20 March 2013

Profits and Social Stability- Perceptions and Reality

In the United States we’re committed to private ownership of public utilities. We’re convinced that profit oriented companies will provide better and more efficient service than a non-profit government entity or even a non-profit co-operative.

And yet this has created other difficulties. Profits are subject to market forces, the price of energy, fluctuating costs, natural disasters etc., and yet the service these companies provide is something that is not only deemed as desirable but absolutely necessary to social stability, the economy, and even national security.

Can something socially essential be left to the whims of the market? What are the moral dimensions to this and are they being rightly perceived by the Church?

We have companies not only desiring profit but since they are publicly traded, they ‘must’ show a profit or would face a quick collapse when the stockholders pull out. And yet this risk that is common among tech companies or retailers must be absent when speaking of something essential to our society.

Not only can they not be allowed to fail, they must show a profit and yet also provide the service to virtually 100% of the population. Is this possible?

In reality for these companies to maintain the level of profitability that they would like or need, to keep themselves viable to investors, they would have to maintain rates that practically speaking would be out of reach for perhaps ten or twenty percent of their customer base.

This is a problem, not for the company but for the officials who govern society. The government is not looking at profits. They’re looking at social stability and having a large portion of your population living without electricity, water, or heat creates a volatile situation. You’re going to start seeing shanty towns and destitution. A society with that level of disparity will become polarized and begin breaking down.

So essentially society (in the form of policy) says we want everyone to have a certain minimum standard of living.[i] These utilities are a basic necessity to a way of life we would consider fundamental to our society, our civilization. Anything less reduces people to a primitive state of near barbarism. Whether this is actually true is not really the issue. It’s the perception people have and like it or not if you live in this society you can’t escape it.[ii]

But if we subject these ‘services’ to market forces then a large portion of the population will simply be excluded. What’s the solution? In some countries they would say public utilities (being a basic necessity of the social model) should not be in the hands of for-profit companies that are answering to stockholders. A different economic model is required for basic social services.

The solution in the United States is to create a subsidy programme that will provide assistance to pay the utility bills. This allows the private ownership model to be maintained, but I contend this is an even worse option. Now we have private enterprise, or profits being subsidized.

But here’s the amazing part. The people who take the assistance in the form of grants again are the mooches, the parasites. They’re a drain on society because they took a $300 LIHEAP (Low Income Home and Energy Assistance Program) payment.

But who gets the payment? The person who applies for this doesn’t get a check in the mail. The payment goes to the utility company.

This way the utility company is content to subject their rates to regulation and keep them at a certain level. They can do it because they’re banking on the fact that a certain percentage of their clientele will apply for this tax funded subsidy which will go straight into the pocket of the utility company. Essentially the utility company has a racket going where they are directly receiving tax dollars and have guaranteed profit that’s annually affirmed and secured by Public Utility Commissions… which are supposed to be holding them accountable and are instead insuring that they continue to remain profitable. They are a government sanctioned and maintained monopoly, feeding directly on tax dollars.

What’s worse having government executives making $250,000 a year from tax dollars, or private executives making millions a year… with a good portion of it from tax dollars? Is it worth it simply to maintain the illusion of market integrity and a commitment to private enterprise?

The Libertarian sector would remove the subsidies and insist the market be allowed to work. This would undoubtedly lead to a number of people being cut off by the market price for the utility. Again governing officials grow nervous at the thought of large numbers of people living without utilities that most of society considers basic. In addition, without regulation companies subject to market forces or even bad management can collapse, break up or have lapses in service. The Libertarian shrugs and says let the market suss it out. It will fix itself.

But governing officials are not content to allow a public utility to collapse and bring about social unrest and economic collapse. Sure, eventually some investors will step in and take over or restart the company. But in the meantime, months, weeks, or even days of interrupted service can be catastrophic. It could cause an economic chain reaction and wound the economy or disable key infrastructure.

Thus we have this strange hybrid system. But what’s strangest of all is that the poor are again castigated as somehow being a drain on the system because they might happen to apply for these programmes while the wealthy owners, administrators, and investors who are directly benefitting from the tax infusion…they’re legitimate producers?

And if the market does suffer one year and the profits come up short, the Public Utility Commission allows them to raise their rates. Consequently more people sign up for assistance and more tax dollars flow into their coffers. It’s quite a business model. And as anyone knows who has tried to deal with these companies, the supposed ‘better’ market driven customer service the consumer is supposed to get…is a fiction. They are every bit as bad as any government agency. This is true on the contractor/construction end as well. Trying to set up services or deal with their engineers is nothing short of maddening.

And on a general socio-economic level, it’s even more ironic when employers pay low wages that they would only be able to pay because of the availability of these subsidies. They’re not going to be very happy if their employees making $3 an hour (because under a Libertarian structure there’s no minimum wage) can’t afford to keep their water or electric turned on and thus show up to work tired, stressed, and dirty…and for some even hungry.

