Big Government vs. a weak state
The option of a people’s state acting decisively in the economy
In the October 23, 2022, episode of the weekly program CURE America with Star Parker, Jonathan Alexandre of the Liberty Counsel conversed with Parker, Founder and President of the Center for Urban Renewal and Education (CURE), with respect to the attitudes and voting behavior of African Americans.
Citing the CURE Report, Black Opinions and Voting Behavior, Parker noted that 20% of blacks self-identify as conservative, which is higher than the 12% of Democrats that identify as conservative; and that blacks identify as liberal half as much as Democrats (26% to 50%). Some 96% of Republicans are moderate or conservative, as against 49% of Democrats, whereas 71% of blacks self-identify as moderate or conservative. So blacks are ideologically different from Democrats.
Parker and Alexandre maintained that with respect to questions related to faith, religion, and morality, blacks have attitudes more like white Republicans. Most blacks are opposed to abortion without limitations. Most support conjugal marriage, and they believe in the importance of the father in the home. Most blacks believe in personal responsibility. Most are opposed to the legalization of marihuana. Most believe that crime and immigration are out of control. Most believe in racial harmony and reject the racially divisive discourse of Black Lives Matter and the government.
Yet, in spite of these conservative views, the CURE report showed that 74% of blacks believe that the government should provide the solutions to problems. On this issue, blacks are ideologically aligned with Democrats. And with respect to voting behavior, since the civil rights reforms of 1964, the average black vote for Democratic presidential candidates has been 88%.
Parker and Alexander believe that there are two factors causing the disconnect between, on the one hand, the conservative worldview of African Americans; and on the other hand, their orientation to government solutions and support for the Democratic Party. First, blacks are dependent on the government for employment. Some 65% of the black middle class is employed by the government. In the case of a two-income family with both working for the federal government, their combined income approaches $200,000. So the government is a major provider of income for black families.
Secondly, the government historically has played a decisive role in the protection of African-American rights. In the 1860s, the federal government, led by Abraham Lincoln and the Republican Party, abolished slavery. And in the 1950s and 1960s, the federal government, led by the Democratic Party, brought Jim Crow to an end. So the belief was consolidated in the black community that the federal government and the Democratic Party can be relied upon to protect black rights. Therefore, the people vote in support of the Democratic Party, even though it no longer is ideologically in harmony with the values of the African-American community.
Against the prevailing view among blacks and Democrats, Parker and Alexander maintain that the government is not well equipped to carry out social programs in such areas as housing and food. They believe that charity is best carried out by the church and the local community. They believe, therefore, that the Republican Party is better prepared to respond to the real needs of the black community. They are calling upon blacks to break the pattern of supporting the Democratic Party and to vote for Republican congressional and Senate candidates in the upcoming elections.
The possible alternative of a people’s state that acts decisively in the economy
In my view, a central shortcoming in the conversation is the absence of an example of a state that acts decisively and responsibly in the economy in defense of the nation and the needs of the people.
Parker and Alexander are right in their rejection of the Big Government philosophy. Big governments borrow money to finance poorly conceived programs that do not foster independent agency, undermining community and church efforts to promote personal responsibility. Big government, therefore, is not a desirable approach. But the only other option in American political consciousness is the weak state, where government regulation and state involvement in the economy are reduced, leaving control of the political-economic process in the hands of private enterprise and the big corporations. This also is a poor option, resulting in resources being wasted in financial speculation and in fundamental human needs not being attended.
Neither Big Government nor a limited state is in the interests of the people. A third option is available, which is exemplified by the states constructing socialism, like Cuba or China, which reject both models of Big Government and a limited state. The Cuban government regularly speaks against the concept of the limited state and its world-wide legacy of families without houses and children without schools or adequate meals. But at the same time, it explains to the people the illogic of Big Government: If the government increases government spending or raises wages without taking steps to increase productivity, this will only lead to higher prices, so that the people will be no better off.
