My entire life, I have heard that the free market and business competition work efficiently, foster creativity, lower costs through competition, can solve many of our problems – and that government just gets in the way of the market working its magic.
Some of this may be true, at least in certain aspects of our communities. However, many of the most difficult and dangerous problems we face demonstrate that the market can’t fix everything; government has a role, indeed a vital role. In fact, the functions of government are precisely those which are not the functions of business or the markets.The functions of government are precisely those which are not the functions of business or the markets. Here are four areas where the government, not markets, must step up and lead.Click To Tweet
So while businesses use the market to reach their profit goals, government has a duty to create a fair and just market, and to occupy those spaces which cannot or should not be left up to the market: those areas where the market fails and those which are too important to leave up to an amoral marketplace, such as basic human rights and a healthy democracy.
Unfortunately, government’s abandonment of its own duties has had profoundly dire and visible consequences during 2020 and early 2021, and should spur us all to return to the purpose of government, and demand our government fulfill its obligations to we the people.
The thumb on the other side of the scale
Businesses look to the market as a tool to maximize profits by maximizing income and minimizing costs.
- If the cost of raw material or labor can be subsidized by your tax dollars, profits increase.
- If a company can dump the byproducts of production without paying for the health or environmental consequences, the costs of production decrease.
- If employees can be paid lower wages, hired part time and therefore not receive benefits, not get paid sick leave even in the midst of a deadly pandemic, work in less safe conditions with minimal financial risk to the employer and not receive hazard pay, the business’ profit margin goes up.
- If essential, life-saving products, such as personal protective equipment or natural gas to heat homes during deadly winter storms, are in short supply, it can be sold to the highest bidder or provided at exorbitant rates, not to the place with the most need or at a price most people can pay.
Absent statutory or regulatory requirements to curb pollution, treat workers fairly, pay the full price for raw materials, distribute life-saving equipment and medications to the places with the most need, or ensure basic utilities remain functional and affordable under predictable though difficult circumstances, even the most conscientious business may be pulled to maximize profits without due consideration of its moral, ethical, environmental, or humanitarian impacts.
Therefore, one of government’s jobs is to balance the drive to maximize profit with the duty to protect the people from immoral, inhumane, or destructive consequences. Government must be the thumb on the other side of the scale, opposite the side of profit maximization and on the side of health, fairness, and safety.
Three other obligations of government
However, government’s job is far broader than to be the thumb on the other side of the scale. There are three other obligations of government that are also important.
The failure of market-based solutions
The first relates to those spaces where the market fails – and therefore market-based solutions used in the private sector have no place. For instance, if rural America does not offer enough of a market to generate profit, the product will not be offered to those who live outside urban centers; such an outcome is particularly problematic when that product is essential, such as health care, mail, internet, phone or roads. As the pandemic spread nearly unchecked throughout our country, children without access to high-speed internet suffered profoundly when schools were closed, and solutions are much more difficult in environments without necessary underlying infrastructure.
Even in urban areas where there is sufficient market size, there are certain markets which just fail. For instance, there are many parts, though arguably not all, of health care which demonstrate the inappropriateness of market-based approaches. Fundamentally, medical decisions are rarely made based solely upon economic measures, but are instead complex decisions which rely heavily on faith, family, values, age, quality of life, provider recommendations, side effects, and success rates. And even if medical decisions were purely economic decisions, how do you even calculate the cost – the copay you pay, the total price paid by you and the insurance company, the average cost nationwide?
In this pandemic, we have seen that there were not and are not market forces to drive continued support and growth of public health infrastructure; the paltry state of our public health institutions was evidenced in the inability to quickly offer sufficient free testing and contact tracing, which resulted in the rapid spread of COVID-19 across the country. In sum, in important spaces where the market fails, government has an obligation to act.
Fundamental human rights
Even if there are not abject market failures, there are two spaces which are too important to leave up to the market’s whims and driving force of profit maximization – those that are fundamental to basic human rights and those that are foundational to a healthy democracy. These areas are the most profound duties government owes to its citizens.
