The Biggest Engine of Economic Growth? 8 Ways Taxpayers and the Government Are Necessary to Capitalism
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10. The New Phase of Social Welfare Financial Transfers
This is the newest area of commercial profit-taking from government investment. It results from the recognition that the goods and services that are provided by the public sector are an area of enormous spending that can generate great returns for private providers. That’s why we see robust campaigns for private school vouchers, for-profit charter schools, and pecuniary on-line learning through all the grades. Despite the rhetoric that disdains public services, the “social welfare services” established over several decades for public benefit are being transferred to private enterprise. Notwithstanding claims to the contrary, this form of profit-based delivery is not less costly, nor more effective. But it is highly profitable. On both the criteria of effectiveness and profit, witness the current expenditures and results in prisons and in privatized schools and collegiate education.
In this same vein, the new national health care individual mandate is a direct partnership with private insurers that will inure to their great profit. Furthermore, the Republican idea of privatizing Social Security and Medicare would be a boon to the denizens of private wealth creation. Boom and bust cycles will likely massacre the pensions of retired workers, but they will barely dent the long term profitability of investment houses.
The demise of an industrial and manufacturing economy in the U.S. and the periodic declining rate of profit has made public capital a target treasure trove for corporations— which can now take “welfare” as the “persons” the Supreme Court in their egregious decision in Citizens United declared them to be.
The view that the private sector is the independent engine of economic growth is obviously false. It’s time for an articulated economic framework which describes how the modern state has worked in an active co-venture with the for-profit sector.
Who knows what kind of tax system on debt position the nation would be in if we had created a venture capital bank that explicitly shared in commercial revenues as all venture capitalists do? Put another way, what would a public finance system look like if the public shared the private profit and personal wealth that was made with the help of our money?
Elizabeth Warren has clarified how the social web and the physical infrastructure that government supports is essential to market function, growth and wealth creation. It makes sense to go a step further and clarify how government action and public dollars serve as a direct partner with the private sector in advancing growth and wealth. Then, it would not be so easy to take the money and run.