To get decent people (who won’t steal) they might have to pay a lot more. Instead under our present system they pay a little more but still not very much. They can rake in massive profits and count on a solid employee base. This is due to the health and robustness of the market? No, it’s largely due to the fact that their low-wage employees can survive on subsidies. The subsidies don’t allow them to flourish, in fact they quickly lose them if they even begin to get their head above water. But…it keeps them off the streets.

And yet our society says these so-called job creators are the contributors and the low-wage workers who take ‘hand outs’ are the parasites.

In many cases the welfare actually benefits the employer and on the macro-scale many of the rich invested in large corporations, military and public utilities are actually the biggest beneficiaries of this large scale subsidization …or let’s call it what it is, welfare. How many stock portfolio’s and 401k’s are invested in public utilities? A few that are invested heavily in utilities return some of the best rates.

The perceptions of many are too narrow and not based on reality. The full picture is more complicated. This is true with regard to utilities and many other issues as well. Another example…

It’s also interesting that I hear many empty-nesters and older people complain about having to pay property taxes for the public schools. They don’t have any kids or their kids are grown and so why should they pay?

But in the case of homeschoolers we’re viewed as not only socially dubious but many even raise the notion that we might be producing children who will be less than productive members of society. Or in some cases because our wives stay home, we’re not contributing as we ought. I’ve actually heard these arguments on numerous occasions.

Not only are we under the shadow of these dark accusations but we have to actually pay money to support these schools which we will never use. The empty nesters did make use of them with their children. We have nothing to do with them and yet we still contribute to them with our taxes.

But I’m often quick to point out that while the local school officials may hate us, somewhere in the state capital there’s a bureaucrat that would hug and kiss me if he could.

Local schools often receive their funding based on the number of students. So in the case of my family, the fact that my children aren’t attending the relatively small K-12 school is resented. My state spends about $17,000 annually per student. While I’ll be the first to admit that’s an absurdity, it is the going rate. That doesn’t mean the local school gets that full amount but that’s the combined cost for having a child in the public school system.

My children not attending costs my local school a teacher or perhaps even an additional teacher’s aide. And yet we save the state a small fortune (nearly $70,000) every single year we don’t send our kids to the public school. Granted we chose to have children, no one forced us to. But thankfully we still live in a society that allows us to have as many children as we want or desire. Thankfully the Michael Bloomberg’s of the world haven’t taken over everything.[iii]

And what benefit do we receive? Not a penny. We receive no money for schooling, books, or anything. We pay property taxes and in addition have to pay for testing and teacher evaluations every year. We spend a significant amount to home school our kids and yet far less than most. We don’t bother with curriculums or a lot of the other costs people incur.

And yet it’s ironic. Being a single income family, we don’t do as well as many of those around us. Being poor (in the American sense) we’re resented and looked down on. And yet… our neighbours should be thanking us! Even if we were to sign up for subsidies we would still be saving the state a fortune every year. However that would only give additional reasons to our neighbours to look down on us.

And yet who are some of the wealthiest people in our little village? Who are the good Christians with all the Republican signs in their yard? The school teachers of course! And in other cases, it’s the police officer or the retired Army veteran. These are the very folks that have done quite well establishing a career funded by tax dollars! They have guaranteed salaries, a secure job hard to be fired from, pensions and health care… and all outside the market’s wage structure.

I know many teachers complain about low wages. Personally I don’t believe it for a moment. And it is especially true if you live in a rural area with very low real estate costs (almost all houses are under $100,000 in this area) these folks making $50,000 or often $80,000 a year are doing exceedingly well and much better than most.

These questions have all been twisted and contorted. I’m afraid the poor have no voice and this is especially true in Christian circles. I don’t pretend to have answers to all of these problems. I can only look at what some other countries have done. And of course as a Christian I weigh all things in light of the Scriptures.

This I do know. The so-called Christian Worldview regarding American society, its politics and economics is not only not in accord with Scripture but often quite opposed to it.

Time and time again we have been told that Capitalism is the ‘Christian’ or ‘Biblical’ system. While it does contain a few elements that accord with Christian principles, there are many essential components that flow from Enlightenment rather than Biblical thought. Actually as I’ve indicated elsewhere I don’t believe there is any such thing as a specifically Christian socio-economic model, nor is it possible to construct one.

Again my purpose in raising issues like regulated utilities, school taxes, and social perceptions is to simply show that very few people have really given these issues much thought, and if they did they would see there are inequities everywhere. And while the poor are certainly not always victims and generate many of their own problems, they are hardly the worthless and slothful drains and ‘mooches’ they’re made out to be. The hypocrisy and criminality are ubiquitous. There are people on the take; there are parasites everywhere and exploitation at every level in our society.

