Stan Sorscher, EOI Board Member

Guest post by Stan Sorscher (cross-posted from Huffington Post)

Let’s look at public policies for economic development that help us recover from the recession.

In one view of economic development, the role of government is to “make business succeed.” In this view, government should get out of the way and let markets find the most efficient outcome.

An alternative view of economic development is that government policies should raise our standard of living. In this view, government plays an active role in devising trade and industrial policies that attract investment, build industrial capacity, and create good jobs that build the middle class. And make business succeed.

To be sure, markets are powerful and efficient, but markets fail. In particular, markets fail to serve non-economic interests — not just the environment, human rights, labor rights, and public health, but markets also under-invest in R&D, education, physical infrastructure and social safety nets.

Globalization has sharpened the difference in these two approaches, by de-coupling investor and business interests from the public interest. If investors are global in their outlook, then the interests of America dim from view.

In a global economy where national boundaries are blurred, we need to think about trade and industrial policies that work for America. A year ago, I mentioned 4 policies that would help reconnect the interests of investors with public interests and communities. Here are four more.

Example 1 – Tax incentives.
In Washington State, like many others, we have a baseline tax on business, with hundreds of exemptions for one industry or another, some stretching back into the mists of time. Suppose we bundled together all the existing incentives already in the tax code, and said, we would love to continue this $6 billion (let’s say) bundle of tax incentives. Sadly, given the economic crisis, we simply cannot afford that level of business tax breaks, as if it were an open-ended entitlement with no accountability.Instead, we will cancel the exemptions, but set aside a $3 billion investment fund. We wish we could give you more! But we can’t. Each business or each industry can apply for a share of this limited $3 billion public incentive fund. Any company’s application should make clear what public good will be delivered from the tax incentives.

The public good might be some number of high-school jobs, and a certain number of college jobs, so much new construction, or some strategic advantage in terms of market position. Competition for limited incentives can be open to any businesses willing to invest in the state. Successful applicants will report on progress toward meeting their voluntarily stated goals. If actual performance falls short, the difference will be recaptured and returned to the public investment fund.

In Washington State, employers bid for subsidies from the Life Sciences Discovery Fund. California has $2 billion fund for biotechnology. Limited-size funds like these could become a standard mechanism for accountable economic development

One variation on this could be a tax bonus system. Instead of applications, we would have a simple formula to determine public good. For each industry, the state tracks total employment, total payroll and total investment in the state. Instead of our current $6 billion open-ended incentives with no accountability and no measure of public good, a $3 billion (let’s say) bonus pool could be allocated to those industries with employment growth rates above the overall average rate in the state. The bonuses could be proportionate to the rate of growth — more growth qualifies for a bigger bonus. This would be a sort of pay-for-performance for companies seeking public incentives.

Ideally, each year, the growth rate for different industries should be published, with great admiration for industries that produce more public good, and less admiration or none at all for those that diminish public good.

Example 2a – Higher Education
Employers in every state and region plead for better-educated and more qualified workers. Instead, states are raising tuition. Families take a leap of faith that education is good and many graduates are crippled with student debt. Unemployment among recent college graduates is at historic highs.

Why not insist on a minimal commitment from business at the transition from education to employment?

As a quid pro quo, employers should commit to internships and increased employment for students enrolled in the programs. We should track the number of interns who are hired and complete 5 years of employment. If the transition from college to employment lags, then the industry should repay costs for the program.

Example 2b. Worker training
Peter Cappelli points out that it was common, years ago, for a business to provide on-the-job-training. Many still do. Employers who externalize training costs to the community are suggesting they don’t have a commitment to workers or the community. Traditionally, an apprenticeship assumes an employment relationship. If a publicly subsidized apprenticeship is provided, we should insist that a local company hire the apprentices before they start the program. If the public subsidizes specialized training, and the employer lays off their apprentice employees within 5 years, the employer should reimburse the state for tuition.

This makes much more sense than media accounts of laid-off workers paying $6000 out of their own pockets for a training program with no clear expectation of employment after graduation.

The question should no longer be, “what can the state do to encourage business?” Instead, the conversation should be “public resources were invested in local industries. Which industries have returned public good from that investment?”

Example 3 – Industrial Bonds
Imagine launch aid similar to what Airbus gets in Europe. The government can hold the bonds, with the clear understanding that this public subsidy comes with an expectation of public good. If a company receiving launch aid suddenly decides to move work to low-wage countries, their launch aid loans could be subject to immediate repayment.

Example 4 – Ex-Im Bank
The US encourages exports of domestically produced goods to foreign customers who need help with financing by providing loan guarantees and administrative assistance. The Export-Import Bank does this, with the condition that loans can be no more than the domestic content of the product. The more domestic content, the higher the loan amount can be. Furthermore, if domestic content falls below 85%, then the product is not eligible for the public subsidy.

I am perfectly happy with making business succeed. We are Capitalists. Well, sort of. To be clear, however, in Capitalism, when a business needs capital, it goes to the capital market. Banks and lenders impose conditions on borrowers that protect the lenders.

We should do no less.

When a company comes to government, we should have conditions that encourage production to stick in our local economy. We should see a clear public good that raises the standard of living for workers and communities.

