The Role of Government

DRAFT 8/11/2004

Framework of Analysis, I The Role of Government

(NOTE: This is the first in a series of discussion memos that, together and with feedback, are intended to provide a consistent intellectual framework for Los Angeles Times editorials.)

Almost every editorial we write raises the issue of government's proper role. This is partly because government is already so involved in the lives of our readers. But it also emerges from the nature of editorials, which is to declare a problem and propose a solution. In the imaginary world of editorials, announcing the solution is the happy ending. In the real world, the editorial's solution must be made to happen. And presumably it will not happen of its own accord, or there would be no point in calling for it in an editorial.

Under these circumstances, there is a natural temptation to want the government to step in. In many cases, we will succumb to temptation, and rightly so. But it is important to keep in mind that government action limits freedom. Government functions by coercing people into doing things they may not want to do. This is true even if the proposed action is, on balance, a good idea-as it often is. It is true even if the action, overall, increases human freedom, as laws and government often do. It is true even in a democracy, and even when the action has the support of the majority. Tyranny of the majority is what the Bill of Rights is all about.

One goal of the Los Angeles Times editorial page should be to teach or remind readers that the government is often a positive force in society. For this very reason, logic and credibility both dictate that proposals for new or expanded government action should be examined with skepticism and endorsed with care. Examining skeptically means asking two separate questions-and keeping them separate. One is whether the government should be involved. The other is, if so, how? Both these questions are important, but the first one is more important (and more interesting) because it is largely moral. When is a benefit to society worth the imposition on individuals (if only the imposition of paying for it through taxes)? The second question is largely practical: how can that benefit be maximized and that imposition minimized? In editorials, that second question usually arises in one of two forms: What level of government should perform this activity? And should the government act directly, or try to work through market forces? The answer to both is: no principle at stake-whatever works best.

Taking the last issue first, consider school vouchers. Should the government build schools and hire teachers? Or should the government give parents the wherewithal to buy education for their children? Theological passions on both sides of this debate are misplaced. On public education, the question of principle is settled: the government will supply education to all children, one way or another. In many places it is failing in that duty. But nobody denies that it is a duty.

"Using market forces" is different from "leaving [something] to the free market." Leaving something to the free market means that the government stays out. Individuals remain free to buy this something or not, as they choose. But individuals who can't afford it cannot have it, even if they do want it-and even if it would be good for society if they did have it. By contrast, using market forces to deliver a government service or benefit has neither this moral advantage nor this moral cost. It's a tool. And the question is whether it is the right tool in the circumstances.

Generally, the answer is yes. Markets are efficient in many ways. But the use of market forces must be justified pragmatically. They have no automatic advantage in principle. And one common way of using market forces-­tax incentives--should be regarded with special skepticism. Rewarding people with tax breaks for doing something the government wants done only works ifthe break's beneficiary pockets more than the cost of doing what the government wants. Furthermore, the cost of tax incentives never appears in the government's budget, and so they don't get the same scrutiny as direct government spending. Therefore, it is always worth asking about a tax incentive whether it might not be better for the government to do this directly- or not at all.

One of the most tiresome canards in the political debate is that all tax breaks are simply "letting people keep their own money," and opposing any tax break amounts to "assuming that all money belongs to the government." There are two basic kinds of tax breaks (just as there seem to be two of everything in this memo, like Noah's Ark). Some tax breaks (for example, the basic personal exemption) reflect judgments about how to finance the government fairly and sufficiently. Other tax breaks (for example deductions for building low­income housing) are intended to encourage some form of behavior. They have nothing directly to do with raising revenue, except by making it harder. They have the same effect on the government's budget and on the national debt as direct spending, and sensible decisions about government policies are not possible if tax breaks cannot be considered as skeptically as direct government spending.

