Friday, April 27, 2012

Can the private sector do everything better than government?

The assumption that the private sector can do everything better than government is basic to Republicans.  They don't even think about whether the assumption is correct.   Democrats, on the other hand sometimes seem to think that Government can do everything.

Someday I think that science will have precisely identified the mix of personality traits that make some people inclined toward the private sector and others inclined toward government.  Government and the private sector should be a team.

The strengths of the private sector are energy, imagination, creative problem solving and willingness to take risks. But the nature of the private sector can allow ambitious, self centered people that are greedy, monopolistic and exploitative to be enormously successful.

The strengths of the government are consistency, focus on public good.  But measuring productivity and cost effectiveness in government work is very difficult which can allow self centered people with good people skills who care little about their mission to build little fiefdoms at taxpayer expense.

I wouldn't want to buy a car made by the government, but I would be happy to put my money in a government bank or get a mortgage from a government entity (without private investors) dedicated to making home loans.

I certainly wouldn't want to buy a cell phone made by the Government, but I wish the government would do more to insure a few companies don't control the market.  Why do I have to go with Verizon if I want to realistically get cell phone reception in Montana?

I wouldn't give my money to government to invest, but I am very happy that government has trained regulators to keep an eye on the companies that are offering investment services, and I wish the government could be even better at it.

I want a house built by the private sector, but I think it is important for government to regulate construction to insure that the house I live in is safe.  I am not so keen on government regulating how my house looks.

I definitely would rather go to a Doctor, Dentist or other health care professional who is paid a salary that is independent of how many tests or procedures he/she performs.  I want them thinking about what I need, not what they need to pay the bills, or buy a new car.

I don't want to buy my tomatoes from a government run farm.  But I want the government to keep an eye on the safety of the products grown by the farmers I buy from, because I have no way to do it.

Every time we as voters have bought into the notion of private sector perfection we end up paying for it, most glaringly with the Great Depression and the Great Recession.  We bought into the notion about the wonders of private sector health care after WW II and 60 years later we pay twice as much for health care (per person) as any other country in the world (even before Obama care) yet many other countries are statistically much healthier than we are.

We as voters need to view the private sector and government as tools we can use to build a strong nation.  We need to understand the strengths and weaknesses of both of these tools, and realize it is a mistake to try to do everything with either one.

Monday, April 23, 2012

Corporate taxes- what is a sensible and fair approach

The question of how much to tax corporate profits is a source of eternal political debate where the opposing sides talk past each other without effectively addressing the other sides legitimate points, or attempting to link their position to historical or economic data.

Inevitably the debate is limited to whether the taxes will cause corporations to hire fewer people, or move elsewhere.  I think that the debate ought to address some much more fundamental questions that go beyond speculative guesses about how the tax rate will affect corporations and the economy.

First, I think it is a mistake to treat all corporations the same.  It is rather like trying to make a size 6 shoe fit everyone in the world.  We could create categories of taxation that look at two factors:

1.  How much does the corporation benefit from government spending?

2.  To what extent do the corporations activities imposed costs on society?

Some corporations unquestionably provide necessary and beneficial services to society.  Medical corporations for example, or farmers.  Other corporations engage in activities that dump major costs on society. Corporations that manufacture alcohol, or tobacco, or make their money off of gambling encourage activities that cause social disruption and mental and physical health problems.   Strip mining or other industrial activities often create major environmental problems.

Other corporations are pretty neutral, they don't provide a necessity but they also don't engage in activities that that dump major costs on society.

Seems to me the logical way to tax corporations is by creating catagories.  Low taxes on activities that are necessities and don't impose costs on socieity, moderate taxes on nuetral corporations, and high taxes on corporations that engage in activities that impose costs on society.