Too often, politicians who believe government should function as a business do not ensure government is fulfilling its duties in these realms because the financial cost can be large. Instead, they fail to fully fund government action in these areas and allow private actors to seek profit by filling government’s void.
For instance, it is a fundamental human right that liberty should not be restrained without due process of law. It is the duty of government to provide an unbiased justice system and ensure those accused of crimes have access to legal counsel so as to minimize the risk of wrongful convictions. Imprisonment, like the court system leading up to it, costs the government money, and the return on those investments is not financial, but rather should be safety, justice, rehabilitation, and deterrence.
However, when private actors are allowed to function within the criminal justice system, imprisonment may become profitable – and greed can drive policies which increase rates of imprisonment despite no consistent, corresponding increase in crime. Profit motive has only worsened the racial bias built into our criminal justice system, bias which has cost too many lives and is at the heart of Black Lives Matter protests. As the country with the highest rate of incarceration in the world and where the majority of those incarcerated have not been tried, we can see the consequences of government turning over its duties to private actors and failing to fully fund its obligations due all those with interactions with the criminal justice system.
In something as fundamental as access to clean water, we have witnessed time and again the consequences of government failure to fully fund this obligation. The horrors of Flint, the prolonged problems many rural and small water districts have in providing safe and affordable water in Kentucky and elsewhere, and the recent water crisis in Texas precipitated in part by an insufficiently weatherized power grid, show that sufficient regulations, updated infrastructures, and government investment to insure affordability are necessary to ensure Americans have drinkable water. Nothing is more fundamental than access to sufficient and safe water.
The foundations of a healthy democracy
And finally, government has a duty to occupy those spaces which are foundational to a healthy democracy. Education is one such area. Democracy cannot survive absent citizen knowledge of government structure and function, access to truth and relevant facts, the ability to critically analyze those facts, the space and capacity to debate proposed responses to facts and events, and the wherewithal to engage in peaceful, responsive action. A quality education is necessary for each of these skills which enable citizens to participate meaningfully in a democracy and, therefore, secure democracy.
Charter schools and vouchers are a means to publicly fund privately run educational institutions and are proposed as a solution to our educational shortfalls by many politicians who claim that competition in the education market will improve schools. Competition has even become a driving force in traditional public schools as they compete for insufficient funding and autonomy based on test scores; even the tests themselves and the correlated curriculum are sources of great profit for the private companies that make them, profit reaped from taxes.
However, markets and market-based competition emphasize efficiency, but successful education is based upon individualized approaches, time, and relationships. When efficiency is the goal, whether to create profit for the private institutions or necessitated by underfunded public school systems, students are more likely taught using one-size fits all education in large classes and success is likely measured by a standardized test score. Parents have witnessed first-hand the impact of such education as children have moved to distance learning during the pandemic. The consequences are an educational system which fails to foster community engagement, creative processes, critical thinking, application of relevant information to current problems, or quality communication based on detailed research. Such schools may focus solely on tested subjects to the exclusion of those not seen as measurable-outcomes based; and privately run, publicly funded institutions may allow for an education biased in its messaging supportive of business to the detriment of understanding civics, other cultures, and different perspectives throughout history. Importantly, when private actors are allowed to participate in public education, democratic control over the foundations of democracy is shifted from the people to big business.
The government’s purpose is not profit, but to secure the blessings of liberty for the people
In sum, government functions not to look to the bottom line, but to “establish justice, insure domestic tranquility, provide for the common defence, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.” As constituents and voters, we should be asking our elected officials and candidates how they will ensure that government will fulfill its obligations to the people through sufficient funding and public control of public functions. Passing the buck to the market or to private actors shirks government’s duties and moves power from the people to the market and business owners. If government is not fulfilling its obligations to the people by means chosen by constituents, then we fail to have a government “of the people, by the people, for the people.”
Written by Heather Harrell. Heather is a wife and mother to three boys, two dogs and one bearded dragon. She is a lawyer and at home with her children now while she volunteers in multiple capacities; she likes to spend her free time cooking and hopes to get back into running as the weather warms up.