It’s been years since I watched Sunday morning talk shows. Maybe as many 20 years. So I’d not had the fortune of hearing wickedly smart demagogues like Newt Gingrich peddling his wares. But I did this morning, thanks to the global DVR that is YouTube.
Gingrich and his allies are selling a pretty interesting lie. Government is bad for the economy. Only companies can create wealth. What Gingrich knows, of course, is that government is a very important player in the economy. In particular, the government is tremendously important for shifting risks:
The explanation for the range of use of cost-plus contracts is the same as that for the existence of insurance companies; it is profitable for all concerned that risks be shifted to the agency best able to bear them through its wealth and its ability to pool risks. The government, above all economic agencies, fits this description…
The possibility of shifting risks, of insurance in the broadest sense, permits individuals to engage in risky activities which they would not otherwise undertake…[A]t any moment society is faced with a set of possible new projects which are on the average profitable, though one cannot know for sure which particular projects will succeed and which will fail. If risks cannot be shifted, then very possibly none of the projects will be undertaken; if they can be, the each individual investor, by diversification, can be fairly sure of a positive outcome, and society will be better off by the increased production. – Ken Arrow, “Insurance, Risk, and Resource Allocation”
All sorts of industries and corporations have profited from government insurance. Consistently. For decades. Whether directly or indirectly, Gingrich and his fellow travelers work for clients who greatly value their ability to shift risks to the government.
His public rhetoric, then, is a form of misdirection. When he tells the middle class family: “Don’t look to government to improve your economic standing,” he neglects to mention that he would reserve this service for his clients, exclusively. He is not trying to eliminate government services, he is trying to eliminate the competition for government services.
This is what the revolving door between government and K Street is all about. It’s why someone like Dick Cheney is comfortable gliding between the White House and Halliburton and back. It’s also one of the many reasons why the “debate” around health insurance is so fascinating.