On the issue of what level of government should perform a particular function, almost everybody is a hypocrite. A popular sentiment on this subject is that lower levels of government are preferable because they are "closer to the people .. " And their very multiplicity supposedly allows them to be (in Justice Brandeis's famous phrase) "laboratories of democracy." But skepticism is in order. A glance at the typical day's headlines in almost any newspaper, including the Los Angeles Times, will cure most people of the belief that state and local governments are any less corrupt than the federal government in Washington. Nor are they less inclined to spend what anti-government rhetoric refers to as "your hard- earned money." During the entire debate of the past few decades about whether the government is too big, the federal government has held constant at roughly one fifth of GDP, while state governments have exploded in size by any measure. The nice notion of states as laboratories of democracy runs afoul of two realities. One is that a national economy needs standardized rules. Fifty different systems for regulating trucks is 49 too many-especially if they all have different rules about axles and mudflaps. In reality, the various states try very hard to have uniform rules of business-and the US Congress or the federal courts will often impose uniformity on them if they can't achieve it themselves. Meanwhile, competition among the states thwarts democracy, rather than promoting it. The people of every state may wish to impose tougher rules about truck axles and mudflaps, but competition among the states to attract the trucking business will make it impossible for any of them to fulfill their citizens' wishes.

Issues about federalism are an area in which editorial writers should be especially on their guard against hypocrisy. Including their own. In practice, people's opinions about what level of government should do something depends on whether they want it done. Freedom of choice on abortion was imposed on the individual states by the nation's Supreme Court. So on this issue, conservatives preach states' rights and liberals say the moral issue is too important to leave to individual states. Gay marriage, meanwhile, is spreading court-case-by­court-case. So conservatives are demanding a national law, or even a constitutional amendment, to stop this insidious trend, while liberals wax eloquent about keeping the national nose out of this local matter and letting each state decide for itself.

Corporations plead for national relief from onerous state tort laws and meddlesome state attorney generals, but they treasure the absurd tradition of state incorporation because Delaware is so good to them.

In a way, though, the hypocrites are right: whether the government gets involved is a more important question than how it gets involved. Most of the "whether" issues faced by a newspaper editorial page can be fit into four broad categories: First, what the founders called "ensuring domestic tranquility": protecting Americans from other Americans. Second, the use of American military power: protecting Americans from foreigners. Third, social issues: protecting American society from American citizens, and protecting American citizens from themselves. And fourth: economic issues: protecting and distributing American prosperity.

In the first category, the issue is usually some variation on protecting the community's safety versus protecting individual rights: constitutional rights such as the right to privacy, the right to a fair trial, and so on; plus the basic rights to life and freedom, which bump up against the community's desire for the death penalty and long prison sentences.

There is no magic trick for balancing these conflicting values. The safety of citizens in their daily lives is the government's most basic responsibility, and a newspaper is or hopes to be the voice of the community. But the community's desire for toughness on crime rarely goes unheard, while the rights of individuals, especially individual criminals, often are uncelebrated and underappreciated. Furthermore, a newspaper is also uniquely (among businesses) dependent on a particular guarantee of individual rights: the First Amendment. So it is prudent, as well as idealistic, for a newspaper to be a guardian of all those rights. An important function of newspaper editorials should be to educate and remind readers about why those rights are important. And if, in striking the necessary balance, there is a slight finger-on-the-scale in favor of individual rights, that is no bad thing.

Protecting American national security is the other most basic duty of government, while sending young Americans to fight and die abroad is the most traumatic decision a government must make (and the most traumatic a newspaper must editorialize about). Obviously, the government must do whatever it takes to protect the nation against threats from abroad. But what it takes is far from obvious, and generalizations are difficult ..

Because lives are at stake and because the players in these controversies often have private agendas, skepticism is always appropriate about the need for any particular weapons system or decision to use military force. In weighing the costs and benefits of military action, the costs should include the potential deaths, injuries and suffering on the other side, as well as on our own. And that includes enemy soldiers as well as civilians. They are people too, and often are draftees with no responsibility for whatever their country has done to earn the terrible wrath ofthe world's only superpower. Obviously, an enemy leader cannot be allowed to, in essence, hold his own soldiers as hostages to prevent the United States government from protecting our national interest. And it is inevitable, maybe even properly so, for our government to value the lives of Americans more than others'. But those other lives are not worthless.