The Green Bay Packers meet the Pittsburgh Steelers in Super Bowl XLV this Sunday

Guest post by Doug Von Korff, staff intern

The “invisible hand” has once again selected a publicly-owned, nonprofit organization by sending the Green Bay Packers to take on the Pittsburgh Steelers in the Super Bowl on Sunday.

Does the notion of a “publicly-owned nonprofit” competing in the pinnacle of American competition and corporate capitalism sound odd? That’s because the Packers are the only franchise of its kind in the league.

Current NFL rules outlaw public team ownership, but you have to wonder why. Shares of Packers stock first went on sale to the public in 1923. Since then, the team has won 12 league championships: 9 prior to the Super Bowl and 3 Super Bowl victories – more than any other NFL team, and all while publicly-owned.

Ownership pays no dividends and yields no perks (not even preference for season tickets!). Shareholders get only the privilege to vote in elections for the team’s Board of Directors. No single stock owner can own more than 200,000 shares, which ensures that no individual has undue influence over the voting process. This system of governance is often cited as the reason the team has never moved from Green Bay, a town of barely more than 100,000, to a larger market.

There’s something we can learn from the Packers about delivering public value.

While other NFL teams have to balance earning a profit for their owners against putting the best team possible on the field, public ownership means the focus of the Packers organization isn’t split between entertaining and making a profit from their fans.

Now of course, public ownership alone isn’t enough to win a football game. You need to recruit players with dedication, smarts, agility and strength; hire coaches who know the game well, and who are respected by their players; build stadiums and concessions… you get the idea.

That’s not so different from our government. Government doesn’t exist to turn a profit, but to protect the public and lay the foundation that makes it possible for every person to strive for success. To do that, you have to find and retain smart and capable public servants; elect public officials who understand what’s at stake; build schools and roads…you get the idea.

I think the major difference between the Packers ownership model and our notion of government ownership isn’t the profit incentive, or a capitalist creed. It’s the enthusiasm of the shareholders, and a recognition of what is delivered for our dollars.

Packers fans happily support their team financially and participate in its governance – they get nothing in return save the satisfaction of being part of a winning team. They pay in to the system because they think that what they receive by having a well-managed, winning team is worth the price.

On the other hand, a steady stream of talk-radio shock jocks and talking heads on cable TV have told Americans that public funds can’t fix problems; that the profit incentive is the only way to ensure efficiency; that the public institutions in which we share ownership (public schools, public power/water districts, ferry systems, etc.) are failing. And if you believe that, well, it’s difficult not to resent paying your taxes – that is, buying shares in your government.

But Washington taxpayers actually receive a huge return for a relatively small investment – roads and ferries that can take them across the state in a matter of hours; seaports and airports that make our state a hub for international trade; nation-leading public universities and an outstanding community and technical college system…the list goes on. Could we improve those structures and services? Of course we can, and we should.

The point is, if we can get it together for a football team – just for the sake of winning – shouldn’t we be able to muster some enthusiasm to pay for a government that makes it possible for everyone to win, instead of fixing the rules so that only the few profit?

Odds are, no one mentions the Federal Aviation Administration, the National Highway Traffic Safety Administration or the Federal Communications Commission (FCC) — let alone the local departments of planning or health. But these public institutions – along with many others – actually have a major impact on our 21^st century Thanksgiving celebration.

While it would take too long to list everything that makes Thanksgiving possible, here are some of the big ones to remember as you gather around the table this Thursday:

• Do you work on Thanksgiving Day? Chances are you don’t, or if you do you’ll be compensated at a higher rate. Say thanks to the federal government, which declared Thanksgiving a federal holiday in 1941.

• Traveling to see family? Thank your local, state and federal governments for everything from the street you grew up on, to the interstate highway system, federal air travel standards and safety precautions, and tax subsidies for every mode of transportation.

• Good to see grandma and grandpa? Remember that they can eat pretty well year-round – no cat food, thank you! – and get high quality medical care, thanks to Social Security and Medicare.

• Do you watch football or the Macy’s Day Parade? Give thanks to the Federal Communications Commission, government-enforced NFL player contracts, and taxpayer subsidized stadiums for these television bonanzas.

• Walking off the meal with a stroll around the block? Give yourself and your neighbors a pat on the back for paying taxes for the sidewalks, and thank your state, local and federal government for enforcing poop and scoop pet laws, and zoning requirements that allow your neighborhood to have clean air and quiet streets.

• Last-minute trip to the store? Government-mandated car safety standards, city snow plows and salt trucks, and well-maintained pavement make it all possible.

• Getting ready to cook? The factories and farms that produce your food have been inspected by the Food and Drug Administration. Happy to have a free range turkey or know the ingredients in that canned cranberry sauce? The government requires industry to provide true and accurate information to consumers.

• Preparing the meal? You’ve got potable water coming from the faucet thanks to water safety standards. And if you’re cooking with gas or electricity, thank your government for building hydroelectric dams, managing the extraction of coal and gas, and ensuring that a bonded contractor did the installation in your house correctly with a required safety inspection.

• Taking it easy by eating out or ordering a pre-made meal? Food safety standards for cooking and storage have been established by city and county governments, with workers required to receive food safety certifications. That means your meal should be fully cooked with safe ingredients in a clean kitchen, free from hair and disease.

