News & Views from 465 California Street

Don’t Buy the Big Lie

Clint Reilly
Feb
10
2009

For decades, corporate fat cats have warded off government oversight and regulation with a big lie: “Government bureaucrats are incompetent managers who can’t tie their own shoelaces, much less oversee or run complex corporations.”

As a young political consultant, I officially named this the “Post Office Argument.”

Thirty years ago, a disorganized and bankrupt postal service became the poster child for the government’s fiscal irresponsibility and inefficient management. Perennial deficits, cost overruns, price hikes, erratically delivered mail and scandals plagued the agency until Bay Area businessman Anthony Frank was appointed to clean up the mess.

But the negative image of the “government bureaucrat” stuck. It was then exploited by an entire generation of conservative ideologues to resist regulation. Big landlords, big energy companies – just about every arm of big business – have exploited the cliché of the flailing government dinosaur.

The Reagan-era canard has been dusted off yet again, this time to argue against federal oversight of the banks receiving taxpayer dollars meant to reignite lending. Predictably, most of the money has been used to acquire other banks, shore up balance sheets or earn interest. Lending has dried up.

America faces a dual crisis. Yes, economically, we are on the brink. But politically, our democratic institutions are failing as a forum to solve critical national problems. The same old discredited clichés are recycled as truth by paid advertising and carefully crafted public relations campaigns. Ads have become a substitute for rational discourse.

Remember the Harry and Louise commercials that derailed President Clinton’s health care reform efforts in 1993? A couple worries on camera that incompetent government bureaucrats will dictate their health care regimen. Sixteen years later, our health care debacle is far worse.

Now the Wall Street Big Boys, Financial Fat Cats and the Bellicose Banking Lobby are pulling the same false alarm. “The government shouldn’t nationalize the banks,” they sob through crocodile tears at congressional hearings. Their Republican enablers immediately raise the specter of a government-run banking system.

The absurdity is manifest!

Through greed and incompetence, these financial manipulators squandered trillions. How could the government – which has already rescued them repeatedly – fare any worse?

The fact is that our federal government has played an indispensable role in the making of the American dream. Throughout our history, government managers have repeatedly conceived and implemented vital projects without absurd pay packages and the abysmal results that characterize today’s financial meltdown. There are hundreds of good examples.

Today, an efficient postal service is the third-largest employer in the United States and operates the third-largest vehicle fleet in the world.

After World War II, the effective implementation of the Marshall Plan facilitated the reconstruction of Europe, and General Douglas MacArthur rebuilt Japan.

President Eisenhower slapped a national highway system across the country. When private companies refused to provide energy to rural areas because it wasn’t profitable, Franklin Roosevelt orchestrated a sweeping rural electrification effort that changed the country forever. The Tennessee Valley Authority brought water, power and economic development to a starved and impoverished region.

The Golden Gate Bridge is an iconic example of a successful public works project. And don’t forget that our state government runs one of the world’s most distinguished educational institutions – the University of California system – not to mention our expansive network of state and community colleges.

The U.S. government also built and manages the world’s greatest network of parks.

Driven by a commitment to public service and a mission to improve society for average Americans, the leaders of these consequential public enterprises are social entrepreneurs who trade personal wealth for civic accomplishment.

Don’t buy the big lie!

I trust our federal government over the fat cats any day of the week.

Comments (34)

  • Clint, thank you for this column. I watch the Washington Journal on CSPAN every morning and I am appalled by the lack of knowledge displayed by what I perceive as a large portion of the American public. We have the responsibility to proselytize this message. The American people should not be afraid of their own government. In fact, it should be just the opposite. “We the people” are the government and we should resist our dis-empowerment that the Republicans have been trying to sell us. Again, thank you.

    Posted by: Warren A Sanford | February 10th, 2009 at 8:09 am

  • No no no!!! Stop the blasphemy! Keep repeating the “truth”: government is bad, government is bad, government bad, bad bad government…

    Posted by: corndog | February 10th, 2009 at 8:32 am

  • “Government bureaucrats are incompetent managers who can’t tie their own shoelaces, much less oversee or run complex corporations.”

    And yet, CEO’s who run a business into the ground make tens of millions of dollars in bonuses.

