Government Pyramid – Role of Government

The Government Pyramid

There is a truly interesting question developing out of the turmoil of the Mideast Uprisings; the debt crisis in Europe and the U.S.; and the terrible triple punch on Japan from earthquakes, tsunamis and nuclear power plant radiation releases. What is the role of government? It is such a basic question but there is enormous depth to answer it adequately. I find to answer that question we have to build a foundation and work our way up.
Governance starts with a small collection of people that bond together to help each other accomplish larger projects than one person by themselves can accomplish. At the other extreme there is the potential for having a world government and an interplanetary government as we expand beyond the boundaries of our planet. This is the dimension of size to define the scope of the government. There are other dimensions that also define the role of government – intrusion into one’s personal liberties is another such dimension.

We measure everything in two ways, a relative scale or an absolute scale. So, consider an individual off on a planet all by themselves. They do not have the opportunity to compare their method of governance to anyone else. The success of governance of their own life can only be measured by how well that person survives. This would be an absolute scale. I would argue there is no practical absolute scale of governance although we really want to believe that there is such a scale. So for argument sake I will use the assumption that we are thinking only in terms of relative governance. Ok, so if we go back to the poor sole isolated on a planet, over time they formulate a belief that things have to be organized in a particular way so that we can take care of their most basic needs – food, fuel, shelter, water, etc.

Let’s assume the person is a man. Now we will give hope to that man. A female shows up on the planet. Immediately they think differently. But they find that by working together they can actually live better than by themselves. However despite the advantages of their agreement to work together they still maintain a different view of what is the best way to ensure long term survival. The key issue is that they agree to disagree at some level. This is the start of having a relative view of governance. The profound development is that the agreement to work together is also the start of intrusions on personal liberties. We either accept the trade-off of personal liberty loss to accomplish more or we limit our potential as human beings.

Bridges, roads, buildings and technology that have developed over time are an extrapolation of the motivation to work together, so that greater things can be accomplished and is a testament to the understanding that larger government is good. Smaller government would mean a limitation on the creativity we have and potential to achieve greater things. If we want to reach for the stars then we have to work together all the more. There may be negatives to larger government but the weighting of value between working together or not is still the same argument as in a marriage. This may sound extreme but if you don’t believe in larger government then you fundamentally do not believe in marriage or the basic reason why we work together.

The point is there is another scale for measuring government in how much can be accomplished relative to the size of the government. This is not to say that just because it is larger that it is more efficient. However, what it does say is that larger projects are attempted by larger governments. The projects that are attempted may be good or bad and are not limited by constructive projects. Larger governments tend to exercise their influence over even larger groups then their own immediate citizens. When outside influences invade other groups, that did not elect to participate in the original group, then they are exercising another dimension of governance – influence or perceived control.

Private industry is just another form of government. They also believe in growing their company, or in other words create a larger government. The major difference is that private industry is autocratic, not democratic. Many of the same measurements regarding governance metrics, described above, apply to private industry as much as political governments. Multinational companies are not inherently bad until they like political governments start to influence the political process internally and externally. But regardless of your belief in the size of companies as too big to fail, if you believe that large government is inherently bad then large corporations are bad for the same reasons. Since they are so autocratic, you may as well believe in monarchies if you like to be ruled by autocratic entities.

Have no doubt there is a philosophical war being waged for your attitude towards what is good and bad relative to the size of government and who makes better decisions – private industry verses the government. The intent here is more to add substance to that debate and not just express empty opinions. The current prognosticators advertise their opinion without substantive information behind their motivation or underlying philosophy. It is like asking you to abandon all common sense so the people at the top can run their companies the way they want and manipulate others to their own advantage.

Levels of Governance
The following describe a generic system of governance that has one principle: governance has to be built one layer at a time based on the strongest underlying foundation layers.

Level I: Relationships
The base of our government pyramid is the basic motivation to work together to make both of our lives better. It is not a free lunch so we need to give up something to get something more. There is no room to be greedy in this kind of agreement. The saying goes, hogs get fatter but pigs get slaughtered. A successful marriage or a small business or group falls within this level. The character of this group is they are only concerned about themselves and exert no outside influence because survival is such a struggle. The price for the cooperation is the abdication of doing just what is self-serving.

