Bad Business vs. Good Government?
Do many Americans implicitly believe governmental activism is morally appropriate and pragmatically competent?
Is it reasonable to put immense trust in the ability of government to solve our problems, many of which it created?
More and more, Americans seem to think so.
Fifty-seven percent of respondents to an NBC News/Wall Street Journal poll released in April (2017) agree that “government should do more to solve problems and help meet people’s needs.”
Only 37 percent believed that “government is doing too many things better left to businesses and individuals.”
This was the highest percentage ever (the poll has been asking these questions since 1995) that thought government should be doing more.
It is easy to sympathize with this sentiment as there is so much nasty behavior by businesses. And government does a much better job in getting things done for us – or does it?
For example, the Consumer Financial Protection Bureau (CFPB) is now finalizing its rule to end payday debt traps.
This is an especially egregious practice of payday lenders, who don’t determine whether their borrowers have the ability to repay.
According to CFPB Director Richard Cordray, “By putting in place mainstream, common-sense lending standards, our proposal would prevent lenders from succeeding by setting up borrowers to fail.”
CFPB is further concerned that consumers must often “choose between defaulting, reborrowing, or skipping other financial obligations like rent or basic living expenses like food and medical care.”
The proposed rule includes a requirement that lenders would have to “determine whether the borrower can afford the full amount of each payment when it’s due and still meet basic living expenses and major financial obligations.”
According to the poll, almost six out of 10 Americans would be applauding these new regulations. (In the interest of all-inclusiveness you can find what the other 40 percent thinks about this here.)
Another instance of a lender drowning their clientele in debt has resulted in hundreds of thousands of parents who have borrowed for their children’s education and are unable to pay back their loans.
According to a front page Wall Street Journal (4.25.2017) story by Josh Mitchell, many of these parents have “delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender”
And, just like those obnoxious payday lenders, the lender “asks almost nothing about borrowers’ incomes, existing debts, savings, credit scores or ability to repay. Then it extends loans that are nearly impossible to extinguish in bankruptcy if borrowers fall on hard times.”
Toby Merrill of Harvard Law School’s Legal Services Center says, “This credit is being extended on terms that specifically, willfully ignore their ability to repay.” This is exactly what the CFPB is trying correct in their new rule.
Merrill goes on, “You can’t avoid that we’re targeting high-cost, high-dollar-amount loans to people who we know can’t afford to repay them.”
With over 300,000 parents now in default on these loans you would think the government would do something about this unethical practice.
But you probably won’t find the CFPB going after this bad actor because it is the federal government that is making these loans through the Education Department’s Parent Plus loan program.
And, yes, if you don’t pay them back they take your tax refund, your Social Security check and whatever other government stipend they can attach, even if you are left below poverty level.
As Betsy Mayotte, a consumer advocate and student-loan expert said, “If Bank of America did that Sen. (Elizabeth) Warren would have them in the biggest hearing you’ve ever seen.”
So, while government has the power, it also has the ability to abuse its power in a totalitarian way that no business ever could.
While government can command accountability from others, it rarely holds itself accountable. Its consequent hypocrisy almost defies belief.
Is it rational to be believe that the people who work in government are more enlightened than those who work in the private sector?
Everyone agrees that when an additional layer of bureaucracy is added to an activity, there is a decrease in productivity. So what makes us think that adding a layer of government to private services will increase efficiency instead of lowering it?
Is it reasonable to think that just because government is ‘non-profit’ that it cares more?
Isn’t it more logical to think that a business run for profit will care more because if they don’t they will lose customers and possibly shut down?
It would probably serve us well to keep in mind that government is administrated by people, people just like the people that run businesses – people with no special virtues, people with the same faults, failures and frailties as the rest of us.
Some claim that Christianity calls on the state to redistribute income, transform institutions and institute ‘social justice’ but, the Bible never issues a call for governmental activism.
Instead this is what God said to the Israelites when they asked for a king to rule over them:
This will be the manner of the king that shall reign over you: He will take your sons, and appoint them for himself, for his chariots, and to be his horsemen; and some shall run before his chariots. And he will appoint him captains over thousands, and captains over fifties; and will set them to ear his ground, and to reap his harvest, and to make his instruments of war, and instruments of his chariots. And he will take your daughters to be confectionaries, and to be cooks, and to be bakers. And he will take your fields, and your vineyards, and your oliveyards, even the best of them, and give them to his servants. And he will take the tenth (Oh, were it only so little!) of your seed, and of your vineyards, and give to his officers, and to his servants. And he will take your menservants, and your maidservants, and your goodliest young men, and your asses, and put them to his work. He will take the tenth of your sheep: and ye shall be his servants. And ye shall cry out in that day because of your king which ye shall have chosen you; and the Lord will not hear you in that day. 1 Samuel 8: 11-18
In other words, don’t treat the state as an idol, putting faith in its ability to set things right.
The state is a human institution, populated with and run by people.
To think that it is a god able to cure our ills is the pinnacle of foolishness.
As Samuel told the Israelites, all-powerful human institutions will end up suffocating those it is supposed to serve.
As Yuval Levin puts it in contemporary language,
In our everyday experience the bureaucratic state presents itself not as a benevolent provider and protector but as a corpulent behemoth – flabby, slow and expressionless, unmoved by our concerns, demanding compliance with arcane and seemingly meaningless rules as it breathes musty air in our faces and sends us to the back of the line.” It has created “a kind of spiritual failing” in Americans, consigning them to “less grounded and meaningful lives.
Terry Applegate writes from Utah in the winter and Michigan in the summer. He is CEO of Applegate Insulation, serves on the board for Citizens for Traditional Values, Cellulose Insulation Manufacturers Association and the European Theological Seminary and is married to Val with three children and four grand-children.