    Wow, those CEO’s must be really good at tying their shoes!

    Posted by: Finck | February 10th, 2009 at 10:32 am

  • To switch to how the govt., especially Obama and Congress, could get the economy going to improve the govt. image, they can redo the bailout program with a stipulation to banks getting money that it is to pay off principal on home mortgages having less than 4 years to pay with less than $40,000. At that point of 4 years left, most banks have gotten back $2 for every $1 put in a mortgage, and that should be enough. Yet the banks will be receiving from the bailout the extra principal money still pending so they can make new loans with fresh interest income developing.
    But that not having to pay for mortgages will free up well over a million families with $200-1,000/mo. to spend on goods, services, repairs, new cars, remodeling, etc. over several years to stimulate the economy much more that stupid rebate. In addition most homeowners with only one mortgage under $200,000 might have a rewriting so that in total the owners will only pay back $2 for each $1 at the end of the loans written for 30 years, and that might reduce payments by $300-1000/mo. for 4 million or more families over 5-8 years, a pretty big stimulus without any new stimulus bill. If Congress and Obama would jump on this, the families could be getting the benefits by Fall. Five million plus families with an extra $5,000/yr cash to spend on average would mean $25 billion a year being spent creating 500,000 jobs, and the people working on those jobs, earning and spending will end up creating about the same number of secondary jobs. So Clint, I hope that you will contact your friends in high places about doing this with the bailout money. Dr. J. Singmaster

    Posted by: Dr. James Singmaster | February 10th, 2009 at 10:34 am

  • If only that were the ONLY big lie coming out of conservative corners…

    Posted by: Frederick | February 10th, 2009 at 10:34 am

  • On behalf of government workers, I can say for a fact that many of these “bureaucrats” are just as talented as high priced consultants but yet realize that in life you don’t have to work 60-70 hour weeks to be successful/happy.

    Posted by: SuburbanBlue | February 10th, 2009 at 10:35 am

  • When this government was formed, the major ideological differences revolved around whether or not the State government would be superior to the Federal government.

    Now these simians have devolved into arguing the very existence for government.

    Posted by: David K. | February 10th, 2009 at 10:36 am

  • The Constitution is basically an agrarian society document.

    With industrial and information age economies with gigantic businesses, the people and the economy become increasingly adversaries mostly whereas at the time of the framers the people were the economy.

    Businesses and owners have outgrown most need for our system in particular, and nation states in general.

    By the time of the Bush admin there’s just no evidence they intended to govern at all, only to use the place in their real work. They don’t care because they don’t need to care.

    Posted by: Gooserock | February 10th, 2009 at 10:37 am

  • The postman will pick up a letter at my house, and for 42¢ it will be hand delivered anywhere in the United states, even the remotest parts of Alaska or Hawaii.

    42¢, door to door, and rarely will it take more than five days. Of course local stuff gets delivered in one day (usually). Still 42¢.

    That’s an efficient operation.

    Posted by: Sarge | February 10th, 2009 at 10:38 am

  • Our postal service is the cheapest in the world. And every day, the USPS delivers over 100,000,000 first-class letters. Between Thanksgiving and Christmas the Service processes over 20,000,000,000 cards, letters and parcels.

    These are the people Republican politicians want to characterize as lazy and incompetent. Perhaps if senators and reps actually had to pay for their postage. . .

    Posted by: Crashing | February 10th, 2009 at 10:39 am

  • Both private enterprise and government can be corrupt. That’s why both are essential. To work as competitive balances of powers with the other.

    Posted by: BVig | February 10th, 2009 at 10:40 am

  • Republicans say they love America, YET they seem to hate 68+% of the citizens ( non republicans) and the entire government. So what is left to love? why don’t they say, we love ourselves, because they do not love this country.

    Posted by: Daze | February 10th, 2009 at 10:40 am

  • When I started to work for the postal service in 1976, people were envious of my new job. Almost everyone said, “What a great job, You’ll make good money,” etc. In the 1980s, after Reagan declared that government was the problem, people starting making fun of me because I worked at the post office. I became embarrassed to tell people where I worked. You know what really bothers me about that? We worked really hard, day and night, to deliver the American people’s mail. Why do republicans think the government can be trusted with nuclear weapons and wars and not to deliver the mail????