Level II: Sharing Resources
The next level of the pyramid is a group of people that need to tax each other so that a common resource can be provided and shared. Value is placed on the resource and on the time it takes to manage it. Additional rules are developed to govern the collection of the taxes and there is now an obligation to pay for what you use. These rules can extend to determine actions and punishment if the taxes are not paid. The definition of governance expands as the complexity of scope expands.

Level III: Protection & Security
There may also be a requirement to protect the resource. Someone may be assigned the task of providing that protection. Maintaining the safety of the resource extends to physical security, quality and ensuring that there is adequate resource for the short and long term. People have different education and capability. Aside from private employment, someone has to either sacrifice or agree to compensation for managing the resource(s). Governance expands greatly at this level because now someone is given authorization to take action under some set of rules for engagement, investigation, prosecution and remedial actions. The limitation of liberties goes up proportionally to the number rules that are created to manage all the roles government plays.

The interesting thing for me is that regardless of who manages these roles – public or private entities, there always has to be rules for providing fairness to the system otherwise power is concentrated and hoarded. We can debate which entity is more efficient, more cost effective and provides maximum value. The debate I rarely hear is, how do we ensure fairness and sustainability to the process? Using water as an example, there use to be ample clean water for everyone unless you lived in an arid area. Excess supplies of water do not require management or rules. Once the demand exceeds the supply then management rules are necessary unless you believe that survival of the fittest is the only rule.

Level IV: Economic Management
Next to security there has to be a way for an economy to function. Bartering may work for a small group of people but a form of currency allows a larger group of people to trade. The currency values goods and services. Similar to other resources, currency needs to be managed and rules need to be developed that govern how much currency is printed, how it is distributed and to who. The bottom-line of economic management is control over distribution of wealth or stated another way, control over all individual access to resources. If we believe that competition and democracy are good then we also have to believe that monopolies are bad for the economy. Too big to fail implies a monopoly. Actions that concentrate power and wealth are counter to the basic principles of competition and democracy.

The role of government should be to directly manage the currency and indirectly ensure the fair opportunity for people and companies to participate in the marketplace. It’s a sad truth but the experience of the financial collapse of 2008 clearly illustrates how greedy companies and people can actually threaten our entire economy if left unchecked and unregulated. What politicians and corporate leaders called creative products where actually Trojan horses for financial products that had poor underlying credit quality. Packaging “no money down mortgages” into CDO’s then rating them as triple A is unbelievably dishonest. Pensions and even countries like Iceland were decimated by the collapse of this market. They should not have existed in the first place. The banks that lent out the money passed on the risk of these low credit quality mortgages to investors that had no idea that they did not properly check out the mortgagee’s ability to pay. The credit rating companies themselves were corrupted by being funded by the same companies that they rated and gave them credit ratings that they didn’t deserve. So here we are with some politicians still espousing that we need less regulation while the abuses and lack of regulation empowered these people and companies to literally risk the world economy because of their greed. How stupid are we to believe their lies?

Bottom-line we need campaign finance reform so that the politicians will not be corrupted by powerful multi-national companies and then to top it off the Robert’s Supreme Court has now made it legal for these same companies to give unlimited amounts of money to campaigns and to do it anonymously. This is very upsetting. We learned nothing from the financial collapse and now the Supreme Court has institutionalized this concentration or power. It provides so much power to the executives of these companies that our democracy is threatened by this one act by the Supreme Court. Concentrating power is not democratic.

Regardless the government should regulate the financial market. The economy depends on it. Private industry in no way cares about abuse, just their profits.

Level V: Internal Health and Welfare
When Roosevelt enacted the New Deal it was a dramatic start of the government taking responsibility for the health and welfare of its citizens. The formation of Medicare, Medicaid and Social Security were a major leap forward in the role of government. Taking care of all the levels below this one is a daunting task and probably stretches the resources of the government beyond its ability. I would have to say that its admirable that the government would take on this role but only if it manages it well and efficiently. The current debates about these social programs are appropriate. We the people should always question abuse of power & government and when it wastes our faith in it by squandering the money we provide to support it.

