Category: Economics

While people who voted once again for Donald Trump gave various reasons for their choice, some say they chose him because he is a businessman, and they see government as a business. While some might be tempted to dismiss this as mere parroting of political rhetoric, the question of whether the state is a business is worth considering.

The state (that is, the people who occupy various roles) does engage in some business like behavior. For example, the state engages in contracts for products and services. As another example, the state does charge for some goods and services. As a third example, the state does engage in economic deals with other states. As such, it is indisputable that the state does business. However, this is distinct from being a business. To use an analogy, most of us routinely engage in business like behavior, yet this does not make us businesses. So, for the state to be a business, there must be something more to it than merely engaging in some business-like behavior.

One approach is the legal one. Businesses tend to be defined by the relevant laws, especially corporations. As it now stands, the United States government is not legally defined as a business. This could, of course, be changed by law. But such a legal status would not, by itself, be terribly interesting philosophically. After all, the question is not “is there a law that says the state is a business?” but “is the state a business?”

To take the usual Socratic approach, the proper starting point is working out a useful definition of business. Since this is a short essay, the definition also needs to be succinct. The easy and obvious way to define a business in capitalism is as an entity that provides goods or services (which can be abstract) in return for economic compensation with the goal of making a profit.

While there are government owned corporations that operate as businesses, the government itself does not seem to fit this definition. One reason is that while the state does provide goods and services, many are provided without explicit economic compensation. Some also receive goods and services without providing any compensation to the state. For example, some corporations can exploit tax laws so they can avoid paying any taxes even while receiving government subsidies and contracts.

While this seems to indicate that the state is not a business (or is perhaps a badly run business), there is also the question of whether the state should operate this way. In his essay on civil disobedience, Henry David Thoreau suggested that people should have an essentially transactional relationship with the state. That is, they should pay for the goods and services they use, as they would do with any business. For example, a person who used the state roads would pay for this use via the highway tax. This approach does have some appeal.

One part of the appeal is ethical. Thoreau’s motivation was not to be a cheapskate, but to avoid contributing to government activities he saw as morally wrong. Two evils he wished to avoid funding were the Mexican-American war and slavery. Since the state routinely engages in activities some citizens find morally problematic (such as subsidizing corporations), this would allow people to act in accord with their values and influence the state directly by “voting” with their dollars. The idea is that just as a conventional business will give the customers what they are willing to pay for, the state as business would do the same thing.

Another part of the appeal is economic as people would only pay for what they use and many probably believe that this approach would cost them less than paying taxes. For example, a person who has no kids in the public schools would not pay for the schools, thus saving them money. There are, of course, some practical concerns that would need to be worked out here. For example, should people be allowed to provide their own police services and thus avoid paying for these services? As another example, there is the challenge of working out how the billing would be calculated and implemented. Fortunately, this is a technical challenge that existing business have already addressed, albeit on a much smaller scale. However, this is not just a matter of technical challenges.

An obvious problem is that there are people and organizations who cannot afford to pay for the services they need (or want) from the state. For example, people who receive food stamps or unemployment benefits obviously cannot pay the value for these goods. If they had the money to pay for them, they would not need them. As another example, companies that benefit from United States military interventions and foreign policy would be hard pressed to pay the full cost of these operations. As a third example, it would be absurd for companies that receive subsidies to pay for these subsidies. If they did, they would not be subsidies. The company would just give the state money to hand back to it, which would just be a waste of time. The same would apply to student financial aid and similar individual subsidies.

It could be replied that this is acceptable, those who cannot pay for the goods and services will be forced to work harder to be able to pay for what they need. Just as a person who wants to have a car must work to earn it, a person who wants to have police or fire protection must also work to earn it. If they cannot do so, then it will become a self-correcting problem as they die in fires or are killed by criminals. Naturally, the state could engage in some limited charity, much like businesses sometimes do. The state could also extend credit to citizens who are down on their luck or even conscript them so they can work off their debts to the state.

The counter to this is to argue that the state should not operate like a business because it has obligations that go beyond those imposed by payments for goods or services. The challenge is, of course, to argue for the basis of this obligation.

A second reason the state is not a business is that it is not supposed to operate to make a profit . This is not merely because the United States government spends more than it brings in, but because it does not even aim at making a profit. This is not to say that profits are not made by individuals, just that the state as a whole does not run on this model. This is presumably fortunate for the state, few other entities could operate at a deficit for so long without ceasing to be.

