The False Promise of Big Government: How Washington Helps the Rich and Hurts the Poor

The False Promise of Big Government: How Washington Helps the Rich and Hurts the Poor

by Patrick M. Garry

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Overview

The debate over the size and scope of the federal government has raged from the New Deal right up through the 2016 presidential race. So why have opponents of big government so rarely made political headway? Because candidates fail to address the fundamental issues.
 
Patrick M. Garry offers a solution in this short, powerful book. Garry, a law professor and political commentator, reveals six ways in which big government hurts the very people its purports to help: the poor, the working class, and the middle class. And the problem is worse than that, he shows: big government actually props up the rich, the powerful, and the politically connected.
 
The False Promise of Big Government debunks the myth at the core of modern progressivism: that only government can help the average person prosper. The truth is that those who claim to speak for the “little guy” actually push for policies that harm the most vulnerable in society, and the proponents of limited government are, in fact, trying to free those individuals from a government that acts against their interests.
 
The False Promise of Big Government lays out everything you need to know about why big government fails and how to overcome it at last.

Product Details

ISBN-13: 9781497697362
Publisher: Intercollegiate Studies Institute (ORD)
Publication date: 10/10/2017
Sold by: Barnes & Noble
Format: NOOK Book
Pages: 75
File size: 713 KB

About the Author

Patrick M. Garry, JD, PhD, is professor of law at the University of South Dakota and the founder and director of the Hagemann Center for Legal and Public Policy Research. He is the award-winning author of several books, including Conservatism Redefined, which received honorable mention in World magazine’s Book of the Year awards. Garry writes frequently for both popular and scholarly publications and has testified before Congress on several occasions.
 

Read an Excerpt

CHAPTER 1

Point #1 BIG GOVERNMENT CATERS TO BIG POWER

Big government is all about monopoly. It exerts monopolistic power. It is justified by monopolistic power. It facilitates monopolistic power.

But this was not the American vision.

American history is rooted in opposition to monopolistic power. The early settlers came to America to escape the monopolistic authority of the established European religions. Much of the spirit for independence arose from the colonial opposition to chartered monopolies from England. The principle of freedom from monopolies became incorporated in various ways into the Constitution and was evident in early constitutional case law, such as Trustees of Dartmouth College v. Woodward (1819) and Charles River Bridge v. Warren Bridge (1837).

The ideal of the independent yeoman farmer or artisan operating in an open and competitive marketplace dominated American self-identity through the nation's first century. Some states even banned monopolies in their state constitutions. Many other states, particularly midwestern and western states, ratified constitutional provisions combating the monopoly power of railroads and eastern banks. And the federal antitrust law, passed in the late nineteenth century, further expressed the American opposition to monopoly power.

Despite this long-standing national commitment to decentralized competition, the advocates of big government continue to push for a federal government that grows larger and less competitive day by day.

The New Deal era that spawned the big government of the modern age also witnessed the growth of industrial giants and the dominance of national media networks. Yet the nation has moved away from the large-scale, mass-industrialization model. Diversity, flexibility, and individualized choice now characterize American culture. A politics that kept up with these cultural changes would not attempt to concentrate ever more power in the federal government's vast administrative state but would disperse power in ways that made for more responsive, customized, and adaptive government.

Instead, the federal government gets bigger and more centralized. And as it does so, it drifts toward greater dysfunctionality. The top-down, one-size-fits-all approach is out of step with private society's use of dispersed knowledge and diverse consumer choices.

DID YOU KNOW?

In two decades, Fortune 100 companies grabbed a much larger share of the economy even as federal regulations grew by nearly 30 percent.

It is becoming more and more difficult for a centralized federal bureaucracy in Washington, D.C., to embody the diverse nation, and yet that is exactly what advocates of big government expect it to do. The federal government's centralized clumsiness became apparent in the Obama administration's 2016 mandate that every public school in America comply with a federally initiated transgender restroom policy. The move overrode the authority of state and local school boards. At least thirteen states challenged the constitutionality of the directive in court.

All these problems are bad enough. But big government is damaging for still another reason: a strong correlation exists between the growth of government and the growth of other big centers of power.

BIG GOVERNMENT AND BIG BUSINESS

Proclaiming that they will fight for small businesses and defend the "little guy," advocates of big government insist that a powerful central government is needed to control the power of large, oligopolistic corporations.

But big government tends to entrench, not control, big business. Big government, in fact, prefers big business. It is far easier to regulate an industry controlled by a few large corporations than one characterized by many small, competitive firms. And that's exactly the kinds of industries that are emerging. From 1994 to 2013, Fortune 100 companies increased their share of nominal GDP from 33 to 46 percent, while federal regulations grew nearly 30 percent. And by mid-2014, new business formation, measured as the share of all businesses less than a year old, had declined by roughly half since 1980.

Another prevailing myth holds that big business opposes big government. But just the reverse is true. Big corporations support big government. They are comfortable with increased regulation precisely because it hinders their competitors, making it harder for new businesses to form and for smaller firms to compete against bigger ones. Huge corporations can afford the costs of complying with regulations, but those same costs can drive smaller or newer companies out of business. Furthermore, the biggest businesses can afford expensive lobbyists to manipulate government bureaucracies to act in their interests. And the more corporate welfare that big government doles out to big business, the more allegiance and complicity that big government acquires from big business.

