There is a popular conceit entertained by enough business leaders that it is frequently mistaken for “the position” of the “business community.” There are two elements to this conceit. The first element holds that private wealth spent by public institutions is always less efficient and less productive than private wealth spent by private institutions; the second component holds that private wealth spent by public institutions always reduces personal liberty. These two elements underlie Grover Norquist’s famous, but increasingly tenuous, “no tax” pledge.
I want to return to these two elements in a moment. But, first, I want to examine one of Mr. Norquist’s frequent claims, repeated in the November 28 NPR interview. According to this familiar claim: “There’s no reason to raise taxes. Taxes should be lower. . . . The problem we have is that government spends too much.”
Consider the elements of this claim one at a time.
(1) “There’s no reason to raise taxes.” This is the equivalent of a parent telling a child, “there’s no reason ever to go to the grocery store.” Obviously, however, if there is no food in the refrigerator, then there is a reason to go to the grocery store. Or, more to the point, if representatives elected to federal office have told their constituents that they will propose legislation whose implementation will cost money; and if these constituents elect these representatives to federal office in order to propose and implement this legislation; then, clearly, there is a reason to raise taxes.” The reason to raise taxes is to pay for the implementation of legislation that constituents have asked their representatives to propose and implement.
Which means that what Mr. Norquist really means to say is either (a) I do not like the legislation that constituents have asked their elected federal representatives to propose and enact; or (b) I like this legislation, but I don’t want to pay for it; or (c) I don’t like the federal government and I believe that depriving the federal government of the resources to pay for legislation the people have asked for is the best way to kill the federal government. For reasons that should be clear in a moment, I believe that Mr. Norquist really means (c).
(2) “Taxes should be lower.” This is the equivalent of a business-owner telling his purchasing agent that it is always better to cut costs; but as every business-owner knows full well, there are many circumstances under which costs need to increase, e.g., when there is greater demand than supply.
What Mr. Norquist really means, however, is either (a) that he doesn’t like the legislation that constituents have asked their federal representatives to pass and therefore he doesn’t believe the legislation should be funded; (b) that he likes the legislation, but also believes that federal debt is good; or (c) that he doesn’t like the federal government and he believes that the most effective way to get rid of the federal government is to deprive it the means to pay for the legislation the people have asked for. Again, for reasons that should be clear in a moment, I believe that what Mr. Norquist means is (c).
(3) “The problem we have is that government spends too much.” Again, since spending and revenue are always tied to one another, and since, in a democratic republic the public indirectly always determines both spending and revenue, this too is a complete non-sequitor; the equivalent of someone who has just purchased a Bentley being told that they have spent too much. That all depends on the market value of the Bentley and the worth of the individual who has purchased it.
What Mr. Norquist really means is either (a) that he disagrees with the priorities of the Americans who have asked their federal representatives to propose and enact legislation; (b) that he feels that we have paid too much to enact the legislation the American people have asked for; or (c) that, outside of Defense, Mr. Norquist believes that any government spending is too much. Even though Defense is the single-most inefficient use of tax-payer dollars, I think that what Mr. Norquist really means is (c).
First, remember that it was Grover Norquist who said, “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” I think it is fair to say that Mr. Norquist does not like government. In 1787, Mr. Norquist would have been an anti-Federalist. That is to say, he would have been among those standing outside Constitution Hall screaming and yelling “Treason!” against those inside. That is because Mr. Norquist is a rabid anti-federalist. He hates federalism. He hates the federal government. And he hates the U.S. Constitution, which established federalism as the law of the land.
Second, this means that for Mr. Norquist it never ever really was about sound economic policy. It was always instead about his profound hatred of all things federal. Mr. Norquist and his allies lost in 1787. They lost again in 1865. And they will not give up until they have dissolved the Union, i.e., “reduce[d] it to the size where I can drag it into the bathroom and drown it in the bathtub.”