These are just a few things our government does for us not only on Thanksgiving Day, but every day of our lives. Our infrastructure, safety standards and rules were made possible by the generations before us, who invested time, hard work and money into the success of their communities and our country.

Our government helps make Thanksgiving relaxing, enjoyable  – and easy to take for granted. So, when it’s your turn to say what you’re thankful for, just remember the government – and its citizens – that helped to make it all possible.

The popular view of government is that of low-achieving screw-up. When asked, “When the government in Washington decides to solve a problem, how much confidence do you have that the problem will be solved?” only four percent of Americans said “a lot.” Sixty-four percent said “none at all” or “just a little.” Of these, more than a three out of four said the reason was “government is incompetent” not that “those problems are often difficult to solve.”⁴ Surveys also show that a large majority of citizens (70%) believe that “government creates more problems than it solves.”⁵ Clearly, for many Americans, government is the Inspector Clouseau of institutions.

But how accurate is this popular image of the government as a bumbling fool? Actually, this is largely a stereotype – one based primarily on myth and selective anecdotal evidence. Of course anyone can cite a number of failed government policies – such as the war on drugs or public housing programs. But it is wrong to leap from this kind of anecdotal evidence to the conclusion that government as a whole is inherently incompetent. The reality is this: most government programs are successful most of the time. By and large, the public sector does a good job providing clean water to drink, keeping the peace, sending out Social Security checks, reducing workplace injuries, ensuring aircraft safety, feeding the hungry, putting out fires, protecting consumers, and so on.

Once we begin to look at the actual performance of major government programs, we see that the vast majority of them have produced substantial improvement in the problem areas that they are addressing – they have produced successful results. This is not the conventional wisdom, but it is what the evidence shows if you bother to look at it. Let’s consider some of that evidence.⁶

What follows is a short list of some of the federal government’s greatest accomplishments. These are policy programs that have not only worked, but have been very successful and have greatly improved the quality of life of most Americans.

• Regulation of the Business Cycle. Until the recent deep financial crisis, we have tended to forget how dependent we are on the federal government to prevent economic depressions. Since the 1930s, the government has used a variety of monetary and fiscal policies to limit the natural boom and bust cycles of the economy. Before government took on this responsibility, severe depressions were a routine and recurring problem in this country – occurring in 1819, 1837, 1857, 1873, 1893, 1907 and 1929. Thanks to government intervention, we have been able to avoid the enormous amount of human suffering caused by these economic meltdowns – the massive joblessness, the destitution, the rampant hunger, the disease, the riots, the hopelessness and the despair. By any measure, eliminating these depressions and this misery has been one of the greatest – and often unheralded – achievements of our federal government.

• Public Health Programs. A variety of programs run by the National Institutes of Health, the Centers for Disease Control and Prevention, and state and local Public Health departments have greatly improved the health of most Americans. For example, the scourges of polio, cholera, and smallpox have been effectively eradicated from this country – a huge achievement. And vaccination programs have reduced by 95% our risks of contracting potentially debilitating diseases like hepatitis B, measles, mumps, tetanus, rubella, and diphtheria. Federal funds spent on buying and distributing these vaccines have saved countless lives and the billions of dollars it would cost to treat these illnesses. In addition, the dedicated scientists who work for the CDC are all that stand between Americans and a potentially catastrophic epidemic imported from abroad. The most likely and worrisome threat is from a new and deadly strain of bird flu. The last deadly flu epidemic to hit the United States, in 1918, killed over 675,000 people in matter of months.

• The Interstate Highway System. Started by the Eisenhower administration in the 1950s, this system now forms the backbone of long-distance travel and commerce in the United States. It makes up less than 1% of our highways, but carries almost a quarter of all roadway traffic. It has also allowed millions of Americans to move out of big cities and live in more pleasant suburban and small town environments. In addition, the interstate system has the benefit of being considerably safer than the old two-lane highways it replaced – saving hundreds of thousands of lives. Even some conservatives have been forced to admit the success of this building program, with George Will calling it “the most successful public works program in the history of the world.” It’s hard to imagine the U.S. without this interstate highway system, and this system would not exist at all if it weren’t for the government.

• Federal Deposit Insurance. Another government program we’ve taken totally for granted until recently is federal protection of our bank deposits. In bad economic times, banks are inherently vulnerable to destructive “runs” – where worried depositors all seek to take out their money at the same time. Before the FDIC, in the depression of the 1930s, over 5,000 banks went bust and millions of Americans lost their savings. The main reason we had no disastrous runs on banks (and money market funds) during the financial panic of 2008 was that government was there to guarantee those deposits.

• Social Security and Medicare. Without these two government programs, growing old would be hell for many Americans. Before Social Security and Medicare, millions of the elderly were doomed to spend their retirement years in poverty and illness. Social Security has cut the rate of poverty for the elderly by over half – from 29% in 1966 to 10% today. Not surprisingly, financial columnist Jane Bryant Quinn has described Social Security as “arguably the U.S. government’s greatest success.” Medicare has also been incredibly successful. It has doubled the number of the elderly covered by health insurance, so that 99% now enjoy that benefit. Without this form of “socialized” medicine, 15 million of our neediest citizens would be going without many vital medical services and many would have to choose between food and medicine. Older Americans are now living 20% longer, thanks in part to this effective program. These two programs have done more than anything else to relieve the pain and suffering of our elderly population.