The effects of government's widening regulatory umbrella are especially evident in the financial services arena. The CEO of Goldman Sachs, Lloyd Blankfein, acknowledged that his company was a big beneficiary of the Dodd-Frank Act's complex regulatory requirements, which have "raised the barriers to entry into the banking business higher than at any other time in modern history." JPMorgan Chase's CEO, Jamie Dimon, said the same thing, explaining that Dodd-Frank helped create a "bigger moat" that protected the huge banks from competition. Sure enough, the big investment banks and brokerage firms have seen record profits since the Dodd-Frank Act was passed.

According to the Federal Deposit Insurance Corporation, thousands of commercial banks have disappeared since Dodd-Frank. Between 2010 and 2015, only two new banks were chartered. By comparison, in the quarter century prior to 2008, an average of one hundred new banks were chartered each year. Even during the Great Depression of the 1930s, an average of nineteen new banks a year were chartered.

Big government's favoritism toward big business and big money can be seen in the way the government tried to stimulate the economy in the wake of the 2008 recession. The federal government increased its taxes and regulation of the economy, thereby inhibiting job hiring through business growth and new business start-ups. Meanwhile, following a monetary program known as "quantitative easing," the Federal Reserve bought trillions of dollars of the federal government's debt in the form of bonds. This program did not create new jobs or increase the incomes of lower- and middle-class America; instead, it boosted the profits of Wall Street bond brokers and wealthy investors who owned equities in the stock market.

In short, big government and big business exist in a kind of alliance, each feeding off the other. Through regulation, government preserves big business by driving off smaller competitors; by protecting big business, politicians buy allegiance and ensure the continual flow of campaign contributions from corporations.

HOW BIG GOVERNMENT HURTS THE SMALL AND POWERLESS

The government's corporate welfare fosters bigger and more monopolistic corporations while hurting smaller competitors. The effects of the Dodd-Frank Act on the financial services industry offer just one example of how this works. Consider, too, the rollout of the Affordable Care Act (ACA), which transferred massive authority from individuals and employers to the federal bureaucracy.

The ACA's regulatory scheme helped the big players in the health-care field and hurt the small ones. An August 2, 2012, headline in the Wall Street Journal announced, "Small Firms See Pain in Health Law." The article pointed out that ACA compliance costs burdened small businesses to a much larger degree than big businesses, and thereby spurred industry consolidation. Solo physicians and small groups, for instance, could not afford to purchase and maintain the electronic records needed to comply with government reporting requirements. From 2008 to 2014, the number of independent physicians declined by almost 50 percent. Large hospitals bought up smaller physician practices and outpatient service providers to form big health-care networks. In 2015, 112 hospital mergers occurred, an increase of 18 percent from the previous year. As the Wall Street Journal noted in an article dated September 22, 2015, this ACA-fueled health-care "merger frenzy" transformed the medical marketplace into "a land of giants."

The goal of the ACA was to promote choice and competition. But it produced the opposite. From 2013 to 2017, the number of insurers selling plans in the individual markets dropped 45 percent, from 395 to 218. As of late 2016, one-third of all U.S. counties had only one health insurer offering coverage on the ACA marketplace. Citing the federal government's own data, Business Insider reported that twenty-five of the thirty-eight states with individual insurance exchanges run through the federal HealthCare.gov platform saw the number of available insurers decrease in 2017.

By actively supporting politically favored corporations, and by pushing industry consolidation in ways that drive out smaller competitors, the ACA demonstrated once again big government's preference for dealing with monopolistic markets dominated by large corporate players.

The architects of the ACA deliberately sought consolidation in the health-care industry. They argued, wrongly, that size would lead to better care and more efficiency. But size would also make medical care easier to regulate from Washington, D.C.

Through the ACA, the Dodd-Frank Act, and many other efforts, the federal government creates incentives for businesses to get inefficiently large. And then once they get so large, the government has more justification for regulating, since they are so large that they may be "too big to fail."

Thus, big government and big business have an implicit quid pro quo arrangement. The bigger the corporations, the easier it is for government to regulate them. And the bigger the government, the more protection that big business has against smaller competitors.

BIG GOVERNMENT'S DENIAL OF OPPORTUNITIES

Traditional public education exemplifies the way in which government favors monopolies in society, to the detriment of the common person.

Education is the most valuable tool for escaping poverty and achieving upward mobility. But the federal government ignores the connection between economic mobility and education when it creates public-sector monopolies in primary and secondary education. Education is treated like just another social-welfare program, with continual increases in public spending that serve primarily to expand the government bureaucracy. It is treated like a public utility — a state-sponsored monopoly that offers a standardized product indifferent to individual needs and administered by a vast bureaucracy.

Consequently, the American educational system is failing many young people. In particular, it is failing the young people who need it most — the poor and disadvantaged.