The point that has to be made is that public trust is a fragile resource that cannot be taken for granted. On the one side of the political spectrum is the party that believes there is no end to the size of government and the amount that can be taxed. Even worse is when is when they let debt to go unconstrained and don’t even try to balance the budget. On the other side private industry can do no wrong and it’s alright that they control our lives and deprive us our liberties. Both extreme attitudes violate the public trust. Both attitudes make me feel that the government cannot be trusted to manage the roles they are chartered to manage like the ones above. Show me that you can manage what I give you well and I will gladly give you more. Especially when you demonstrate that you care about what might happen to me and everyone else then the motivation is benevolent.

Yes, we have a serious faith deficit in our government. The real question is how to fix it? We need to start to demand that they act in a more responsible way and I would contend that it starts with calling out those people at are at the extremes that act us to do too much and the others that would scare us into submission.

Level VI: External Influence
The next evolution / level to the pyramid is when a group starts to act in competitive ways. This is a dramatic departure from how a collective group needs to act. Think of a sports team, a military group or a corporation where they need to consider their competition and plan how to beat them. Governance in these groups is normally highly autocratic. The common denominator between these groups is that their sheer formation and existence implies that they are structured and operate to be competitive.

It is one thing to form a group to have a friendly game. It’s another thing to form a group to exert a government’s influence over another group that did not elect to belong to your group. Another sad truth is that as resources become tighter, our citizens’ will more easily rationalize that we are justified in trying to influence others to provide access to their resources or in more dramatic ways by using force. The use of force on other groups is an extreme role for a government to exercise. Whereas the other roles of government mentioned are somewhat palatable, this role of governance is easily objectionable by a large part of the population.
The critical question is how valid is the need for government to act in a competitive way. Many wars are fought because its leaders have made the case that it’s in the “National Interest” to impose our influence on the other country. But how did we get to that point? It is not hard to imagine that the situation could have developed due to poor planning or lack of conservation. Worse yet it may have been due to greed of fortune or power. Look at the contrast between the countries that we have gone to war against verses the ones that we have not. There is no consistency in either policy or principle in how or when we went to war. War again is an extreme form of projecting our influence on others. Given the relative positive of this level compared to the others there should be no doubt, when we should ultimately go to war and the basis by which that choice is made.

Putting all this side, the position of the U.S. being a world cop is bankrupting this country. We can either invest in screws and nails to build a better future or in sledge hammers and bulldozers. Over investing in things that destroy means that we are not investing in things that allow us to improve and build. This point cannot be confused with when we are protecting our own resources and our standard of living that is tied to our own ability to produce constructive goods and services. The extent that any government goes to exert own influence on others
is unusual and beyond the scope of what we should be doing. The cold war is a classic example of when the race to build arms was tied directly to the amount of influence one country can have against the other. This race clearly bankrupted the USSR. The economic lesson that should have been learned is that their balance of investment was way out of proportion than what would have allowed them to compete on products and services. Who would have bought a car from the Russians at that point in time? Did they innovate anything that stands out in your mind from all that investment in their military infrastructure?

Please step back from the individual arguments and keep a perspective on the larger design of the pyramid. Take care of the base first and reduce the spending on the upper levels to maintain the strength of the entire economy. If we become too top heavy in the social spending or exerting foreign influence then the structure falls over and fails. Decades of disproportionate spending on the wrong things and underfunded promises have led to our infrastructure crumbling, a $14 trillion dollar deficit and our currency collapsing before our eyes. We will destroy our standard of living standard and we won’t be able to blame anyone but ourselves for it happening. This is not ideology or dogma. We are experiencing a devastating failure of principle. Remember that choosing not to act is a choice to go along with unprincipled failure to abate the decline of our way of life.

We can take control of our destiny provided we understand what is at stake and have a vision of how to create and maintain a strong and enduring government that works. The roles and the scope of the government can best be controlled by agreeing on what is most vital for the country and making hard chooses about things that undermine our ability to sustain our economy. When the money runs out we will be forced to get back to basics. I hope this discussion provides some perspective where to look for solutions.

M Mirsky 4/13/2011

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.