Who Do You Trust — Government or Business?

July 27, 2009 at 4:44 pm (By Amba) (, , , , , , , )

Been thinking a lot lately about how liberals trust government and mistrust business, while conservatives trust business and mistrust government.  It may be the single most fundamental difference between them.  Now here’s John Stossel quoting Greg Mankiw:

Perhaps a lot of the disagreement over healthcare reform, and maybe other policy issues as well, stems from the fundamental question of what kind of institutions a person trusts. Some people are naturally skeptical of profit-seeking firms; others are naturally skeptical of government. […]

I tend to distrust power unchecked by competition. This makes me particularly suspicious of federal policies that take a strong role in directing private decisions. I am much more willing to have state and local governments exercise power in a variety of ways than for the federal government to undertake similar actions. I can more easily move to another state or town than to another nation. […]

Most private organizations have some competitors, and this fact makes me more comfortable interacting with them. […]  To be sure, we need a government-run court system to enforce contracts, prevent fraud, and preserve honest competition. But it is fundamentally competition among private organizations that I trust.

This philosophical inclination most likely influences my views of the healthcare debate. The more power a centralized government authority asserts, the more worried I am that the power will be misused either purposefully or, more likely, because of some well-intentioned but mistaken social theory. I prefer reforms that set up rules of the game but end up with power over key decisions as decentralized as possible.

Mankiw cites Paul Krugman, who raised the whole “who do you trust” issue, as a member of the opposite camp:

What puzzles me is that Paul seems so ready to trust solutions that give a large role to the federal government. (In the past, for instance, he has advocated a single payer for healthcare.) I understand that trust of centralized authority is common among liberals. But here is the part that puzzles me: Over the past eight years, Paul has tried to convince his readers that Republicans are stupid and venal. History suggests that Republicans will run the government about half the time. Does he really want to turn control of healthcare half the time over to a group that he considers stupid and venal?

Stossel adds some thoughts of his own (the ABC site seems to be copy-proofed somehow, so I have to take a screenshot of the passage):


I grew up in the allegedly benevolent shadow of FDR, believing that business was greed and government was public spirit.  My attitude has changed drastically, mostly (the way my attitude usually changes) through broadening circles of friendship, which came to include small entrepreneurs, a couple of first-generation millionaires from working-class backgrounds whom I love and admire.  Also typically, though, I haven’t gone all the way.  I think of government and business as another of the vital checks and balances of American life.

An example I’ve been thinking a lot about lately is cars.  We had a visit recently (which I noted on Twitter) from a deeply and deliberately Southern character, a 61-year-old who looks (to RT myself) as if “The Rime of the Ancient Mariner” had been written by John Crowe Ransom, but who is a stealth liberal and Obama voter in a conservative small Tennessee town.  He said that after the election he had heard one of his neighbors raging, “They’re going to take our cars away!”  Who knew that SUVs were in the Bill of Rights?  Which amendment is that?

There’s a paradox about business:  it is at once the most innovative force in the world and, at the same time, can be one of the most conservative and inert.  Nothing illustrates its inertia more than the fossil fuel economy, with all that it entails of manifold environmental damage (not even counting disputed global warming, just the health effects of air pollution and the ravages of, for instance, mining the Alberta tar sands) and dangerous dependence on foreign countries.  As long as there is oil and as long as its price can be kept within broad bounds, our energy habits are not going to change.  There’s too much employment, too much existing infrastructure, too much power and profit and, yes, pleasure (I love the freedom of a fast car as much as anyone, and more than many) entrenched there.  Market forces will keep on playing that hand until it is catastrophically played out, because the costs of changing are too high and the rewards too meager and speculative.  In this case, there isn’t enough necessity to mother sufficient invention, and there won’t be until it’s too late.

The conservative solution is “Drill, baby, drill!”  The way of life that cheap oil made possible is too often equated with the American way, a days-are-numbered luxury with an eternal right.  I think this is a place where government can play a legitimate role in forcing innovation by manipulating the market — creating an anticipatory artificial scarcity (through taxation and regulation) on one end and incentives for new solutions on the other end.  (Don’t tell me government should never manipulate the market until you’ve eliminated farm subsidies, please.)  It’s a delicate business because the transition can only be gradual and the regulation can’t be too draconian without strangling the economy.  But the decades of permissive mileage standards have been shameful, and have contributed to the American auto industry’s fatal complacency.  Unnecessary waste — in a sort of potlatch*-like display of boastful affluence — has too often been the American way.

Here’s how I feel about cars:  getting places fast on Ike’s highway system, with the top down and the radio blasting, has been wonderful — and quintessentially American for a particular time.  But I sometimes think about the places I’m passing, the detail I’m missing at my usual 75 miles per hour.  The convenience and pleasure the automobile has given us has exacted a high and mostly unnoticed price, from the annual fatalities (which usually equal the number of American deaths in the Vietnam war) to the creation of car-dependent bedroom communities.  If we have to drive slower, drive less, or drive shorter distances in yet-to-be-invented plug-in electrics, I won’t feel that my God-given rights have been violated; I’ll feel that a wonderful era has passed and another, differently wonderful, is beginning.  Besides, I have faith in American inventiveness.  Given the chance and the necessity, I don’t doubt that the problem of the fast electric car, too, will be solved.

(I didn’t have time to write this, and I definitely don’t have time to put links in, but will do so later.  Meanwhile, Google “Alberta tar sands.”)

UPDATE: At the link to “potlatch” I find that these traditional feasts were all about the redistribution and sometimes the destruction of wealth.  Prestige was proportionate to how much you gave away.  Here’s the ultimate irony:

Potlatching was made illegal in Canada in 1885 and the United States in the late nineteenth century, largely at the urging of missionaries and government agents who considered it “a worse than useless custom” that was seen as wasteful, unproductive which was not part of “civilized” values.

I guess it was thought subversive of the sacredness of private property?

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