• GI Bill Without this program, the middle class as we know it would not exist. The GI Bill provided government funds for 16 million World War II and Korean veterans to attend college. It allowed my father to become the first one in his family to graduate college, to become an engineer, and to go on to build a middle-class life for our family. Historian David Kennedy has remarked that “GI Bill beneficiaries changed the face of higher education, dramatically raised the educational level and hence the productivity of the workforce, and in the process unimaginably altered their own lives.”⁷

• Federal Housing Authority. The middle class housing building and buying boom in the United States was initially financed by cheap GI Bill housing loans and by Federal Housing Authority insurance of conventional home loans. In 1945, only 44% of Americans owned their own home. But thanks in large part to the FHA program that lowered interest rates and down payments, 63% of Americans owned a home by 1968. These homes have become a multi-generational source of wealth for tens of millions of Americans. The FHA still insures over $50 billion a year in mortgages, and remains especially important for low-income house buyers.

• Consumer Protection. In reaction to increasing public pressure in the early 1970s, government began to pass legislation to protect consumers from shoddy and dangerous products. The Consumer Product Safety Commission remains the key agency enforcing these laws. The need it fills is still a vital one – products kill over 20,000 consumers a year and injure over 25 million more. It would be far worse if the CPSC did not recall hundreds of products every year. It is estimated that its activities produce $10 billion in savings on the health care bills, property damage, and other costs associated with these defective products.

• Anti-Discrimination Policies. Since the 1960s, policies like the Civil Rights Act and Title IX have chalked up impressive gains in decreasing discrimination against minorities and women. Racial segregation in hotels, restaurants and other public facilities has been eliminated. Housing discrimination and workplace discrimination, while not completely eradicated, have been substantially reduced. College enrollment for minorities has greatly increased, jumping 48% during the 1990s alone. In terms of gender, workplace discrimination and sexual harassment have decreased and record numbers of women are now attending colleges and graduate schools. There is still room for improvement – particularly in the area of equal wages – but it is clear that these policies have made substantial progress in eliminating racist and sexist practices that had existed for hundreds of years.

• Clean Water and Clean Air Programs. America’s water and air are significantly cleaner than they were in the 1960s, thanks to federal legislation. The levels of four of the six air pollutants covered by the Clean Air Act – nitrogen dioxide, smog, sulfur dioxide, and lead – have been reduced dramatically, by an average of 53%. The quality of the air has significantly increased in virtually every metropolitan area in the U.S. The Clean Water act has been similarly successful. When it was passed in 1972, only one-third of the nation’s waterways were safe enough for fishing or swimming. Today that has doubled to two-thirds. And while only 85 million Americans were served by sewage treatment plants in 1972, that figure has now risen to 170 million.

• Workplace Safety. Businesses love to complain about the rules of the Occupational Safety and Health Administration and sometimes its policies have been a bit overboard – but it has clearly been very effective in greatly increasing the level of protection for American workers. In 1970, the year before the creation of OSHA, 22,000,000 people were injured on the job and 14,000 died from job-related injuries. Since then, OSHA has helped to cut occupational injury and illness rates by 40 percent. Even more important, between 1980 and 2002, workplace deaths fell from 7.5 per 100,000 workers to 4.0. Particularly impressive has been its success against brown lung disease among textile workers, which has been virtually eliminated.

• The Military. Even Rush Limbaugh, who has never met a government program that he likes, admits that the U.S. military is a great success story. Although debates continue to rage over how the military should be used, there is complete agreement that our Army, Navy, and Air Force are the most effective military organizations in the world today. We have the best trained and the best equipped armed forces, and they have an unparalleled ability to effectively project military force – as was demonstrated in the two recent Gulf wars. In the case of the military, the government has clearly done an exemplary job of creating a well-working and effective organization.

• The West. Although few Americans think about this, much of the Western United States as we know it today is the creation of various federal programs. It has been that way from the very beginning, starting with government-sponsored explorations of the West in the early and mid-19^th century. It continued with the federal government providing the money and troops for the depressingly efficient program of “Indian removal.” The government also sold public land to settlers for low prices and sometimes even gave it away. The railroads, which spurred so much growth in the West, would not have been built without massive subsidies from the federal government. And today, much of the farming in many Western areas is made possible by federal water projects, substantial parts of the ranching are subsidized by the artificially low grazing fees on federal property, and much of the mining is made more profitable by dirt cheap access to federal land. Cities like Los Angeles and Las Vegas would dry up and blow away without the federally funded dam and canal projects that provide water to those arid regions. So it is ironic that while anti-big government sentiment is very strong in parts of this region, the West literally would not and could not exist as it does today without the sustained help of the federal government.

• National Weather Service. This government agency not only makes your life more convenient by forecasting your daily weather, it also helps to ensure the safety of planes in the air and ships at sea and it has saved countless lives with its hurricane and tornado warnings. It also just keeps getting better. It’s predictions of hurricane paths has improved by fifty percent during the past 15 years; and its forecasts of weather 72 hours in advance is now as reliable as 36-hour forecasts 25 years ago.

