VIEWPOINTS : In Defense of Big Government : Business Applies a Double Standard to U.S. Programs

“Big Government” has gotten a bad rap in the past decade. It has escalated to the point that President Reagan has staked his public career on the “Big Government Is Evil” theme.

And his 1987 budget now before Congress reflects his determined push to remove government from the role of major social provider.

Unfortunately, this view creates more problems than it solves. In our zeal to trash government we forget why it was necessary in the first place for the federal government to double as social engineer.

The government stepped in when big business failed to produce sufficient jobs and income for workers during the 1930s. Industry--not government--fumbled the economic ball.

Even before President Franklin D. Roosevelt’s New Deal, business was on a roller-coaster cycle of boom and bust. When profits were high and business expanded, a large segment of the work force was still idle.

One reason for this was that industrial and manufacturing plants never operated at capacity.

Another reason was that thousands of workers simply lacked the necessary skills, education and training to compete.

In the era from 1890 to 1930, business created other headaches for itself and workers. Stock swindles, tax inequity, union busting, the absence of wage scales and basic employee protections became synonymous in much of the public’s mind with the workings of industry.

Picture Was Grim

For many white workers, the picture was grim. But for blacks and women, it was worse. Race and sex discrimination firmly excluded black and women workers from all but the most menial and marginal jobs.

The federal government did much to change this. The New Deal creations of Social Security, unemployment insurance, welfare, housing and farm subsidies and union rights gave the poor and minorities a new lease on life.

Many business leaders realized that government programs had revived much of industry that was on the verge of collapse.

Capitalism emerged from the Depression intact and even stronger. And thanks to the federal government, business escaped without massive social upheaval.

From the close of World War II until the 1960s, business and government enjoyed a happy relationship. The federal government continued to expand its funding of social programs with little objection from businessmen.

The Vietnam war, however, raised the first warning signals to business, as President Lyndon B. Johnson’s guns-and-butter policy piled up enormous deficits that threatened corporate profits.

The OPEC oil price increases, the erosion in the international monetary system and political instability in Third World nations accelerated the profit decline for the oil, steel, chemical and auto industries. The declining dollar sent shock waves through the financial markets.

It was time to regroup. Corporations demanded solutions. They began lobbying the federal government to reduce corporate taxes, to beef up spending for defense and technical research and to sharply cut funding for social services and welfare.

Removed Important Voice

The demise of the civil rights movement and the disarray of black leadership removed an important voice that might have effectively opposed the new corporate thrust.

And the federal budget priorities began to reflect the shift from social welfare to defense spending.

In 1981, 22.2% of the federal budget was earmarked for defense. In 1989, the figure is expected to climb to 34.6%.

Spending for social programs, on the other hand, will decline to an anticipated 7.6% of the budget in 1989 from 9.7% 1981.

The problem is that this is not a prescription for cutting the power of “Big Government.” It merely transfers federal money from one sector to another.

Surely business leaders must know something else about government. Whether by design or by default, government can be a good friend to businessmen when it comes to regulating pet industries.

This was certainly true from the early years of industry regulation through the years of President Jimmy Carter’s Administration.

Always Got Rate Increses

The railroads nearly always got the rate increases they sought from the Interstate Commerce Commission.

For years, the Federal Power Commission did not enforce a Supreme Court decision requiring the agency to fix the prices charged by independent natural gas producers.

The Civil Aeronautics Board allowed the major airlines to have their way for decades on air fares and routes.

And the Federal Communications Commission has rarely intervened to stop media owners from expanding their communications empires. Even when minorities and women challenge the licenses of radio and TV stations over access, the FCC has failed to take action.

Certainly, there have been few complaints from business when it comes to awarding government contracts for everything from highways to housing construction.

President Reagan’s 1987 budget, for example, provides $62.5 billion for science and research--a hike of 16%.

Corporations engaged in the fields of space, industrial design, transportation, biotechnology, computational sciences and geosciences will directly benefit from these funds.

Will any of them turn contracts down because the money behind them comes from “Big Government?”

Let’s be fair. If we can applaud the government’s role in space and defense spending, then why can’t we do the same when government spends money on social programs?

After all, the needs of minorities and the poor would seem to outweigh the need for a $500 toilet seat for a Pentagon restroom, or a $50 screw on a weapon part.

It’s a question of priorities, not one of big government.