There is, of course, the question of whether the state should aim to operate at a profit. This, it must be noted, is distinct from the state operating with a balanced budget or even having a surplus of money. In the case of balancing the budget, the goal is to ensure that all expenditure is covered by the income of the state. While aiming at a surplus might seem to be the same as aiming for a profit, the difference lies in the intent. The usual goal of achieving a budget surplus is analogous to the goal of an individual trying to save money for future expenses.

In the case of profit, the goal would be for the state to make money beyond what is needed for current and future expenses. As with all profit making, this would require creating that profit gap between the cost of the good or service and what the customer pays for it. This could be done by underpaying those providing the goods and services or overcharging those receiving them, both of which might seem morally problematic for a government.

Profit, by its nature, must go to someone. For example, the owner of a small business gets the profits. As another example, the shareholders in a corporation get some of the profits. In the case of the government, there is the question of who should get the profit. One possibility is that all the citizens get a share of the profits, although this would just be re-paying citizens what they were either overcharged or underpaid. An alternative is to allow people to buy additional shares in the federal government, thus running it like a publicly traded corporation. China and Russia would presumably want to buy some of these stocks in the United States.

One argument for the profit approach is that it motivates people; so perhaps some of the profits of the state could go to government officials. The rather obvious concern here is that this would be a great motivator for corruption and abuse. For example, imagine if all courts aimed to operate at a profit for the judges and prosecutors. It could be contended that the market will work it out, just like it does in the private sector. The easy and obvious counter to this is that the private sector is well known for its corruption.

A second argument for the profit option is that it leads to greater efficiency. After all, every reduction in the cost of providing goods and services means more profits. While greater efficiency is desirable, there is the concern that costs would be reduced in harmful ways. For example, government employees might be underpaid. As another example, corners might be cut on quality and safety. The operation of for-profit prisons and universities provide tow cautionary tales about how a for-profit government would be bad for those outside the ruling class.  It can be countered that the current system is also problematic since there is no financial incentive to be efficient. An easy reply to this is that there are other incentives to be efficient. One of these is limited resources, people must be efficient to get their jobs done using what they have been provided with. Another is professionalism.

In light of the above discussion, while the state should aim at being efficient, it should not be a business.

When the left proposes to provide new and expanded benefits to non-rich Americans, the right replies with two stock arguments. The first is the deficit argument, which I addressed in my previous essay. The second is the Dependency argument.

The gist of the Dependency argument is that if people get assistance or benefits of a certain sort from the state, such as unemployment benefits or childcare, then they risk becoming dependent upon the state. Since this dependence is claimed to have negative consequences, such assistance and benefits should be limited or not provided. This can be seen as a utilitarian argument.

There are numerous variations of this argument which tend to focus on specific alleged harm. For example, it might be contended that if unemployment benefits are too generous then people will not want to work. As a specific illustration, in  April, 2020 Senator Lindsey Graham argued that public financial relief for the coronavirus would incentivize workers to leave their jobs. Other alleged harms include damage to the moral character of the recipients of such benefits and, on a larger scale, the creation of  a culture of dependency and a culture of entitlement. While this argument is passionately advanced by many on the right, there are two main issues that need to be addressed. The first is whether the argument is being made in good faith. The second is whether the argument is a good one from a logical standpoint.

Bad faith argumentation can occur in a variety of ways. One way is for a person to knowingly use fallacies or rhetoric as substitutes for good reasoning. Interestingly, a person can use fallacies and rhetoric in good faith when they do so unintentionally. In such cases, they are using bad logic in good faith. Another way is for a person to use premises they believe are untrue. Naturally, a person can make untrue claims in good faith; they do not realize their claims are untrue. Another way a person can argue in bad faith is to advance arguments that they do not believe in. This usually involves making arguments based on principles or reasons that they do not actually accept, while they pretend that they do.

Because of the problem of other minds, sorting out when people are engaged in bad faith argumentation can be challenging. After all, even if you can show that a person has used a fallacy or made a false claim, this does not itself prove they were arguing in bad faith: bad faith involves intent. Fortunately, there are ways to make a decent case that someone is engaged in bad faith and one of these is to provide evidence of inconsistency. This is, unfortunately, not always decisive: people can be sincerely inconsistent because they do not understand the implications of their claims and for other reasons that do not involve an intent at deceit. But in the case of the right, their dependency argument seems to generally be a bad faith argument.