• Poverty Policies. This may seem counter-intuitive. Everybody knows that poverty policy is the classic example of government failure. How could it possibly be considered a success when the poverty rate is essentially the same as it was thirty years ago? The answer is that most of the policies aimed at the poor in the U.S. were never intended to get them out of poverty. They were only intended to alleviate the suffering of the poor – and studies have shown that they have been very successful in doing this.⁸ For example, food stamps have worked to greatly reduce hunger and malnutrition among the poor. The poor are much healthier and have more access to medical treatment thanks to Medicaid. And rent subsidies have allowed many of the poor to move out of places with leaking roofs, inadequate heat, and faulty plumbing. These three programs form the backbone of our anti-poverty efforts – their combined budgets are eight times larger than that for welfare – and in terms of achieving their stated goals, these programs have to be considered impressive government successes.

• Student Financial Aid Programs. College is getting increasingly expensive and more and more students require financial help to attend. The federal grants, loans, and work study money provided by the Department of Education form the largest source of college financial assistance, providing billions of dollars in funding each year. These programs have worked to remove financial barriers for students and thus create more equal opportunity in higher education. They have been a major factor in producing the rapid increases in college enrollment seen in the last 50 years, and they have also contributed to the increasing class and racial diversity of the college population.

• Food and Drug Safety Programs. The federal government enforces extensive rules to protect the public from tainted food and directly regulates both the meat and poultry industries. It also plays a key role in ensuring the safe use of pesticides on agricultural products, both from here and abroad. Federal authorities are also on the frontlines in combating new threats to our food system, such as mad-cow disease. In addition, the Food and Drug Administration ensures that the drugs we take are pure and effective – an enormously complicated enterprise. Every year the FDA identifies almost 3,000 products that are unfit for consumption and ensures their withdrawal from the marketplace. Americans are undoubtedly safer and healthier thanks to these government programs.

• Funding Basic Science Research. Most research on basic scientific topics – in physics, biology, chemistry, etc. – does not have immediate commercial applications and so this work is highly dependent on government funding. Federal funds pay for 80% of the basic science research in this country, through laboratory facilities in universities and in government agencies such as the National Institutes for Health. For this reason, the government deserves a great deal of credit for the important scientific and technological breakthroughs produced by these efforts. In just one area – biomedical science – basic research has provided the foundation to develop new diagnostic technologies, such as nuclear magnetic resonance machines, and new treatments for cancer, diabetes, and many other diseases. It is revealing that nearly half of the most important medical treatments in the field of cardiovascular-pulmonary medicine have their origins in basic research attempting to unravel the mysteries of the lungs, heart, and muscles – work done by scientists not working in this specific disease area.⁹ Beyond such practical payoffs, government-funded basic research has also made important progress in answering many of the most profound questions that have baffled humanity for centuries: What is the nature of matter and energy – and the nature of reality itself? How did the universe begin? How will it end? Are we alone in the universe? What is the nature of life – and how did it begin? The achievements of basic science in the United States have been many and stunning – and these are achievements of government as well.

Pretty impressive – and this list could go on much further. But while such lists of achievements can go a long way toward invalidating the popular notion that government is inherently incompetent, there is even better evidence available.

Read more: The Forgotten Achievements of Government

Note: This post is excerpted with permission from Government is Good, which is not affiliated with the Economic Opportunity Institute (EOI). The opinions expressed by its author do not necessarily reflect the views of EOI.

John Burbank, Executive Director

This past month I flew back to Vermont, where my dad lives. He is 91 years old now, and just broke his hip. So he has a long recovery in front of him, and I was there to help him along and bolster his spirits when he needed some encouragement.

My dad is in a rehabilitation center, where he is learning to “hop” on a walker, and not put any weight on the bad leg. He gets tired, but he perseveres, and he is making progress. He maintains an enthusiasm and interest in life, athletics, politics, and his family and friends. I got him a Kindle, but I am not sure he has figured that out yet!

Without the great professional staff at his rehabilitation center, the physical therapists, the nursing assistants who make sure he is comfortable, and the nurses who look after him, my Dad would not be making progress every day. Without the EMTs who got him to the hospital, the specialist who replaced his hip, and the other doctors who supervise his care and progress, my Dad would not be alive now. Without Medicare, the medical bills would have started to pile up.

Let’s put this another way: My Dad wouldn’t have had much of a chance if we actually took U.S. Senate candidate Clint Didier’s advice: “We’ve got to get rid of this protecting the weak.”

My father-in-law is also one of those weak people we are protecting. His dementia is getting worse. He walks around, enjoys other people’s company, and watches the world as his window onto it shrinks down. He gets careful attention and care at his assisted living place and good health care for his various ailments. Medicare covers almost all his medical costs.

My father-in-law served in the Pacific during World War II. He was a naval officer at Iwo Jima. His hearing has been shot ever since. He ended up with his military pension and that’s about it. Should we neglect my father-in-law because he didn’t save much money? Too bad for him, but he is on his own! Perhaps he can appreciate the “freedom” that entails.

This is not just about old people. A colleague of mine just lost her husband. She has infant twins. As a survivor, she and her twins are entitled to Social Security benefits. If she was on her own, without Social Security, she would be in dire economic straits. Her emotional loss and devastation of the past year would be compounded with the fear of simply not being able to make ends meet.

