Only Government Can Help?

Posted: Mar 29, 2014 12:01 AM
Only Government Can Help?

Hey you. Yea, you, running a business. Or opening a franchise. Or preparing to retire after a lifetime of hard work. Mike Konczal has a message for you: Stop congratulating yourself and accept the fact that all your success is only possible because you’ve got a massive, federal welfare state backstopping you every step of the way.

Konczal is a fellow at the Roosevelt Institute (Franklin, not Theodore, if that even matters). He’s penned an essay in the latest issue of Democracy that does a better job than Barack Obama did explaining the president’s “You didn’t build that” philosophy.

Sure, you conservatives probably think people were on their own in, say the 1800s, when the federal government’s writ barely extended across the Appalachians. Konczal is here to disabuse you.

“The public post office helped unite the national civil society Alexis de Tocqueville found and celebrated in his travels throughout the United States. From tariff walls to the continental railroad system to the educated workforce coming out of land-grant schools, the budding industrial power of the United States was always joined with the growth of the government,” he writes.

Indeed, we’ve always had a post office. Benjamin Franklin worked as a postmaster, for the British before independence. But we don’t necessarily need a federal, government post office. Recently two employees of the U.S. Postal Service spent their morning removing two mailboxes from the sidewalk outside my building. Parked next to them was a UPS truck. It was a tidy reminder that the private sector stands ready to deliver mail, if only the government will allow it.

And yes, the federal government once imposed steep tariffs. But those tariffs did more than simply protect domestic manufacturing; until the early 20th century, they produced enough revenue to fund almost the entire federal government.

But don’t get the idea that Konczal is arguing that the country needs a small, effective, fully-funded federal government that aims only to protect American property and do limited tasks. Instead, he insists he intends to oppose: “Paul Ryan’s budget, which seeks to devolve and shrink the federal government at a rapid pace.” As if.

Under current law, the government would spend $46 trillion in the next decade. Ryan proposes spending $41 trillion. Ryan’s budget envisions the government spending 19 percent of GDP by the year 2023. That’s about what it spent during the Bill Clinton years, hardly a time of federal austerity.

Konczal claims that Americans need the federal welfare state, because private charities simply aren’t up to the task. And he unleashes a blizzard of statistics aimed at proving his point. “Overall giving fell 7 percent in 2008, with another 6.2 percent drop in 2009. There was only a small uptick in 2010 and 2011, even though unemployment remained very high. Giving also fell as a percentage of GDP (even as GDP shrank), from 2.1 percent in 2008 to 2.0 percent in 2009 through 2011. (The high point was 2.3 percent in 2005.)” And on and on.

But notice what he’s choosing to measure: inputs. Liberals love to measure inputs, because that’s the easy part. But spending more isn’t as important as spending more effectively.

Konczal doesn’t look at outputs: what did the charities spend during those hard times. Luckily, John DiIulio does. “In 2009, the organizations recognized as non-profits by the Internal Revenue Service reported nearly $1.9 trillion in spending while holding $4.3 trillion in total assets (for comparison, the total assets of state and local governments were about $4.6 trillion),” he writes in National Affairs. So they poured about half of what they had into helping others. That’s the point of private charity.

Bill Gates became the world’s richest man by focusing on outcomes. “The way we help the poor out today [is also a problem],” he explained in Rolling Stone magazine. “Why aren’t the technocrats taking the poverty programs, looking at them as a whole, and then redesigning them? Well, they are afraid that if they do, their funding is going to be cut back, so they defend the thing that is absolutely horrific. Just look at low-cost housing and the various forms, the wait lists, things like that.” And that’s exactly the point: bureaucrats are focused on inputs. What should matter is outputs.

Konczal’s correct about one thing: the massive welfare state has crowded out many private charities. With massive redistribution programs such as Social Security speeding toward insolvency, we may soon wish it hadn’t.