Cuban Minister of the Economy Alexander Gil has explained it to the people on several occasions. It is a question of a law of economics. Prices are determined by the relation between supply and demand. If the demand for goods and services increases, but the supply of goods and services does not, this will cause an increase in prices. Accordingly, increasing salaries through a new minimum wage law, or through new labor contracts, or by reducing taxes on the people, increases the demand without a corresponding increase in production, which only leads to higher prices for goods, unless the salary increase is part of a comprehensive plan to increase production.
On the other hand, if the government were to borrow money in order to build new factories or convert new lands into agricultural production, it could lead to an increase in productivity, thus increasing the supply in relation to the demand, thereby providing more for the people and lowering prices. Therefore, Gil and the Cuban government constantly are declaring that increasing productivity is the key to elevating the standard of living of the people. The development and strengthening of the economy cannot be accomplished by blind, mindless, unplanned government spending and government employment, which can have positive and visible short-term effects, but generally is bad for the economy in the long run, by creating a large government that stifles economic productivity.
In this regard, Cuban economists have been critical of the New Deal in the USA. It was good as a temporary short-term measure in the context of an economic emergency. But it was not sustainable in the long term, because it led to excessive long-term government debt; and because it was based in part on the superexploitation of the peoples of other nations, thus provoking global conflict. During World War II and the Cold War, Cuban economists maintain, the USA put the Great Depression behind by investing in the production of arms, but this created dependence on the arms industry and on militarist foreign policies. The United States needed to invest in ecologically and politically sustainable forms of economic production, which the U.S. government failed to do, according to Cuban economists. As a result, the USA declined relative to competing and emerging world powers, with the government satisfying the demands of the people through government social programs, transfer payments, and government and military employment, financed by more and more government debt.
But this rejection of the Big Government philosophy has not meant that the Cuban government was prepared to simply reduce the role of the state in the economy. Its philosophy has been that state economic planners must accurately identify sectors in which the national economy has to grow, and to invest or foster private investment in these sectors. It is a question of policies of investing or stimulating investment in key sectors, under conditions of intelligent regulation, and in accordance with a comprehensive long-term plan. Neither Big Government nor a weak state, but a government that acts decisively to promote the productivity of the national economy, resulting in a growing economy, a higher standard of living, and the capacity to provide health care, education, nutrition, and housing for all.
The Cuban scientific and pragmatic approach is illustrated by the policies of the Cuban Revolutionary Government with respect to foreign private property in Cuba. At the time of the triumph of the revolution, Cuban agricultural land was overwhelmingly in the hands of primarily U.S. foreign companies. The revolutionary government nationalized the land and distributed it to peasants in the form of voluntary cooperatives or state farms, offering compensation to the foreign companies with terms of payment over twenty to thirty years. The decisive agrarian reform program became the foundation for a significantly higher level of development in the Cuban countryside that persists to this day. On the other hand, with the economic crisis of the early 1990s, following the collapse of the Soviet Union and the Eastern European socialist bloc, the Cuban government signed contracts with foreign capitalist companies, primarily in the tourist sector, creating joint ventures of the Cuban state and foreign capital, in accordance with the Cuban economic plan. Slowly but surely, the Cuban economy was restored, and tourism became the largest industry in the Cuban economy. Foreign private capital was mobilized to attend to the needs of the Cuban economy by offering possibilities for reasonable profit, and the Cuban state remained in control of its national economy.
At the same time, the Cuban revolutionary project learned in experience the importance of paying people more for better work, especially in a context in which the basic needs of the people are universally met. Cuba found that too many people were neither studying nor working, because the standard of living for people working and contributing was not that much higher than those not working. People did not have sufficient material incentive to work, and this was limiting the productivity of the economy. Consciousness of this problem did not emerge from academics or leaders, but from the breast of the people, who could observe the phenomenon in their families and neighborhoods. Accordingly, the Cuban revolutionary project moved to the principle of pay according to work, which was incorporated into its social and economic model of 2012. The People’s Revolution in China underwent a similar evolution. You cannot simply give more to the people, without expecting responsibility from the people in return.