So I have our government to thank for the well-being of my father and father-in-law, and the economic security of my colleague and her babies. Look around, and you realize that our ability to live and prosper, or make do, is only because we depend on each other. As kids, we are utterly dependent on our parents, our teachers, our friends, relatives, and neighbors, our local fire station and police, and our government.

As adults, our relationship with government morphs into a crucial interdependency. Our government makes society civil, establishing systems of law and order and justice which become the basis for commerce, employment, and advancement. We in turn pay taxes to enable government to insure the fundamentals of democracy, including “life, liberty, and the pursuit of happiness.” Our taxes enable government to pay for Medicare and Social Security for our parents, and unemployment compensation and community college worker re-training for our neighbors who have lost their jobs in this great recession. We are able to prosper, or at least persevere, thanks in large part to government. And as adults, we are also the beneficiaries of the investments, inventions, infrastructure, and leaps in productivity brought to us by our parents, grandparents, and great grandparents.

As old people, our health and well-being and quality of life depend even more on the investments of others, especially the systems of finance and health care that are possible only through our government. So when we talk about government, we are talking about our lives, our well-being, the comfort of our parents and the progress of our children. My Dad is not on his own, not now, never has been, and never will be, to the last of his days. And that is true for all of us, no matter how much we vilify the government that we ourselves elect!

Ask yourself this question: “What has government done for me lately?” If you are like most Americans, you will probably answer: “Not much.”  Many people feel like they pay a lot in taxes but don’t really get anything back from government.  Surveys show that 52% of Americans believe that “government programs have not really helped me and my family.”

But is that really true? Let’s examine a typical day in the life of an average middle-class American and try to identify some of the ways that government improves that person’s life during that 24-hour period.

6:30 a.m. You are awakened by your clock radio and listen for a few minutes to the news before getting up. But you can listen to your favorite station only because the Federal Communications Commission brings organization and coherence to our vast telecommunications system. It ensures, for example, that radio stations do not overlap and that stations signals are not interfered with by the numerous other devices – cell phones, satellite television, wireless computers, etc. – whose signals crowd our nation’s airwaves.

6:38 a.m. You go into the kitchen for breakfast. You pour some water into your coffeemaker. You simply take for granted that this water is safe to drink. But in fact you count on your city water department to constantly monitor the quality of your water and to immediately take measures to correct any potential problems with this vital resource.

7:00 a.m. You go into your newly renovated bathroom – one of a number of amenities that you enjoy in your house. But the fact that you can even own your own house is something made possible by government. Think about this: “ownership” and “private property” are not things that exist in nature. These are legal constructs: things created by laws that are passed and enforced by government.

7:01 a.m. Government also helps you own your house in more than the legal sense. On a more practical level, the federal government actually gives you money every year to help pay for your house. It’s called a mortgage interest tax deduction and it is one of the larger benefit programs run by the federal government – amounting to over $60 billion dollars a year. You can also deduct any real estate taxes you pay.

7:30 a.m. Before you leave home, you take your pills to control your high blood pressure. But how do you know that this medicine is safe or effective? Without the testing required by the Food and Drug Administration, you wouldn’t. And without the vigilance of the FDA, you could easily fall victim to unscrupulous marketers of unsafe and worthless medicines.

8:15 a.m. You drop your child off at day-care. One of the reasons you can afford this program is the $3,000 child care tax credit you get from the federal government every year. Equally important, your child benefits from the fact that most state governments now enforce day-care requirements for group size, ratios of children per staff member, teacher training, nutrition, health, safety, and space requirements.

…[Ed.: The list goes on here.]…

So goes your typical day as an average middle-class American – if you happen to be paying attention to all the different ways that government laws and programs help you lead a better life. For most of us, thinking about our day this way is a real eye-opener. We like to see ourselves as rugged individualists, leading our lives without any help from anyone, especially government. But this is an illusion. As we have just seen, the reality is completely different. We are constantly benefiting from a variety of government laws and programs.

Federal, state, and local government employees are literally working around the clock to make our lives better in innumerable ways. Ironically, even those conservatives who complain that they don’t want government “interfering” in their lives depend heavily and repeatedly on government throughout their day. And the examples described earlier are only a small sample of the many ways that government programs improve our lives. They do not even include many of the most important services of government, such as preventing economic depressions, catching criminals, caring for our fragile ecosystem, dispensing justice, thwarting terrorist attacks, and eradicating deadly diseases. A detailed description of all the various ways that our lives are improved by the activities of local, state, and federal governments could easily take up hundreds of pages.

Many conservative critics of government like to portray it as a malevolent force whose extensive network of laws and regulations are increasingly invading our lives in harmful ways. They have it half right: government policies do affect our everyday lives in many ways, but these efforts are usually beneficial. For most of us, most of the time, government is not some faceless bureaucrat who is constantly ordering us around; it is more like a guardian angel: an invisible benevolent being that accompanies us throughout their day, easing us through potential difficulties and protecting us from impending harms. Admittedly, the angel analogy is a bit exaggerated, but the underlying truth is not: government has an extensive and overwhelmingly positive effect on our everyday lives.

Note: This post is excerpted with permission from Government is Good, which is not affiliated with the Economic Opportunity Institute (EOI). The opinions expressed by its author do not necessarily reflect the views of EOI.

