Ongoing series designed to combat the corporate propaganda campaign.
Let’s talk about positive externalities. Typically national defense and parks are considered positive externalities (Regulation in the States, Teske, 2004: 33). However, national defense and parks are provided by the funds from public tax dollars; and the public pay much more taxes than corporations.
Take national defense, what rationale calls this service provided to the people with their money a positive externality, or a spillover benefit? A positive externality is a social benefit of private sector transactions. But if national defense is a benefit achieved for the public with their own money, it is simply an exchange and not a spillover benefit. There is no extra unintended benefit, just people getting what they paid for.
Well, the logic of this makes sense under American ideology. It is a spillover cost to business if the people actually get a fair benefit from their money (which they don’t but that is a matter for another discussion). That money is supposed to go to the private sector elites as efficiently as possibly, through tax cuts, "corporate welfare," and other public subsidies to the private sector.
This is because the private sector leaders and government leaders are often times the same people, with alternating roles in public service and private money-making. And these people are risk-averse, they want investor protection because the market can be so precarious and they have to get it through public subsidies. Examples abound of this in recent history. The U.S. government bailed out the deregulated savings and loan industry for an estimated, prorated cost of $500 billion over a number of years (Social Problems, Eitzen-Zinn, 2006: 207). Imagine the government spending $500 billion to help criminals from poor neighborhoods that had fallen on hard times.
Every corporation is a market failure. Every enterprise that has limited liability and a legal mandate to maximize profits is going to create spillover costs. Maximizing profits means concentrating wealth, and wealth cannot be concentrated in market conditions where everyone is receiving a fair, equalized benefit. Someone is getting the better of someone else in many transactions, and thus there are spillover costs.
The reason we have regulation is because lawmakers believed, and obviously continue to believe, that public institutions can provide for the common good better than market conditions alone. Government regulatory actions require funds to enact and enforce, which is why the government collects taxes from the public for their own good. But what if the reverse happens and private interests are allowed to supersede essential social protections from social contractual arrangements like regulations and taxes? Well, in reality this happens quite often.
For example, Walter C. Anderson was a telecommunications mogul and one of the richest men in the world. He made billions of dollars in the telecommunications industry, which is allowed to operate under monopolistic conditions due to the lack of appropriate government regulation. Anderson also concealed millions of dollars in profits through money laundering schemes where he hid his holdings in offshore shell companies located in Panama and the Virgin Islands. Someone must pay the cost for Anderson’s bi-polar breaches of the social contract. "’You have people making billions of dollars who ought to be paying hundreds of millions in taxes but aren’t paying anything. That money has to be made up somewhere else, and it’s the average guy who has to do it,’ says Bob McIntyre of Citizens for Tax Justice." The method that the government uses to find out what people owe is called third-party reporting, which is usually done through W-2 and 1099 forms that the IRS receives. Yet, American financial institutions do not have to automatically file these reports to the IRS, even if their owners are U.S. citizens. This is another insidious form of limited social and economic liability (Reader’s Digest April, Crowley, 2007: 33-35).
It is through vehicles like this that positive externalities are created; but they are created for business and not the public. Any reasonable analysis could lead an honest, rational person to see that spillover benefits go to the financial upper-echelon and not the public. The question then arises, why do the public allow this to continue? Words on a piece of paper can be turned into law, and clever schemes can be carried out this way. Yet, this does not ensure acceptance of these laws. If corporate prerogatives that are harmful to people dominate the legal framework, they must be protected from the people not through moralizing, but through firepower. That is exactly why conservatives find it so essential to increase the military and police power of the government, so that the free-enterprise system can be protected, not from terrorists, but from public-enemy number one: the public.
I believe that the American people are not apathetic, but they are antipathetic. They accept the unfortunate reality of life because they have to. If the American people could make life for themselves and their families better, they would. But to struggle against the powers that be means staring down the barrel of a policeman or soldier’s rifle. So instead the American people feign loyalty to those that they most fear. Thus national defense is cruelly considered a positive externality to the public, but it is really just a measure of protecting positive externalities to private special interests.