Baseball Crank
Covering the Front and Back Pages of the Newspaper
August 16, 2006

Governments aren't businesses. They're governments.

The Wall Street Journal humors Ned Lamont with some prime op-ed space to make his case to business-minded voters, with unintentionally hilarious results. Here's his #1 "lesson" he draws from his experience in business:

[E]ntrepreneurs are frugal beasts, because the bottom line means everything. In Connecticut, voters are convinced that Washington has utterly lost touch with fiscal reality. We talked about irresponsible budget policies that have driven the annual federal deficit above $300 billion and the debt ceiling to $9 trillion. Meanwhile, the government is spending $250 million a day on an unprovoked war in Iraq while starving needed social investment at home. I am a fiscal conservative and our people want their government to be sparing and sensible with their tax dollars.

Let's say you owned a bank, and you noticed that the bank's security guards were costing money, and weren't bringing any revenue into the bank. Would you fire them on the theory that "the bottom line means everything"? Maybe Ned Lamont would. But to the rest of us, the bank's security guards are there to protect the parts of the bank that make the money. This is one reason why the obsession with equating deficits to private businesses or households is so silly - there are reasons, yes, why it is preferable not to run deficits, but the idea that government should be run with an eye to its own bottom line is not one of them. The purpose of government is to protect the rest of society, enabling private citizens to make money and do all the other good things of life. Once you treat government like an enterprise with value and profit motives unto itself, you head down a very dark path.

Posted by Baseball Crank at 9:27 PM | Politics 2006 | Comments (16) | TrackBack (0)

Terrible example. So I'll throw out the obvious retort--Does a bank hire its own police force to look for criminals thousands of miles away from its own branch? Or does it watch out for its business by hiring security guards to watch its OWN branch locations?

Posted by: Dave at August 16, 2006 10:41 PM

I assume you are making some sort of strained Iraq analogy here, but it just emphasizes my original point: Governments aren't businesses; they're governments. A bank that's threatened by people outside the bank's property will call in the superior forces of law enforcement, which have a longer reach and more force at their disposal.

When the US has a problem, who is the bigger, strnger force we can call to bail us out? There's nobody; we're it.

Posted by: The Crank at August 16, 2006 11:12 PM


There's another angle (or twelve) to this: as with shareholders, someone has to pay the bill for fiscal profligacy. Whether directly via taxation, or indirectly by a devaluation of wages, savings, and equity through inflation, the US Citizens pay for it.

And like shareholders, they should have a voice.

As you know well, Lamont's representing the views of at least 50% of those citizens (maybe more), by saying, "let's reconsider some of this spending on this war."

I understand your point that the government isn't a business. True enough. But since we're paying for the decisions of the government, we have a right to demand some degree of economic efficiency, no?

I mean, isn't that what conservatism traditionally stood for.

Posted by: Mike at August 16, 2006 11:41 PM

I'm all in favor of holding government accountable, and demanding it show something for the resources it consumes. And I don't dispute that Ned stands for the people who oppose the war root and branch. But my point is, when you measure the profitability of the bank, you look at the whole bank, not just the guards. Government is just the guards.

Posted by: The Crank at August 16, 2006 11:44 PM

Your analogy is a good one, but you come to the wrong conclusion. A country, like a business, has to survive and grow and prosper. Doing that involves a lot of things, not the least of which are attending to security and not wasting resources. Not paying attention to the bottom line will destroy a business, and endlessly running up deficits will destroy a country. Security, like all functions in a business, is a make or buy decision. What will it cost my business to do this? Can I get someone else to do it more efficiently? Is it worth doing in terms of its contribution to the bottom line?

The bottom line here, though, is that the voter in CT, and elsewhere, is being asked to choose between an administration that has made an ungodly mess of national security because of Bush's obsession with Iraq and an opposition party, personified by Lamont, which really would like to change the subject because it has no answers.

Posted by: jimbo at August 17, 2006 4:34 AM

the voter in CT, and elsewhere, is being asked to choose between an administration that has made an ungodly mess of national security because of Bush's obsession with Iraq and an opposition party, personified by Lamont, which really would like to change the subject because it has no answers.