    Posted by: Daze | February 10th, 2009 at 10:41 am

  • To answer your question Daze: Because weapons and wars are more profitable that’s why! :(

    Posted by: MikeTL | February 10th, 2009 at 10:42 am

  • Government CAN be a force for good, but we must avoid pushing the pendulum too far the other way.

    Private industry has a way to keep score – profitability. This is an imperfect measure that can lead to stupid short term decisions and greed that causes some of the grief we are seeing now.

    In the public sector it is much more difficult to know when you are being effective. When have you gone far enough? When have you gone too far? In absence of objective score keeping, other things drive – some of which may be irrational or counterproductive.

    Example: How risky should loans be? In the private sector, this should be a decision based upon risk and return – somewhat neutral of morality if the business is legitimate. If all banks are nationalized (I don’t know that this was your proposal, but bear with me), wouldn’t the government banks all have similar, consistent rules for risk taking? Doesn’t the nature of the businesses they support become subject to the sausage machine of policy?
    What if I want a loan for a liquor store?
    What if I want a loan for a web-porn business?
    What if I want a loan for a health clinic that a) provides abortion counseling or b) refuses to provide abortion counseling?
    All things being equal, do you suppose big campaign contributors might get special treatment?

    When the government controls all finance then the demonstrably inefficient and partisan policy makers gain too much control over the levers of our society.

    I’m not arguing for complete free market capitalism… that has been shown to be wanting. Let’s just not throw the baby out with the bath water.

    I would sure welcome a discussion of how we might find a center to the private vs socialist ownership question.

    Posted by: LCTLIB | February 10th, 2009 at 10:42 am

  • I agree with “LeftCenterLibertarian” that there needs to be a balance, or what is known as a mixed economy.

    But your call for restraint in government expansion is senseless, given the deregulatory orgies that have triumphed over the past thirty years. The pendulum has swung so far to the laissez-faire that it has almost swung free.

    Posted by: Ponte | February 10th, 2009 at 10:43 am

  • Don’t forget though, “Tax Cuts” DO work in exactly the way they were intended. To make the rich, richer. That after all is the over all purpose of the republican party.

    Posted by: Irate | February 10th, 2009 at 10:44 am

  • Here’s a post office argument:

    NETFLIX!

    The greatest service the Post Office has ever performed.

    Posted by: Hunter | February 10th, 2009 at 10:45 am

  • Failing banks should just fail. If a bank fails, no one loses an existing mortgage. It will be sold to someone. If a bank has failing policies and strategy, then it needs to go under. FDIC is limitless now for failing banks (cf. Citi). With FDIC, a failed bank is different than 1930. A failed bank is a failed business and the business should close; the government should not prop it up.

    Posted by: DuaneK | February 10th, 2009 at 10:46 am

  • Hello Clint,

    I am know sure what planet you live on , but the US postal service is still a bankrupt business, running a deficit in the red in the tune of $1 Billion a year. They have to stop service for a day a week or lay off 12% of their work force, just to break even financially.

    Big Government, builds nothing, designs nothing , engineers nothing without the support of my hard earned tax dollars. I am one of the 1% baters, you refer as greedy. Well, I have paid will over $500 K this year in Taxes alone, 2008 . For what? So a bunch of idiots can run around in the saying there doing something good for society. Look at Sacramento, and now Washington!! How about they just go earn a real living producing something that society real need, like gasoline, hybrid car, solar panel, etc. But do not force me to do it. Tell Joe Kennedy Jr. to s tart his own hybrid factory, instead of telling someone in Detroit to do it, if its so profitable.

    Government takes from the producing member of society , private sector, and give to non-producing people and government, public sector, buy the force of the gun, and by laws they have written. Franklin Roosevelt, prolong the Great depression by tax ing the most productive member upwards 90% of their income. No wonder no one want ed to work. It was NOT until 1941 when we got into the war WHEN Government GOT OFF THE BACKs OF THE MEN OF THE MIND, THAT THE ECOMONY TURN ED AROUND, BECAUSE THEY NEEDED US.