But, therefore, third, this means that Mr. Norquist is ready to embrace economic principles that are really not economic principles at all. Take the first element of Mr. Norquist’s conceit that we identified above: that private wealth spent by public institutions is always less efficient and less productive than private wealth spent by private institutions. First, as even Milton Friedman and Friedrich von Hayek acknowledge, since there are many public goods that will never earn a high enough return to justify private investment, but which nevertheless the public has decided are worth the revenue, public institutions will always spend these dollars more efficiently than private, because private wealth will never pursue these ends at all. This, of course, has been a principle of neo-liberal economics as far back as Alfred Marshall.
Second, however, since private wealth’s principle aim is not the production of any good, but maximizing return on investment irrespective of the good, there is a built-in incentive wherever private wealth pursues public goods for private wealth to take whatever it can from the public trust while delivering as little as it has to in order to fulfill its statutory obligation. Thus, only in the most abstract sense can we say that wealth spent public institutions is always less efficient since efficiency, by definition, is a function of cost and earnings without regard for the good produced. For its shareholders, Bechtel was hyper-efficient in its Iraqi operations, pulling huge sums out of the Treasury in exchange for almost no goods at all. We gather that the public means something else by efficiency when it asks representatives elected to federal public office to enact legislation on its behalf.
But, in Mr. Norquist’s view, Bechtel is the ideal public servant since it took from the public trust and delivered to the private. Which brings us to the second element of Mr. Norquist’s conceit: private wealth spent by public institutions always reduces personal liberty. This, of course, is Mr. Friedman’s and Mr. von Hayek’s hobby-horse. And it rests on an empty, abstract understanding of “liberty” that is fundamentally at odds with the understanding entertained by the framers of the U.S. Constitution and founders of our nation. Even Mssrs. Friedman and von Hayek, certainly no great fans of public spending, are forced to acknowledge that the “good” produced by public education is an educated citizenry.
The insight contained in their begrudging acknowledgment appears over and over again in the debates over the U.S. Constitution. That insight is that while private wealth must, by definition, aim at private goals, public goals must be achieved by public wealth.
But evidently Mr. Norquist – never a stickler over truth or accuracy – is not too terribly interested in the meaning of either republic or republican, from res publica, or the wealth we hold in common. Since building a republic, however, was the aim of the framers, they were deeply interested in creating the substantive, material conditions that promote substantive liberty. Like Friedman and Hayek, the framers recognized that liberty was more than the absence of constraint; that it entailed the presence of real goods such as wealth, education, leisure, and property without which no individual could be free.
Mr. Norquist has removed these substantive conditions entirely, claiming instead either (a) that providing these basic goods to all people would itself constitute an infringement upon our basic liberties or (b) that private wealth is better able to provide these public goods than public wealth. Yet, nothing is more certain from the Constitutional debates themselves than that this was and has always been the anti-federalist objection to federalism.
So, where does this anti-federalist objection come from? One source, to be sure, was originally popular hostility to the British crown. In the popular imagination, the British crown came to signify all centralized government. Liberty, by contrast, was represented by the absence of centralized government. This was Patrick Henry, Sam Adams’ and Tom Paine’s position. The other, more powerful, source of anti-federalist opposition were wealthy elites who believed they could always outrun a government that was weaker than they were. This, of course, is the 18th century version of Norquist’s “small enough to drown in a bathtub.” It was in the interests of these elites to campaign for smaller government, not so that they could protect popular liberty, but so that no agent would be sufficiently coordinated or powerful to protect the public interest.
But the question that Mr. Norquist and his allies always ignore is: what is it that the public has asked its elected federal representatives to do? Whatever it is that the public has asked them to do, we must also pay for. Which means that we can always accurately measure how much taxation is enough, too little, or too much. It is too much if it is more than we need to pay for what the public has asked for. It is too little if it is less than we need. And it is enough if it meets the costs of what the public has asked for.
This is not a philosophy. It is not an ideology. It is not a campaign. It is how public policy and revenue work in a democratic republic. But, of course, it is this “democratic republic” part that sends Mr. Norquist up the wall.