John Burbank, EOI Executive Director

From the Everett Herald:

As the recession continues bumping along, tax receipts are continuing to fall behind what’s needed to sustain public investments in education, health care and public safety. The most recent state forecast projects a $3 billion revenue shortfall over the next two years.

The governor has responded with a call for “transforming Washington’s budget.” As this “transforming” process heats up, we’ll no doubt hear a lot about making government more “efficient,” like the private sector. And that should raise a big red flag, because an economist would tell you that efficiency isn’t really what you want to measure when it comes to governing well.

How’s that, you say? We want government to be inefficient? Well, not exactly.

We want government to build public structures and provide services that meet the fundamental needs of its citizens. That means government stands apart from the private sector focus on efficiency and cost-cutting in search of greater profit. (Indeed, it is that single-minded, for-profit approach that often results in increased and escalating costs for the public, such as BP’s Deepwater Horizon disaster in the Gulf of Mexico.)

Some services are provided much more efficiently by the public sector — especially those that would never occur if left to the private sector to manage alone. For example, a colleague of mine has a child with Down’s syndrome. Both federal and state laws require that “each school district … insure(s) an appropriate educational opportunity for all children with disabilities between the ages of three and twenty-one.” That means that when my colleague’s daughter turned 3, she started receiving educational services paid for by the government.

Those services could include one-on-one tutoring and coaching for a special education student, learning in very small class sizes, tutoring, speech therapy, or help with “mainstreaming” into a regular classroom. It all takes money, and it all could be considered an economically inefficient expenditure. After all, the private sector would not assume those costs. Applying a standard cost-benefit analysis would not point to a pathway for this intervention or help — unless the parents were very, very wealthy.

But morality tells us something different: to invest in all children. It is inefficient, and that is good.

Another example: When there is a fire in the neighborhood, you can be sure you’ll hear the sirens soon, and the firefighters will be responding within minutes, if not seconds. They don’t ask for a VISA card before they put out the fire. But they are helping a private homeowner, as well as those neighbors whose houses might be threatened by an out-of-control fire nearby.

That’s because fire prevention is a public good, whose benefits and costs are shared by all of us. Is it economically efficient? Not necessarily. Maybe the house they save isn’t worth the money spent to save it, when you consider all the tax money needed to build or upgrade fire stations, engines and ladders, and the wait time for firefighters between fires. But that’s not the point. The point is that we can all depend on our firefighters to be at an emergency or a fire at our house when we need them.

There are other efficiencies in government that the private sector can’t touch. For example, all of us use our streets and roads to get around. Left to the private sector, we might have a few very well paved streets, walled off from most of us by tolls. But that wouldn’t do much good for commerce and for just plain getting around. We have only been able to build the transportation infrastructure we have because millions of citizens — past, present and future — have paid, are paying, and will pay for them with taxes. That just can’t be done by the private sector.

So when we sit down to talk about government efficiency, taxes, and what is “cost-effective,” let’s be careful. We may not be asking the right questions. Governments are not businesses, and should not be. They are not accountable to shareholders, looking for short-term profits. Governments are accountable to the citizens — all of them — whether they make $1 million a year or $30,000.

As citizens, we expect public structures and services, certainly for ourselves and our children, for the unlucky and the forgotten, and for the vast majority of our neighbors. No special favors to the wealthy, but essential public structures for all of us. That’s how government in a democracy should work.

Can you imagine a world in which you receive health care when you need it, and don’t have to worry about losing your coverage when you change jobs? How about when you have a child, being able to take six months to care for your baby at three-quarter pay? Or when you retire, receiving an annual pension worth three-fifths of the average of your best five years’ salary? A place where college tuition costs close to nothing and a train gets you from Everett to Seattle in 15 minutes, every half hour?

In this world, as an employer I do not have to negotiate health insurance. I do not have to figure out how to start a deferred compensation plan. I do not have to cover costs for leave when one of my employees has a baby. I do not have to set up a cafeteria-style program of benefits and hope my employees guess the correct amount of pre-tax dollars to cover their child-care costs.

All these social responsibilities would be shifted from my business, enabling me to focus on one thing: creating the best possible products and services. An educational pipeline provides me a ready supply of talented workers — and I can get back and forth between business meetings in Everett and Seattle without the hassle of sitting in traffic.

Of course, in the largest and most dynamic economy in the world, this isn’t just a fantasy. Wait, aren’t we talking about the United States? No, it’s Europe — specifically the European Union — with an economy based on universally available health coverage, higher education, pension security, maternity and paternity leave, and a transportation system that moves goods and people around with speed and efficiency.

I got a taste of this world recently.

Our daughter, newly graduated from college, has a job, thank goodness. She teaches English in French elementary schools, and we were lucky enough to visit her. We got our metro passes in Paris, which enabled us to whisk all over the city without a worry about cars and traffic jams. We took a side trip to Amsterdam — traveling 400 miles in three and a half hours, on a train cruising at 186 miles per hour! When my daughter had a medical problem in January, she found a private doctor near her apartment (almost all personal physicians are in private practice), got treated immediately, and had to pay only a small fee.

Shared social policies actually save money for employers. It is more efficient than having each employer figure out their own package of benefits (if they even offer them). And it generates profits. That’s why Europe has more Fortune 500 companies than the U.S. and China combined.