    If the government employees are so smart, them why are they working for the government ? Because they do not want to think, but take order from some bureaucrat at the top. Follow ing orders like the military!

    If you do not like your union wage or government pay, go start your own company, but do not tax the crap out of me!!

    Posted by: Kelly N | February 10th, 2009 at 10:47 am

  • Clint, educate yourself by ordering “Meltdown,” by Thomas E. Woods Jr. Also read Atlas Shrugged by Ayn Rand, Human Action by Ludwig Von Mises, Capitalism by George Reisman and Man, Economy and
    State by Murray Rothbard. Government doesn’t create anything, it only gives to some what it stole from others. That’s why The Founders wanted to severely limit it. Govt caused all our depressions including the current one.

    Posted by: Mike H. | February 10th, 2009 at 10:49 am

  • Just a note to tell you that I read your Tribune comments regularly and agree with you most time. I am 81 and was two months too young to vote for HST but supported him against Richard M Nixon In addition I worked in the campaign of Helen Gahagan Douglas in 1950.

    I am a really old past President of the MGO Democratic club. Get the
    idea anyway. Thought you would like to know that your efforts are not entirely wasted.

    Best personal regards,
    Frits

    Posted by: Frits | February 10th, 2009 at 10:51 am

  • I appreciate your weekly columns and very much enjoy them. I always end up thinking “gee, I wish I’d said that”.

    Posted by: Jenks | February 10th, 2009 at 11:52 am

  • If this administration listens to the propaganda we are in for more of the same and future meltdowns if we recover from this one and that is not a given right now… We need bold bold action and we need to set the banking and financial and insurance industries straight.If we ante up we own you. They should not receive monies from us without penalty or consequence. If they receive a ridiculous bonus they should be taxed heavily. Geithner’s small steps plan will not inspire confidence because it doesn’t fix anything;it just postpones the pain a little and is a fakeout pseudo quasi govt solution and not a brave bold move and that is really what we need. Nationalize yesterday, now and tomorrow. It is the only way to signal that we are serious and that the grownups are in town now.

    I was a govt employee for 10 years and I am my co workers were helpful, efficient and productive and at a
    fair but substationally lower pay rate than offered by the private sector. Now most of that private sector is out of work.

    Posted by: Marissa | February 10th, 2009 at 1:05 pm

  • Right on, Clint. Back in the eighties I tried to tell the
    readers of my paper (The Intermountain Post, Sandpoint, ID – I was
    editor). the same thing. I wound up broke.

    Posted by: John D. | February 11th, 2009 at 9:23 am

  • Dear mr. Reilly,
    Your piece in the mercury news today was an excellent portrayal of the decades of lies associated with allowing the government to handle regulatory and other service matters for citizens. Social security, medicare, veteran’s administration, the military in it entirety (including those wonderful, ethical private contractors like blackwater, haliburton, et al) are the key to accountability, budget control and the fabled transparency required by citizens. On the local level, police and public safety, prison management, plus many infrastructure functions, utilities, etc., would surely be served admirably and cheaply by private enterprise, right?

    My 92 year old rockribbed republican step father is currently blaming the financial woes on democrats in congress, and of course the huge, greedy unions who stifle free enterprise. He will not concede that the number of folks in unions has been falling steadily for years, and that republicans have held sway in congress for about 14 of the last 16 years!

    He knows the stock market better than almost anyone and trusts it implicitly because over the years, half a century worth or so, his money has shown growth of some size or another. He will never change, nor will the millions of other lock step conservatives. Jimmy carter, lyndon johnson, bill clinton, and most of all, f.d.r., provided the seeds of financial ruin in america. Now obama is doing it all over again with wasteful government pork and fraud. Dang.

    Thanks for your article; i will forward it with my fond regards to step father for his rebuttal and revision!

    Posted by: Ed | February 11th, 2009 at 9:34 am

  • I’m surprised to see you defend government bureaucracy and government employees. Peter Drucker tells us that the best we can expect from government is “competent mediocrity.” I worked for the IRS during the Clinton administration and would have to say that on average a typical IRS employee is no more than half way to mediocrity and management seemed oblivious to performance.