If we take the Dependency arguments seriously, then they would also tell against inheritance, something beloved by the right since it helps entrench wealth and enhance inequality. In fact, philosophers have long made this argument.

Mary Wollstonecraft contends that hereditary wealth is morally wrong because it produces idleness and impedes people from developing their virtues. Inheritance is unearned. So, if receiving unearned resources creates dependency, then inheritance would create dependency. It could be countered that people can earn an inheritance, that it might be granted because of their hard work or some other relevant factor. While such cases would be worth considering, earning it hard work is not the usual way one qualifies for an inheritance. However, an earned inheritance would certainly not be subject to this argument. This exactly mirrors the conservative Dependency arguments, and they should, if they are consistent, agree with Wollstonecraft. But they clearly do not.

As one would expect, conservatives on the right generally favor protecting inheritance and oppose estate taxes. During the first Trump administration, the exemption to the estate tax increased to $5.49 million and in 2017 it increased again to $11.18 million. The Big Beautiful Bill also aimed at reducing taxes on the estates of the extremely wealthy.  This is inconsistent with their Dependency argument. If they truly fear that people getting small benefits from the state will create dependency and destroy incentives, then they should be terrified by such massive inheritances: these would, as Wollstonecraft argued, seem to be vastly more harmful. If one does not like the inheritance argument, then there is also the welfare for the wealthy argument.

While there are some exceptions, the right typically favors subsidies and benefits for corporations, businesses, and the wealthy. As such, it is hardly surprising that the bulk of social welfare spending benefits them rather than the poor. With almost no exceptions, one does not hear the people railing about the alleged dependency of the poor argue against these benefits and assistance. They are only concerned when the beneficiaries are the poor rather than the rich.

One can, of course, argue that there are relevant differences between benefits and assistance for the rich and those for those who are not rich. Often, these arguments also tend to be made in bad faith. A common tactic is to use the Perfect Analogy fallacy. This fallacy occurs when one takes the standards for assessing an argument by analogy to the extreme and imposes unreasonable requirements for similarity. This is the opposite of the Poor or False Analogy fallacy; this occurs when the standards are applied too laxly by the person making the argument.

 As a tactic, when using the Perfect Analogy Fallacy, one simply refuses to accept that the two things are similar, no matter what evidence or reasons are presented. As always, it can be challenging to prove that someone is doing this in bad faith, but one can sometimes push the person into trying to defend something that they clearly do not believe, and their bad faith becomes evident. That said, one must always be careful not to assume that a person who rejects an analogy must be arguing in bad faith or that they must be wrong—to refuse to consider their arguments would be an act of bad faith.

In closing, those who oppose the state helping the non-rich and use the Dependency argument generally seem to be arguing in bad faith. Naturally, if they have also argued against inheritance and benefits for the wealthy using the Dependency argument, then they can be  arguing in good faith. As far as whether benefits create dependency or destroy incentives to work, that is another matter. But the answer seems to be “no”, as long as one looks at the statistical data rather than simply speaking from ideology or “common sense.”

, and they have cast the woke elite as the generals of this opposing force. “Wokeness”, like “cancel culture” and “critical race theory”, is ill-defined and used as a vague catch-all for things the right does not like. In large part, the war on wokeness has been manufactured by the right’s elite. In part, the war arises from grievances of the base. There are even some non-imaginary conflicts in this war —at least on the part of the Americans that can be seen as blue-collar workers. I will be focusing on this and will try to define the groups and harms as clearly and honestly as possible.

Put roughly, the United States has two broad categories of blue-collar workers. There are the traditional blue-collar workers, such as those in manufacturing, employees of plumbing businesses, truck drivers and so on. There are also the blue-collar elites; they own small businesses, are successful self-employed electricians, work as middle managers at blue-collar industries and so on. As with any class, there are degrees of each. For example, a successful self-employed plumber could be considered a blue-collar elite, but would be lower on the economic class structure than someone who owns and operates a profitable plumbing company they built up from their original one-person business. Someone who simply bought a plumbing company with their inheritance would most likely be a white-collar elite.

The woke, broadly speaking, could be seen as folks on the left who embrace liberal values. While this aspect of the definition is contentious, the woke can be seen as focusing mostly on social issues relating to such factors as race and sexuality and being less (or not at all) concerned about general economic issues.