Hmmmm. I'll take Curtain # 3, Monty.

Posted by: Mike at August 17, 2006 7:51 AM

Certainly no Republican has ever stated that they wanted to run government like a business. That would be outrageous!

"...despite all the criticism hurled at his intelligence, he is still an MBA graduate from Harvard Business School and wants to run the government like a business, though a compassionate business."

Segment on a bio of W.

C'mon you gotta do way better than crap like this to criticize Democrats. Slapping Lamont for saying a dearly held GOP Inc. philosophy (or bumper sticker line; sometimes it's hard to tell the difference) is laughable.

Posted by: jim at August 17, 2006 10:47 AM

Jim, I'm not criticizing him for saying govt should be run more like a business, but for confusing what government's real bottom line is.

Posted by: The Crank at August 17, 2006 10:52 AM

You haven't shown that he has confused the issue. You have provided an example from an assumption you have made about this statement, but simply because you believe your examply fits his thought process does not mean it does. He could have meant "the bottom line means everything and we should have security guards to ensure that we do not get robbed thus costing us more greatly against our bottom line." You really don't know what he meant by saying that and, be honest, nearly every GOP Inc politician has said the exact same thing or damn close to it.

In short, terrible example and you are fishing.

Posted by: jim at August 17, 2006 11:48 AM

If Ned were the fiscal conservative he claims to be, he would not be touting spending money on social programs that ahve been over shown over and over not to work. He would however be looking to increase the dollars in the pockets of those businesses he refers to (like with tax cuts). You grow government revenues and therefore reduce deficits by putting more money in the hands of businesses so they can grow. This has been proven everytime it has been tried. The tax custs of JFK, Reagan and now W ahve fueled some of the largest econimic expansions in our history and the only way to really stop it is to increase taxes. Interest rates have a slowing effect, but the economy can adjust to that. I can not overcome taking money from the system via taxation.

Posted by: maddirishman at August 17, 2006 12:10 PM

I have got to start spell checking.

Posted by: maddirishman at August 17, 2006 12:24 PM

The tax cuts of JFK, Reagan and now W have fueled some of the largest economic expansions in our history

Mad, I guess we're back to disagreeing. ;-)

The economic expansions under Reagan & Bush II are multifaceted, to be sure. But please don't under-value the role of deficit spending & loose monetary policy in both of those expansions.

You think domestic programs constitute wasteful spending. Jim thinks foreign adventurism constitutes wasteful spending.

I agree with both of you. Curtain #3 please, Monty.

Posted by: Mike at August 17, 2006 12:35 PM

The business of America might be business, but not the governements. A government really has to decide just what it must do to govern effectively. For instance, were this a dictatorship (an Islamofascist State say?), then press control is important. For the US, and say, local governements, it becomes something else.

For NYC, all teh talk by the political idiots to make the subway system pay for itself while regulating and keeping fares down loses the idea that, in NYC, the subway is a vital link for the fiscal state of NY, plus the only way to move upwards of 10,000,000 people around.

You wouldn't want to privatize the military. We've already eviscerated the post office. Naturally, private business comes in to replace what COngress has decided must pay its own way, so where we used to spend pennies to mail an envelope that arrived the next day, we spend over $10. Or Amtrak. In an era that states we must reduce ourt fuel consumption, it makes no sense to phase out a rail service that runs the Northeast Corridor, so people can fly or drive instead.

So Lamont can claim a bottom line necessity, but in truth, government does hav e abottom line, just a different one. What services are necessary, how much does it cost to provide them, and how do we pay it? I think Lamont has a better grasp than good old bridge to nowhere rape the first amendment portkpie Ted Stevens. Of course, if that is as good as you get, then we are in it deep.

I think Connecticut will join Vermont as recent states with an independent senator.

Posted by: Daryl Rosenblatt at August 17, 2006 2:09 PM

Mike, it was nice while it lasted.

