We can think of it as a synthetic person, not born, but created and given life by its citizens, who are the collective sovereigns.
We are the Owners
As citizens, we own 100% of this, the world’s largest corporation. We aren’t issued stock certificates and we don’t have a corporate charter, however, we do have the United States Constitution. And through the power of this document, we vote for our elected officials, just like stockholders vote for their Board of Directors; but unlike private sector corporations we elect our chief executive at the voting booth, not directly, but through the complex and archaic “Electoral College.” The President and both houses of Congress are responsible directly to the voters. Once elected, the President, with consent from the Senate, hires his team: The Justice Department; Judiciary (upon death or retirement of Federal Justices); and Cabinet Secretaries, including the Secretary of State and all Ambassadors. Then, the federal bureaucracy under the President’s authority, employs all four million federal employees, almost half in the military.
Further, all the public assets of the United States belong to us, including some 650 million acres of land, almost 30% of total United States territory. These consist of parks, forests, rivers, lakes and natural resources; such as timber, oil, coal, natural gas, gold, silver, and other minerals. I should also mention government office buildings, museums, libraries, military ships, tanks, artillery, aircraft, office equipment and supplies, right down to paper and pencils. In aggregate, we are ultimately the source of and should (directly or indirectly) be the beneficiary of all federal monies; in 2012 about $2.5 trillion in taxpayer generated revenues. Keep in mind that “we” includes 263 million fellow American citizens. However, the above mentioned revenue is only part of the picture. In the same year, our government spent about $3.6 trillion, leaving a deficit of approximately $1.1 trillion. This increased our 2012 public debt of $16 trillion to over $17 trillion in 2013. (The current federal debt is over $21 trillion.)
Our Family Business
It is important to remember that the United States is not a separate entity from us. The combined public debt and unfunded liabilities of $110 trillion is our debt, our problem and our responsibility to fix. So far, we have entrusted our government to elected officials who have promised, but not delivered responsible governance. It is now 2018, and understandably polls show that most Americans don’t trust the President or Congress and we give them dismal job performance scores.
Basic Rules Do Apply
Basic financial principles apply equally to our government as they do in the private sector. Economists, journalists and public officials treat the federal government of the United States as a special case where normal rules of business, finance and management do not apply. There are too many examples to cover them all, so I’ll just touch on a few:
· In a downturn, businesses cut costs, including the layoff of unneeded workers. The federal government increases spending (because revenues go down when we are in a recession and as loyal followers of Keynesian Economics, we increase federal spending to “stimulate the economy”). Except in egregious cases, federal employees have jobs for life.
· If an idea, product, service or practice fails, private businesses cut their losses, change course, and move on. The federal government refuses to acknowledge its mistakes and continues to throw money at its failures.
· Private insurance companies understand risk, and design disability products that based on actuarial tables will continue in perpetuity. The federal government designed a disability program that crushes the federal budget and greatly contributes to our mounting debt.
· A business knows its customers and their needs, and will work as productively as possible to provide the most value at the lowest cost. These concepts are rarely considered by federal bureaucrats.
· Businesses’ operating expenses are limited to the confines of its revenue, including a reasonable provision for debt and its repayment. The federal government historically spends money with complete disregard to its income because it is able to supplements its revenue with a seemingly endless supply of debt. And makes absolutely no provision for its repayment.
· A business should never finance its current operating expenses with long term debt. The federal government has continued this practice for eight decades.
Government services should provide more benefits to the average citizen than their costs to the average citizen, just like any other private sector product or service. There are exceptions, so let me explain. What I am not advocating is that every U.S. citizen should receive a direct benefit from every dollar the federal government spends; but that every dollar that the federal government spends be related to matters that concern all Americans; benefits the majority of citizens or conforms to the values of a majority of citizens. At the same time, every dollar should further the rights of all citizens, including respect for privacy and private property. This brings us to the basic values of Freedom, Liberty, Equality, Justice, Peace, and Prosperity for all.
Special interests, lobbying and exercising the right to petition
The First Amendment of the Constitution, adopted in 1791, states:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
The Right to peaceably assemble is the constitutionally guaranteed right that allows political parties, labor unions and trade associations to exist. The right to petition government is the right to lobby, although I’m not sure that a “redress of grievances” was intended to mean: “Protect my company from competition” or “Bail my company out of its financial difficulties”. A pretty good description of lobbying was given by Milton Friedman to the National Association of Business Economics:
A corporation executive who goes to Washington seeking a tariff for his company’s product is pursuing his stockholders’ self-interest…If he’s made a valid, accurate judgment that a tariff will be in the self-interest of his enterprise, he is justified in lobbying for such a tariff.
What Dr. Friedman is saying is simple: an executive has the legal right to ask for the tariff and as long as it is in his company’s best interest, then he is merely fulfilling his fiduciary obligation to his stockholders to maximize the firm’s profits. In this case, it would be at the expense of his international competitors, taxpayers and consumers.
Today, special interests use their money to manipulate public opinion through slanted news releases, Web sites, op-ed articles, advertising, books and TV interviews; they then target like-minded donors and raise oodles of money, mostly from rich people who will benefit from the lobby’s political clout. And finally push to the point of absurdity their agenda. In other words, special interests become relentless monkeys on the backs of the public and key political leaders.
There is a vicious circle where “special interest groups” put billions of dollars into the hands of politicians and into the media to sway public opinion with the goal of obtaining political power, which translates into favorable legislation, which then increases the wealth and clout of the “special interest groups”, who are then encouraged to put more money into the political system, becoming a new class of political elites.
According to a study by Martin Gilens from Princeton and Benjamin Page from Northwestern, when the economic élites support a given policy change, it has a forty-five per cent chance of being enacted. However, when the élites oppose a given measure, its chances of becoming law are eighteen per cent or less than one in five.
Ideally in our form of democracy:
· The services that our government provides should benefit the majority of citizens, protect the integrity and safety of our nation, and serve a compelling interest that is of concern to the nation as a whole.
· The benefits of any law or action should not accrue only to special groups, nations, or corporations.
· Government services should provide more value to society than their costs to taxpayers, as determined by the taxpayers, and should be delivered in the most efficient, cost effective means possible.
· Our laws must protect the rights and privileges of all citizens. Likewise the costs and burdens of government — and its actions — should be born fairly by all citizens.
Perhaps we need a stronger constitution; one that curtails the power of special interests and gives our country back to the people.