    I suggest you get hold of Al Gore’s report on government performance published in September 1993. I read the report and must say Mr. Gore was right on target, but alas, I saw absolutely no changes at the IRS. I saw a copy of the report circulating around the office but I don’t think anyone read it.

    In the preface of the report Bill Clinton and Al Gore had this to say: ” We can no longer afford to pay more for–our government. The answer for every problem cannot always be another program or more money. It is time to radically change the way the government operates–to shift from top-down bureaucracy to entrepreneurial government that empowers citizens and communities to change our country from the bottom up. We must reward the people and ideas that work and get rid of those that don’t.”

    So far I have seen or heard nothing that suggests the new administration is changing anything in dealing with employee performance. Mediocrity is achievable if only government becomes dissatisfied with the system. I am not optimistic the new president will make inroads in solving this most vexing of problems.

    Posted by: Richard | February 11th, 2009 at 9:35 am

  • You certainly hit a nerve with this one! The majority of us, including me, are not quite sure how the money will be spent, and really don’t think anyone can really follow up with an efficient system to ensure we are mortgaging our children’s and grandchildren’s future for a good cause. Not sure giving money to a bank to buy another bank in South America is a good idea and am wondering how we can prevent those kinds of abuses. Giving $4B to the organization that was created or supported Obama(can’t remember the name and I may have my facts incorrect) is not my idea of good corporate governance.

    Then, once we give all that money away and realize it won’t work, how do we stop it or get it back? No one has really tracked that first $350B we’ve already spent, even though the government has hired some very bright folks to figure it out. Maybe Dennis Miller is right. Keep the money and let everyone fend for themselves. The strong will survive and one can only hope to be part of the strong, or maybe even lucky. If we really feel compelled to give it away, let’s have some fiscal responsibility(more than the fat cat CEO’s of failing companies) and cut out these silly “lard” giveaways and put some real meaning into this spending spree.

    I really don’t think everyone is on board, or worse yet, really understands what this stimulus package means. Catastrophe if we don’t? If we have really been in a recession or whatever, since December of 2007, as some economists state, and the last two notable recessions (1973-1975 and 81-82) lasted 16 months, we may be more than half way home! I wonder if we wait and save, or severely reduce those dollars, and find a way to put people back to work.

    Good article, keep it up.

    Posted by: Bruce | February 11th, 2009 at 9:42 am

  • I think there’s a problem with the stark delineation of “Private sector” and “public sector”.

    “Private sector” is pure fiction. Of course there’s a need to linguistically describe non-governmental activities, but let’s jettison terminology that feeds the misconception that large corporate interests are a “sector” of our government. It wittingly downplays that constitutionally described “sector” called “The People?” It cripples our discussion about what the role of government should be.

    The first time I heard the term “private sector” used that way was just after Ronald Reagan was elected Governor in California.

    Posted by: Harry | February 11th, 2009 at 9:48 am

  • @Harry -

    I don’t want to debate linguistics… I don’t think that the “private sector” is part of the government, I think it’s part of our civilization and economy.

    I’m not drinking the de-regulatory kool-aid… I’m suggesting that regulations need to, as much as possible, assure that there is transparency and honesty and that transactions are “fair”. That is a proper role of government.

    To the extent that the government is empowered to blatantly choose winners and losers (and there has been a lot of THAT over the past 8 years) – that is overreaching and bad.

    Unless you are Haliburton. Or Blackwater. Or GM. Or Chrysler. Or Boeing.

    Posted by: LCTLIB | February 11th, 2009 at 9:49 am

  • LTCLIB -

    So you want to “balance” the government” against “private enterprise?” See what I mean about the confusion? Government is the formulation and administration of law. It’s never a question of whether the government is “better” at doing things than some other entity, like “private enterprise.” Government does what it does because it is the government.

    Who is this “private sector?” I suggest that the word was coined specifically as code for the corporate elite, to be juxtaposed with and as a co-equal partner with government, and whose interests must be “balanced” against the interests of government and, by subtle omission, to exclude from the conversation the interests of the rest of us – The People. That is the Republican view — the underlying lie.

    Senator Kyle started a sentence about how we must support those hard working people . . . [here I thought he was on the right track, but] . . . who run those businesses.