Europe is also corporate America’s biggest target for foreign investment, with U.S. businesses making far greater profits there than anywhere else in the world. So our own corporations, even while they stymie efforts for increasing health coverage and family leave in our country, invest in Europe for profits.

It also saves money for workers and consumers. For their taxes, Europeans receive a seemingly endless list of benefits and services for which Americans must pay extra and out-of-pocket costs via premiums, deductibles, hidden fees, tuition and other charges — in addition to our taxes.

Even Americans who have health care coverage are paying escalating premiums and deductibles, while Europeans receive health care in return for a modest amount deducted from their paycheck. Americans are saving a hundred thousand dollars per child for their college education, yet European children attend for free or nearly so. On this side of the Atlantic, Americans scrape to save the amount they need for retirement beyond Social Security, but the European retirement system is much more generous. Many Americans pay extra for child care, or self-finance their own sick leave or parental leave after a birth, but Europeans receive all of these and more in return for paying their taxes. When you add it all up, it turns out that many Americans pay out as much as or more than Europeans — but we receive a lot less for our money.

This is not a business versus workers equation. What we can learn from Europe is that when we enable all citizens to get a good education, guarantee health care and provide good pensions, we also enable businesses to focus on production, innovation, productivity and profits.

That’s the key to getting out of this recession and unlocking the door to a prosperous economic future.

This is hardly an Islamic tide, as the alarmists have claimed. And the vast majority of Muslim immigrants have endured the hardships of immigration for a better life, European-style, not to spread jihad. Of greater concern is the number of ethnic minorities, including the children and grandchildren of immigrants, who remain less than fully integrated.  These minorities, like most minorities everywhere, suffer from higher rates of unemployment, poverty and discrimination.

Europe’s problem is “more Marx than Muhammad,” as one French scholar put it. Europe needs its own version of a civil rights movement that will fully integrate its minority populations. Fortunately there are signs of government action to end discrimination, with tens of billions of euros being spent on various programs and interventions. But these efforts are in their initial stages. Time will tell if they will be effective.

In terms of population decline, Germany, Italy and Spain have alarmingly low birth rates. But France, Ireland, the Scandinavian countries and Britain are holding their own, at or just below population replacement levels. Central and East European countries also have low birth rates, but those closely track with the end of communism when economic uncertainty and the collapse of child support structures caused women to postpone births; there is evidence of birth rates rebounding there.

By raising the age of retirement, allowing a reasonable rate of immigration, increasing the number of women in the labor force, and continuing its long term productivity gains, Europe should be able to cope with these demographic uncertainties and their impacts on its social systems. While there is cause for concern in some countries, it is way premature to be pronouncing the end of Europe.

– Steven Hill, guest blogger

You can see all the posts in this series here.

Steven Hill is the author of “Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age” (www.europespromise.org). He’s visiting Seattle and Bellingham this week:

• Monday March 15 at 11 a.m., interview on the Dave Ross Show, KIRO 97.3 FM

• Monday March 15 at 7 p.m., presenting at the University of Washington Communications Building

• Tuesday March 16 at 7:30 pm: presenting at Town Hall Seattle (tickets here)

• Wednesday March 17, 7:00 p.m.: presenting at Village Books, Bellingham

For starters, this velvet diplomacy has been instrumental in bringing greater peace, democracy, and prosperity to the former communist dictatorships of eastern and central Europe, as well as to neighbors such as Turkey, Ukraine, and others in its periphery. All told, this “Eurosphere” links two billion people — one-third of the world, including many Arab countries — to the European Union and its way of doing things. Europe’s smart power also shows the right temperament for slowly nudging Russia, China, the Middle East, and other hot spots toward rapprochement with the West.

Contrary to its reputation as a military weakling that “punches below its weight,” Europe has the second largest military budget in the world after the United States (larger than China’s), with two countries possessing nuclear weapons (France and Britain), over two million European soldiers in uniform (more than the U.S.), and many boots on the ground in peacekeeping missions and hot spots around the globe in Afghanistan, Lebanon, Kosovo, Bosnia, the Congo, and elsewhere.

But Europe’s real strength is that the European Union has had lots of practice at forging consensus among dozens of players, and that gives it a skill set that is more effective than America’s hard power at bringing large segments of the world together over the many challenges we collectively face. Indeed, the top analyst in the U.S. intelligence community wrote in September 2008 that U.S. superiority in military power will “be the least significant” asset in the era that is unfolding. In an emerging, multipolar world, Europe is transforming our very notions of “effective power” by combining economic might with a patient and pragmatic foreign policy that has achieved results.

– Steven Hill, guest blogger

You can see all the posts in this series here.

Steven Hill is the author of “Europe’s Promise: Why the European Way is the Best Hope in an Insecure Age” (www.europespromise.org). He’s visiting Seattle and Bellingham this week:

• Monday March 15 at 11 a.m., interview on the Dave Ross Show, KIRO 97.3 FM

• Monday March 15 at 7 p.m., presenting at the University of Washington Communications Building

• Tuesday March 16 at 7:30 pm: presenting at Town Hall Seattle (tickets here)

• Wednesday March 17, 7:00 p.m.: presenting at Village Books, Bellingham