Normally, the substance of a government policy should be of more interest to an editorial page than the procedure by which policy is made. (And policing editorials against the tendency to bog down in procedural who-struck-John is a constant task.) But the decision to go to war may be an exception. Wars need public support not just because that's the whole idea in a democracy, but specifically because public support has enormous military value: it strengthens our side and weakens the other side by making clear that we're not going to quit. And yet for almost two centuries, in the biggest scandal of Constitutional law, the essential democratic stamp of approval-the congressional declaration of war-has been eroded to the point of disappearance. Presidents claim, and essentially have, unilateral power to take the country into war.

The result has not generally been wonderful. Restoring Congress's veto over presidential warmaking to its intended place in the US Constitution should be an official Los Angeles Times editorial hobbyhorse, to be ridden whenever the occasion arises.

Occasionally, the United States goes to war "voluntarily"- that is, for reasons other than an imminent military threat to our national security. More often, there is widespread talk about such a possibility. Most voluntary war issues fall into one of three (for a change) categories. First is war to serve American national interests that fall short of repelling an imminent threat to our national security. (For example, invading the oil-producing nations to guarantee a steady supply.) Second is war to serve American values (such as promoting and protecting democracy) as opposed to our hard interests. Or (a variant) war for purely humanitarian reasons, such as preventing mass starvation or genocide. Third is "pre-emption," as articulated by President George W. Bush and illustrated by the second Gulf War.

Two subcategories raise specific issues. The third first is "pre-emption," When does a theoretical threat become a real one? If an enemy army is massed on your borders, it may make sense to seize the advantage of striking first. But speculative concern that a foreign country may try to harm the United States some time in the future is not a good enough reason to initiate bloodshed. One advantage of America's military dominance in the world should be that we have the luxury of waiting, and knowing that delay won't mean defeat. One exception to this principle is a hostile country's acquisition of nuclear (and possibly other "mass destruction") weapons. Because they are uniquely threatening, and give the owning country immediate, not just speculative, leverage even over the world's only superpower, a policy of removing them militarily and pre-emptively may be justified, if nothing else works.

The second subcategory concerns situations where national security is not directly at stake. As the world's superpower, America has the luxury and the burden of being able to act militarily to protect its values, not just its own safety. When should military power be used (or threatened) to remove an oppressive government, or to prevent a slaughter of innocents? These issues, when they arise, are especially challenging to editorial writers, because principled and logical consistency is missing from the national debate, badly needed, and yet nearly impossible. Ifwe send troops to stop a rampaging dictator in Europe, why will we not do so in Africa? It would be nice if we had a consistent set of rules, based on the severity of the crisis and the potential costs and risks of intervening and so on. One such policy would be: never. American military power should only be used to protect American interests, narrowly defined. But that should not be the policy of a great newspaper in a great country that prides itself on its great ideals. We--the paper, and the country--should work toward some consistent rules. And meanwhile, we can say a few things: (1) Editorial writers have the luxury of powerlessness. Government officials do not. Decisions to intervene abroad inevitably will be based on less­than-principled considerations: the approach of an election, or other interventions, or ricochet effects on other foriegn-policy issues, or oil. But lack of consistency should not be an excuse for inaction. You don't let Country X starve this year because you let Country Y starve last year. (2) It is better to act in concert with other nations, and better yet through some permanent international body. This is both to share the burden, and as a good reality check on our intentions. (3) "Nation-building" comes with the territory. The hope that we can get in, do good, and get out is naive.