At the primary and secondary level, government education spending has soared in recent decades. Per-pupil federal education spending is nearly four times its 1970 level. Public schools all across the nation have added staff at a much more rapid pace than student enrollment has increased. The District of Columbia public schools, for instance, increased their staffing by 7.7 percent from 1993 to 2014 even as enrollment declined by 3.1 percent.

Despite the increases in spending and staffing, student performance has not improved. According to the Nation's Report Card, only 25 percent of all twelfth graders were proficient in math in 2015, with just 7 percent of black students being proficient. In a February 2015 report, the Educational Testing Service reported that American millennials lag behind their peers in other countries in literacy, numeracy, and problem solving. Youth from poor and minority households drop out of school at alarming rates, and many of those who do graduate from public high schools do not have the skills to continue their education or acquire a job with any meaningful future prospects.

Yet government continues to try to maintain its monopoly. It does everything it can to prevent competition in the education field. Public-sector educators staunchly resist programs that would give all students, regardless of family income, the chance to attend the school of their choice.

As it now stands, the wealthy can attend any school they choose, but the poor and working class are stuck with the public schools assigned to them, regardless of the quality of those schools. Furthermore, the morass of government regulations stymies local charter and private schools seeking to reach out to poor and middle-class communities. Accreditation mandates and limits on the number of charter schools all reduce the supply of alternative schools.

Policies like charter schooling, vouchers, and school choice have succeeded whenever they have been implemented, especially in benefiting needy children. The data consistently show that voucher recipients or school-choice students academically outperform their counterparts from traditional public schools. In a 2007 study, scholars from Harvard and the Brookings Institution found that school vouchers in New York City significantly increased the proportion of African American students who went on to college. A 2009 study out of Stanford University shows that access to charter schools reduced New York City's black-white achievement gap by 66 percent in reading and 86 percent in math.

Eighty percent of the charter schools in New York City outperform their comparable public schools. The 6,700 students at New York's twenty-two Success Academy charter schools, overwhelmingly from poor, minority families, scored in the top 1 percent in math and top 7 percent in English on recent state tests. Some 90 percent of the students at Success Academy's Central Harlem charter schools scored proficient on the state's math exams in 2015; just 15 percent of students in Central Harlem's traditional public schools scored proficient.

The issue is not funding. Charter schools on average spend significantly less than traditional public schools. For example, in her book The Prize: Who's in Charge of America's Schools?, veteran reporter Dale Russakoff notes that charter schools in Newark, New Jersey, spent $16,400 per pupil in 2014–15, whereas Newark's district schools spent $19,650 — 17 percent more.

One big difference is in how charter schools spend their money. Russakoff's data show that less than half of the traditional public school's spending ($9,604 per pupil) trickled down to the classroom. By contrast, three-quarters of the charter school money ($12,664 per pupil) went into the classroom. New York Times columnist Joe Nocera put it well when he wrote: "Money that the charter school is spending on extra support [for students] is being soaked up by the bloated bureaucracy in the public school system. It is a devastating fact."

Despite this performance record, federal and state governments continue to oppose voucher programs, primarily because they might upset the status quo, protected by powerful public-employee unions. In 2013 the U.S. Justice Department sued to block Louisiana's voucher program on the grounds that it violated forty-year-old federal desegregation orders, even though 90 percent of the beneficiaries of the scholarships awarded under the Louisiana program were African American. And New York City mayor Bill de Blasio blocked a Success Academy middle school in Harlem from adding 194 students, all of whom were low-income minority students attending a Success Academy elementary school, even though on state assessment tests 80 percent of those students passed the math test and 59 percent passed the English test. Meanwhile, at the public middle school that most of the students would be forced to attend instead, just 5 percent of students passed the math test and 11 percent the English test.

"THE GOVERNMENT IS SO VAST"

President Obama told Congress in September 2009 that the health-care reform law would not add "one dime to our deficits, either now or in the future." All the increased benefits being promised under the ACA would be paid for out of cost savings from a reform of a Medicare and Medicaid system that was "full of abuse and waste." In other words, the ACA would extend health insurance to thirty million uninsured Americans while improving health care for millions more already-insured Americans and yet not increase the deficit at all, just because Medicare and Medicaid would finally get cleaned up.

What a cleaning up that would be!

But this argument itself undermines the case for big government. If Medicare and Medicaid, which accounted for nearly 20 percent of all federal spending in 2009, were that full of waste and inefficiency, why were the programs not reformed earlier? And if two government programs became so full of waste that their reform could pay for the biggest government social program since the Great Society era, does that not say something about how unaccountable big-government programs inevitably become?

(Continues…)



Excerpted from "The False Promise of Big Government"
by .
Copyright © 2017 Patrick M. Garry.
Excerpted by permission of ISI Books.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Introduction Exposing the Myth of Big Government,
Point #1 Big Government Caters to Big Power,
Point #2 Big Government Breeds Cronyism,
Point #3 Big Government Is a Tool of the Elite,
Point #4 Big Government Becomes Its Own End,
Point #5 Big Government Backfires,
Point #6 Big Government Crowds Out Civil Society,
Conclusion Changing the Debate,

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