This “government bad, private good” meme is getting a little old, if you ask me. Not just because it’s become an overblown, orchestrated chant from some segments of the political spectrum, but also because it’s patently untrue.
Have we forgotten as a nation how private enterprise can wreak havoc on markets, clients, economies, consumers and taxpayers when greed and corruption run amok?
Remember Enron? California has yet to climb out of the deficit canyon first created when Enron began scamming the state’s ill-fated foray into energy deregulation about 10 years ago. Oh, don’t think for a moment I’m letting the California Legislature off the hook for not dealing with the deficit since — the state capital is a muddled, misguided, myopic morass of partisan paralysis and ineffectiveness.
But let’s not forget the root cause of the state’s initial plunge into deficits — the energy crisis created by Enron’s illegal actions protected by a friendly White House with ties to the Texas firm. Enron finally blew itself up with its increasingly fraudulent accounting scams, taking out along with it one of the big-five accounting and audit firms, Arthur Andersen, for its complicity in helping Enron mask its illegal activities.
And, for those who’ve forgotten, Enron was followed by a long list of firms — WorldCom., Tyco, Adelphia, Nortel, just to name a few — that made business news pages read like a scandal sheet of ongoing corporate fraud and criminal activity. These “good” private companies fleeced stockholders, employees, customers, and retirees, wiping out investors and 401Ks by the thousands as corporate executives conspired to line their pockets behind the scenes even as their firms received tax credits, incentives and taxpayer dollars.
We’ve seen it time and time again — when the political pendulum swings to deregulation and diminished oversight, with the goal of getting government out of the way, fraud and corruption rush to fill the void.
Though it’s becoming increasingly politically incorrect to point out facts, the economic meltdown of 2008 was conceived and created by Wall Street traders, bankers, lenders, and mortgage originators engaging in fraud and creating Ponzi-like mortgage securities and synthetic financial derivatives that were guaranteed to blow up when the Wall Street-created housing bubble burst.
And it was aided and abetted by the ideological belief that the private market would discipline itself and government oversight was simply unnecessary — until it collapsed like a house of cards. Then, of course, government needed to step in and save the market from its own avarice and corruption.
Those who claim the economic meltdown and recession was caused by government forcing lenders to sell mortgages to people who couldn’t afford them is grossly misinformed. It’s as if they’ve learned the letter “A” and now believe they’ve learned the alphabet. A little bit of knowledge can be a dangerous thing, especially when it’s informed more by ideology than research and facts. Facts are pesky things, they don’t go away just because some don’t want to learn them.
Government can be inefficient and wasteful just as private firms can be permeated with graft and scandalous behavior. There’s corruption in both government and private markets. It seems to be a permanent facet of human behavior, unfortunately.
When governments, fueled by ideology, seek to outsource government functions, they can trade one set of perceived problems for an equally problematic different set. Who will monitor conflicts of interest and ensure outsourced employees have no ties, financial or familial, to vendors, contractors, developers and other special interests? Whose best interests lie at the heart of decisions — the public’s or that of the private firm that provides the workers? How much more of the public’s business gets conducted hidden from public view?
Excellence and efficiency occurs with good management. Neither government nor private business has a guaranteed lock on either. Give the “government bad, private good” mantra a rest.