Then there are the social issues. Government is the operational arm of society as a whole. When should it act to shape the culture in a way the majority (if not a noisy minority) would prefer? The answer given by the Los Angeles Times editorial page should be: rarely. The costs and risks of government choosing among social trends to discourage or promote are more frightening than those trends themselves. The dangers are often amorphous and always exaggerated, while the threat to individual freedom is specific and concrete. Constant, disconcerting change has always been a feature of American culture, as of the American economy-and one of its strengths. Many existing and proposed social controls-drug and drinking laws, divorce and marriage limitations, pornography censorship, and so on-amount to protecting people from themselves. We believe that people are better judges of their own self-interest than the government. And when the first-level impact of some social control is to limit the freedom of the individual, and when that individual's activity is not causing any direct harm to anybody else, vague and speculative effects of that individual's behavior on society as a whole are not a good enough justification for government action.

Questions about the proper role of government arise most often in the context of the economy. Most of them boil down to one of two issues: production and distribution (or efficiency and equity, or prosperity and fairness. We want an economy that can produce as much "stuff' as possible (including stufflike clean air, as well as goods and services that are conventional parts of GDP). And we want the stuff distributed fairly.

What does "fairly" mean and why should the power of government be used to take someone's assets and give them to someone else? There are many famous answers to the second question. all of them debatable. It's because huge economic disparities are a threat to stable democracy. Or it's because of natural justice. The simplest and most compelling justification for a bit of government-imposed redistribution is that, as any honest person should be willing to acknowledge, your lot in life is more the result of luck and the society you are born into than the product of your own efforts. Why, for example, does a newspaper editor in Los Angeles make many times the income of an editor in BangIa Desh? It's not because the one is many times more talented or works many times harder. It's because of the general productivity of America's economy, built by all of us over generations.

As for "fairly," we can't say for sure where that line is drawn. What we can say is that in America, there is little danger of redistribution going beyond the point of fairness, wherever that may be.

So government economic policies should be evaluated by whether they serve or disserve the goals of prosperity and fairness. The easiest cases are policies that serve or disserve both goals. Universal public education is an example of something that serves both. Trade protectionism, most tax subsidies, and direct government subsidies to specific industries are examples of policies that make the economy poorer and less fair at the same time.

The tough issues are policies that make a trade-off between prosperity and fairness. The basic government activity of raising taxes imposes a burden on economic activity and therefore leads to less of it. Taxes, taken alone, harm prosperity. But taxes finance other government activities that promote prosperity and/or fairness. Free trade often burdens individuals near the bottom of the economic ladder. Thus it reduces fairness. But it promotes general prosperity. So how do you decide whether the trade-off is worth it?

A general guideline is that free market capitalism is good at prosperity and not so good at fairness. Therefore, as a general rule, there should be a division oflabor: let markets handle the operation of the economy, and then let government fiddle a bit with the results. There are, of course, the classic exceptions: externalities and public goods. Government must regulate to protect the environment, because market forces won't do it. But government policies aimed at either general or specific prosperity should be regarded with some suspicion. When evaluating a subsidy for particular industry, or a special tax break for some particular form of economic activity, the key question is why the government should know better than the market. If there isn't at least a convincing theory, the policy is a bad idea.

By contrast, the key question about policies aimed at fairness is the trade-off itself: does promoting fairness impose too great a cost on general prosperity? As discussed above, we are far from the point of having to worry whether redistribution itself discourages work effort by successful people (by taxing their reward) and unsuccessful people (by subsidizing their sloth). Undoubtedly it does so, but not much. The more pressing question is whether the method of redistribution is efficient. As a general principle, simple cash transactions are more efficient than more subtle forms of redistribution. Any policy that takes the form of government deciding what we produce (as opposed to maximizing our productive capacity and spreading the wealth a bit) will cost more than it delivers. Fairness arguments for any government activity except writing a check should be regarded with deep suspicion. Public television, art museums, etc., for example, may be justified on other grounds, but not as sensible ways to share the wealth.

A particular danger to avoid is luddism, or resistance to change in general. Proposals to protect the economic status quo come from all parts of the political spectrum, and are rationalized in terms of both prosperity and fairness. But they usually serve neither. Many such policies already exist: farm price supports, protectionism once again, various provisions of the tax code. The editorial page should take a hard line against institutionalizing fear of the future.

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