    Posted by: Harry | February 11th, 2009 at 9:53 am

  • Your col deplores the dismantling of financial regulations, but what about Madoff?

    An absolutely huge SEC staff, warned repeatedly, stood by and let him rip off $50 billion.

    Posted by: Bud | February 12th, 2009 at 1:12 pm

  • I have a hard time believing you believe your own liberal arguments. The argument for the Big Bailout is that “I trust our federal government over the fat cats any day of the week.” Are you kidding me? We all know that corporate greed is the reason for the banking crisis. While the Bush administration should have had someone ensuring the regulations we have in place are followed, it was the Clinton administration that gave banks the right to bundle these loans in the first place. Our federal government gave banks billions and what did they do with it? Paid high salaries to their CEOs, provided golden parachutes to those who left, gave foreign nationals jobs and sponsored lavish retreats to exotic places for their staffs. And did this bailout loosen credit for consumers? No. Wouldn’t you think the government would have had restrictions on what the banks did with the money? Even Obama’s new plans to give banks more assistance does not address the big four that already received and wasted what they were given. Talk about incompetence – the government rushed through the bill so quickly that they did not put the right restrictions in place. We had to do it right then or the sky would fall. Here a month later the sky has not fallen and the government is still throwing money out the door.

    He talks about incompetence on the corporate level, look at the SEC scandal. This government agency was run by young incompetents who ignored Markopolos’ warnings for a decade about Madoff and his $50B fraud that bilked investors.

    And come on, state colleges are better than private colleges. No one believes that. In fact right now UC is lowering its standards to allow more minorities to attend.

    His statement that public leaders are “social entrepreneurs who trade personal wealth for civic accomplishment” is bull. Most politicians are in it for the power and the money. Most were already wealthy before they ran for office. The Senate is made up of over 50 millionaires, a substantial representation of the nation’s propertied class. The House – 123 elected officials earned at least one million dollars last year; liberal Democrats and conservative Republicans alike. Liberal stalwart and Massachusetts Senator Ted Kennedy, brother of the late John Kennedy, disclosed that he has 45 million dollars in the bank. West Virginia Senator John Rockefeller, also a Democrat, reported to have earned 80 million dollars.

    John Kerry’s wife Teresa Heinz inherited 500 million dollars when her previous husband died. The Senate has always been home to the country’s richest elements, and the rising cost of election campaigns has led both parties to encourage self-sufficient candidates, boosting the number of wealthy elected officials. “There tend to be more rich people in the Senate,” said Richard Baker, the Senate’s historian. Representatives and senators tend to hold lucrative jobs – attorneys, doctors and company executives. “Members of Congress are recruited not from (an) ordinary cross section of America occupations,” said Thomas Mann, a Congress expert at the Brookings Institution, a Washington think tank. “There has been an increasing tendency for parties to seek out individuals who can self-finance at least part of their campaigns. New Jersey’s Jon Corzine, a former chief executive of Wall Street giant Goldman Sachs, spent more than 60 million dollars, a record, in his successful senate bid in 2000. The richest person in the House is CA Democrat Jane Harman, who reported assets worth more than 160 million dollars. Next Amo Houghton, a NY Republican who reported 150 million dollars. In the Senate, Majority Leader Bill Frist, a Tennessee Republican and heart surgeon, unveiled a fortune worth 45 million dollars.

    Trust the government? The bankrupt state of California just announced they would no longer be able to fund paying the long-term rent for registered sex offenders who now have to abide by Jessica’s Law. Some are concerned these poor people may become homeless! CA spent $22M in 2008 for their housing, some up to $2,000 a month. Trust the government, give me a break. Keep a very watchful, regulatory eye on big business – you bet!

    Posted by: Helen | February 12th, 2009 at 1:12 pm

  • Dear Mr. Reilly,
    meant to respond before this; thank you for expressing (in print) what I’ve long thought, yet never articulated: that Big Goverment is a Big Bad…is actually a Big Bad Lie. (It’s galling to see Fat Cats bankrolling special interest lobbying on the one hand, and slapping government in the face with the other.)
    I enjoy reading your views. Best wishes, robin

    Posted by: Robin | February 24th, 2009 at 12:14 pm

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