You can make the arguement that there were other factors involved with Reagan and W. A great example of that is the military rebuilding that was required to recover from the previous administrations. What you can't argue with is the direct increase in government revenue that has accompanied both tax cuts (as well as JFK's). That is information that is readily available. In the case of Reagan, at one point revenues doubled from the previous year.

Posted by: maddirishman at August 17, 2006 2:16 PM

I think that everyone but politicians seems to understand that it would be impossible at a practical level to run the government as a business. There are simply too many things a government must do that are not conducive to black bottom lines. No doubt the reference is to increased efficiency as much as is possible in a massive governmental/bureaucratical system. Perot rattled on about this and people were enamored for a bit. Largely the GOPers break out the rhetoric more often than the Dems. That is one of the reasons I thought this was a poor rake at Lamont. I don't know much about him (however, anyone would likely be better than Lieberman), but this seemed a pointless and vacant point of criticism.

On the tax cut thing. Sigh. Reagan gets a lot of credit for something that never really happened. I think Mike's point is along these lines. The famous "tax cut" of 1981 did not cut taxes at all. It's true that tax rates for higher-income brackets were cut; but for the average person, taxes rose, rather than declined. The reason is that, on the whole, the cut in income tax rates was more than offset by two forms of tax increase. One was "bracket creep," a term for inflation quietly but effectively raising one into higher tax brackets, so that you pay more and proportionately higher taxes even though the tax rate schedule has officially remained the same. The second source of higher taxes was Social Security taxation, which kept increasing, and which helped taxes go up overall. Not only that, but soon thereafter; when the Social Security System was generally perceived as on the brink of bankruptcy, President Reagan brought in Alan Greenspan to save Social Security. The "saving," of course, meant still higher Social Security taxes then and forevermore. Of course, that was only taxed up to certain income levels.

Since the tax cut of 1981 that was not really a cut taxes went up every single year after that, with the approval of the Reagan administration. But to save the president's rhetorical sensibilities, they weren't called tax increases. Instead, ingenious labels were attached to them; raising of "fees," "plugging loopholes", "tightening IRS enforcement," and even “revenue enhancements."

The Tax "Reform" Act of 1986 was supposed to be economically healthy as well as "fair"; supposedly "revenue neutral," it was to bring simplicity, helping the public while making the lives of tax accountants and lawyers miserable; and (b) income tax cuts, especially in the higher income brackets and in everyone's marginal tax rates and offset only by plugging those infamous loopholes. The reality, of course, was very different, In the first place, the administration succeeded in making the tax laws so complicated that even the IRS admittedly did not understand them. Secondly, while indeed income tax rates were cut in the higher brackets, many of the loophole plugs meant huge tax increases for people in the upper as well as middle income brackets. The point of the income tax, and particularly the marginal rate cuts, was the supply-sider objective of lowering taxes to stimulate savings and investment. But over 40% of taxpayers suffered a marginal tax increase (or at best, the same rate as before) and, of the majority that did enjoy marginal tax cuts, only about 11% got reductions of 10% or more. In short, most of the tax reductions were negligible.

I was taking economics at the time, so shoot me.

I would also argue that there is little in the way of tax cuts by the current admin if you are anything but pretty wealthy. That is fairly well documented and too painful to go into.

Of course, the greatest post WW2 growth of the economy came under Bill Clinton. While many to most here would (and no doubt will) argue that the economy at the time happened in spite of rather than in reaction to his economic policies I have always found it somewhat disengenous to take credit for things when your team runs the show but then hurumph at success garnered when the other team is in charge.

Posted by: jim at August 17, 2006 3:54 PM

And it was the tax increases pushed forward by the Clinton administration that slowed the economy almost to a standstill by the time he left office. In the last ten years the best pay increase I have received was teh Bush tax cuts. It made a huge difference in my paycheck and I am not wealthy by anyones imagination. The reason poor people don't get tax cuts is they don't pay taxes to start off with. In most cases by the time you factor in the Earned Income Credit they are getting back much more than they payed in during the course of the year.

Posted by: maddirishman at August 17, 2006 4:40 PM
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