For an economy of the Cuban or Chinese type to work, the government has to be under the control of the people. In the case of the USA, the government has not been under the control of the people since the age of the Robber Barons, a fact that is to some extent obscured by the façade of representative democracy. Elite control of the state is the reason why in the United States we have not seen the model of a decisively acting people’s state. We have experienced, instead, control of the state and society by the corporate elite, which has promoted the model of the weak state, in accordance with its interest in the unfettered pursuit of profit. And we have seen the alternative of a progressive sector of the elite promoting New Deal mechanisms of Big Government, in order to control the people through government social programs and government employment.
In the United States, we have been taught that governments seeking to construct socialism are authoritarian. We therefore do not know that they are in reality people’s governments, in which the people, in free competitive elections without political parties or campaign financing, elect their delegates to municipal assemblies, who in turn elect deputies to a national assembly, which is the highest authority. These structures of people’s democracy were developed in places like China, Cuba, and Vietnam, due to particular conditions in these countries that cannot be replicated in the USA. However, they demonstrate to us in the USA that a government under the control of the people is possible, thus calling us to the task of trying to develop federal and state governments more under the control of the people and less subjected to the sway of powerful interests, with structures adapted to American conditions. So that we could have people’s governments that seek to direct the economy with decisive measures, governments that follow the model neither of Big Government nor a weak state. Neither government spending and borrowing without a plan; nor a limited state that functions to facilitate short-term corporate interests. A strong state, not a bloated or overweighted state, that is prepared to defend the nation and the people; and that leaves to private enterprise, churches, civic associations, and local communities what they can do best.
The socialist governments of the world provide goods models. What is needed is not Big Government that throws money on social problems and continually increases government employment; nor a state that permits private companies to control the political-economic system in accordance with their interest in maximizing short-term profits. What is needed is a government under the control of the delegates of the people that acts decisively and with intelligence in the economy, defending the long-term interests of the nation in the development of its national economy and its productive capacity, and responding to the fundamental human needs of the people. An active people’s state that understands the pitfalls of Big Government.
A note on student debt
Parker and Alexandre discussed the forgiveness of student loans as an example of the mismanagement of Big Government. They maintained that the recent reduction of student debt by the Biden Administration is an inflationary and unfair measure. They argue that those with burdensome student loans are themselves responsible for taking out the loans, and that providing them with government relief is unfair to those who opted not to go to college because of its high costs. In my view, Parker and Alexandre are correct; government relief on student debt tolerates and reinforces personal irresponsibility. However, I submit that the irresponsibility with respect to student debts is systemic. In the first place, there is the failure of the state to fully fund education, creating a situation in which the personal decision of pursuing higher education is influenced by family income, so that it is not equally available to all. Secondly, there is the system of financial aid, in which college and university bureaucrats offers packages to students that can be managed by their families in the short term, but leave them with extensive debts in the long term. Thirdly, the post-graduate employment opportunities and income possibilities turned out to less than what was hoped or anticipated, reflecting the failure of the state to attend to the productivity of the national economy.
So rather than focusing on the irresponsibility of the individuals, I would focus on the irresponsibility of a system that did not care for and support young people as it should have. And this systemic irresponsibility ought to be taken into account in making an adjustment. At the same time, such an adjustment ought to occur in the context of a shift toward significantly greater government support for the costs of education as well as toward state policies designed to promote the productive forces of the national economy, so that the state can afford to fund higher education without increasing government deficits. Providing a system of free universal education at all levels and promoting the productivity of the national economy are essential roles of the government, a fundamental fact that neither the Big Government nor weak state models understand.
But Parker and Alexandre are right in saying that increasing government deficits to partially forgive student debts as a measure that stands by itself illustrates the widespread disregard for personal responsibility. Attention to the problem of student debts ought to be part of a national moral reset.
Conclusion
I believe that in seeking to understand the relation between the government and the economy in a just society, we ought to study the examples of the countries constructing socialism today, such as Cuba and China, and learn from them.
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