The woke can be seen as breaking away from concerns about the lower economic classes in general and focusing on specific oppressed groups. The woke elite are what David Brooks calls the Bobos; this is the ruling class of the left that has largely abandoned the working class left of the past. There are, of course, degrees in these classes. A poor college student working at McDonalds for tuition money who blogs and tweets in support of transgender rights could be seen as woke, but not elite. Stephen Colbert can be seen as an example of a top tier woke elite. As noted above, there is the problem of what counts as being in the woke class and the right’s “definition” is so vague it is useless in a rigorous discussion. To be fair, they do not intend this usage: “woke” is a political term and is kept intentionally vague. The right calls those concerned with broad economic issues “socialists”, “communists” and “Marxists.” But they also apply these labels to mainstream corporate Democrats, such as former VP Harris.

As would be expected, these terms are usually not used rigorously, correctly, or consistently. A person could be condemned as being “woke” for allegedly ignoring the plight of workers while simultaneously being blasted for being a “socialist” who supports unions, better benefits, and higher wages. But back to the woke elite and blue-collar folks.

As noted above, the elite of the right blast the woke elite for abandoning the blue collars in favor of a woke ideology. The blue-collar workers believe, correctly, that their situation has gotten worse, especially relative to their parents and grandparents. The blue-collar elites, though well off economically, see themselves as victims: they are excluded, mocked, or simply ignored by the woke elite. They are not wrong about this. I will begin with the workers.

Trump and his fellows have appealed to the perception of white, blue-collar workers that the woke elites have abandoned them in favor of woke ideology. There are also those who accept racist explanations for their woes. For example, there is the idea that minorities are stealing jobs from white workers (with the aid of the woke elites). These workers are not wrong that they are being hurt, but their explanations tend to be mistaken. So, let us look at the woke elite and race.

The woke elite and right elite are both fighting to stay at the top of the hierarchy, but they do differ in some of their methods.  But there are similarities. The woke elite, by definition, profess to be anti-racist (or at least not racist). But they generally benefit from racism in two ways. First, the white woke elite benefited from past racism and benefit from current racism in the usual ways, though they profess to condemn these things. Second, racism gives them a battleground with their opposing elite on the right. The elite of the right have, for the most part, use racism as a tool to maintain the social hierarchy that benefits them. For example, they use racism to divide the working class against each other. The woke left elite can be sincere in this fight, but they also benefit from keeping the fight focused on such matters as race to distract from concerns about class, since they are part of the upper classes.

Both the work elite and right elite are careful to avoid engaging each other issues of economic class; this is because they largely agree on the economic class structure (them on the top, everyone else beneath them) and do not want to disrupt that. A key difference, as noted above, is race. For the right, race is both a tool to maintain the existing hierarchy and a key part of the hierarchy. While the woke elite benefit from racism, they are like elites prior to the construction of race: their hierarchy is not built on race, and racism is not one of their tools. While professing a kinder, gentler view of economics, they do all they can to lock themselves in their position and thus lock out others. One example is education: the woke elites jealously protect their control over who has access to elite universities. The infamous college admission scandal laid bare how the elites attempt to control this access.

A second example is the concentration of the woke elite in a few cities. This has hyper concentrated wealth with a range of negative effects. This includes harm to the cities that would seem to benefit from this, such as a skyrocketing cost of living. A third example, which is what the right (ironically) focuses on is that the woke elite have transformed the Democrats from a party with some meaningful commitment to workers into a party that has abandoned them in many ways. It has also had a similar impact on the American left in general. There are, of course, some who have remained strongly committed to workers, such as Bernie Sanders. But the blue-collar workers are right to recognize the woke elite as their enemies, but not for the reasons the right gives. It is not the anti-racism of the woke that hurts workers, but their commitment to maintaining the economic social order. The woke elite are committed to maintaining the existing social order, they just do not use racism as a tool in doing so because they have other tools that work very well. And, if they embraced racism, they would just be elites of the right.

The right is correct to call out the woke elites for abandoning the workers, but they only offer lies, racism, sexism, and no real help. They have no desire to meaningfully improve conditions for the workers, the “woke” Bezos and anti-woke Ted Cruz are both vehemently anti-worker. The difference is that Cruz sees racism as a critical tool and Bezos (probably) does not since he has other tools that keep him on top. As such, blue collar workers need a third party, one that will fight for them and not for the woke elite or the right elite.