Its not "your money"; its "our house".

[arendt]

Its not "your money"; its "our house".
by arendt

One of the most common bunko games in politics today is to pretend that the complexities of continent-sized countries are nothing but the details of everyday life writ large. For example, we are told to treat the budget as if it were a big personal savings account, ignoring all the issues of money creation, currency exchange rates, unfunded future obligations, and so on. This is the same kind of word game that laissez-fairy tale economists use when they claim that businesses in the marketplace are “nothing but order takers” - pray tell, then, why do large companies have “strategic” planning departments?

George Bush was playing big-time bunko when he demanded tax cuts “because its your money”. This is like the guy who buys a used car, gets in an accident driving it off the lot, and wants his money back. Sorry. You bought something tangible. “Your money” ceased to be fungible; it became a “fixed asset”. Of course, you can get your money back for the tangible wreckage, but all you will get is the market price of the scrap.

The point that is deliberately missed by the conmen pitching the “your money” racket is that the national government is not just a big cash drawer; it is machinery for producing “social goods”. As machinery, as a functioning assembly line, it produces many more social goods than individuals could produce alone. It is Adam Smith’s pin factory; but producing, instead, certified teachers or safe drugs or clean air. But, without functioning machinery, raw material simply cannot be converted into product at the high rate we are used to, or cannot be converted at all.

The reactionary, Repeal the New Deal crowd has (so far just barely) failed to dismantle the assembly line; so they have decided to try to rip off or damage a few key parts. They figure that if they can steal the tires or the fuel injectors, or drain the water from the radiator, they can turn the government into scrap. Then people will agree to sell their car, which has been deliberately sabotaged, for pennies on the dollar - and, coincidentally, to give the proceeds of the sale to the super-rich recipients of Bush’s serial tax cuts.

Opposition to Bush’s asset-stripping racket is the essence of classic conservatism: the honest valuation of assets. Just as the stock of a business sells for a multiple of earnings (in an honest
market, about equal to 20), the value of the government should be set at a multiple of the services it provides. Then, we can see just how much value (as opposed to money) is being stolen from the non-rich by this racket. The fact is that the non-military goods and services which the government provides to the middle and lower classes are worth much more to those classes than the scrap value of the government assets that would be liquidated by a shutdown or privatization of government services. Such an analysis could be done on the privatization of the National Parks, along with the granting of mining and timber rights on government lands for prices that would have been cheap 100 years ago.

To switch analogies from houses to cars, the demand by the rich to liquidate functioning public assets is akin to a group of people who have taken out a joint mortgage on a house. One of these buyers (who happens to be a banker) has decided that he doesn’t want to pay the mortgage he helped to negotiate through his own bank. So, he stops paying and goes to his bank demanding that they foreclose on the other, still-paying (but, due to his default, high-risk) tenants, so that the bank can get back “its money”.

Now if a bank officer in the real world tried this swindle, he would land in jail. There are laws in place which force bankers to get rid of foreclosed properties in open auctions within some short time of acquiring them. These laws were written to prevent banks from foreclosing on a pretext and snapping up desirable property for a song.

It is quite clear that the GOP Congress has no intention of pay-as-you-go financing of existing government assets. Its clear that further calls for tax cuts are basically demands to liquidate public assets for a song to the benefit of the rich. Of course, the government has already long since been looted of all its real cash. Reagan and Bush saw to that in the 1980s, running up the biggest deficit in history, crashing the stock market, and overseeing the de-industrialization of America. What they are after now is the basic infrastructure of our national house, the copper plumbing and the windows if you will. They want to get their hands on the Social Security Trust Fund, even though they have been stealing from its non-existent “lockbox” for years with IOUs.

If any GOP conman has the chutzpah to admit what they are doing, he will probably make some argument that the private sector will provide these services more efficiently. First, the private sector will provide a completely different set of social goods. Any good that isn’t profitable (like low-risk pensions or Flood Insurance ) will simply not be produced. We already see the WTO arguing against basic governmental services in their kangaroo courts. Second, it is an empirical fact that privatization has not produced anywhere near enough “ cost savings” (if any at all, when you discount “free riding” and subsidies) to win the efficiency argument. And, finally, there are simply things you do not want to privatize - such as prisons, police, or oversight of banks.

In summary, the next time some bunko politico says “its your money”, tell him “its our house, and you want to foreclose on it.”