This shouldn’t surprise us if we hold to a proper conception of sin and the effects of the fall. I’m afraid many Christians, even those who profess to believe in Total Depravity all too often exhibit a sort of ‘Pollyanna’ view of at least certain segments of society. Consequently by wrongly assessing the situation and reality, coupled with bad theological presuppositions they end up promoting an utterly false socio-economic agenda.

Again just to clarify I am not necessarily advocating Socialism, which in itself is a grossly misunderstood term. My task here is simply to demonstrate there are different ways of assessing the situation, and once Sacralism and various social and political assumptions have been properly abandoned… we can actually sit back and begin to understand the complexity of the situation and the magnitude of the problem. We can detect the pervasiveness of sin and when we rightly understand this world, its future and our place in it, the commentary and counsel being proffered by the mouthpieces of the Christo-American faction is exposed for what it is. Worthless and more often than not completely out of accord with Biblical teaching.


[i] In fact if you reject it, you’re viewed as aberrant, perhaps mentally unstable and possibly a danger to others. Parents that live this way face the threat of having their children removed. The elderly face the possibility of being forced into assisted living.


[ii]  Rural Alaska is something of an exception. It’s one place that if you want to live a primitive lifestyle, you can without becoming completely suspect.


Some of the wealthy would shrug their shoulders and say ‘so what if the poor live in shacks as they do in the Third World.’ But they don’t really mean it or do not understand the implications of that type of society. The security the wealthy enjoy as well as a great deal of their wealth depend on the fact that society is reasonable stable, secure, and though there is an underclass they are usually minorities and confined to urban enclaves. If members of the lower-middle class as well as the white poor find themselves totally destitute they will take to the streets. I think we’re starting to see hints of this in recent years.


[iii] As an aside it’s been interesting to listen to Evangelicals respond to Bloomberg’s nanny state tyranny. They’re critical of state shepherding and the regulation of personal lives…but not really. Listening to Albert Mohler I often laugh because being a good Baptist he’s all for the regulation of things like alcohol, gambling, work hours (on Sunday) and things of that nature. His principles on one level are different than Bloomberg, but in the end he’s the same. They just have different ideas about what is ‘good’ for society. The bottom line is they both believe the government can and should be regulating your personal conduct and decisions. Remember Santorum said the government should be in your bedroom?


Christian Sacralists can rail against Bloomberg all they like but in the end their view of the state’s role is not that different. From the standpoint of Biblical Christianity they both represent a power grab, a force of evil that threatens freedom. Both prostitute themselves to state power.


Anonymous said...

This is meaty food for thought. Most of us Americans think only in oversimplified and parochial concepts. Corruption is everywhere! Mammon is a powerful god of this world and influences it all. That is all the more reason to get serious about rejecting sacralism, dual citizenship fallacy, and embrace two kingdom pilgrim thinking. thanks, Proto.

Protoprotestant said...

I don't know how meaty it is, but you got my point about corruption being everywhere. I don't think people realize how pervasive it is...and how much we're all (like it or not) a part of it.

If I was trying to promote real viable solutions then I would just be like everyone else...blinding myself to realities. I think we can find and even in some form advocate for some change.

As Christians we primarily should be concerned with proclaiming the truth...even if it angers everyone.

All I'm trying to do is take the wrecking ball to the paper castles we (as Americans in this case) have erected in our minds and hearts.

I don't find it depressing. In some ways it's rather liberating. If it makes you feel more like a Pilgrim and a person who happily ditches the American Dream and all the garbage and lies that go with it...then that's a good thing!

Not everyone is going to even remotely agree with everything I'm talking about with regard to the American economy. That's okay. But if I'm making anyone stop and think and begin to question things they've taken for granted, then I'm more than content.

I'm sorry to say I used to rail against the poor. I employed all the nasty arguments that caricatured the poor, minorities etc... I definitely had the Archie Bunker worldview.

That said....Archie wasn't 'always' wrong. (smile) Rob Reiner was a meathead.

eliyahu said...

I've long wondered how conservative Christians who hate the federal gov't would have state and even federal policies which are "moral" or "Christian" or "promote virtue", and still be "limited government", if their government ideal is legislating (regulating) social norms and behavior? That kind of government doesn't sound very limited to me. It requires tremendous regulatory and enforcement power, and with what oversight?

Perhaps you should do a series on how rights are man made, not God given.


Protoprotestant said...

Yeah the Christian Right doesn't believe in small government at all. They just want government to focus on different things. They want more law enforcement and more jails.
We just had a DA election around here and basically we had Right-wing incumbents being challenged by even farther Right candidates who argued for more prosecutions, more jails, more drug task force stuff.

The drug problem around here, pot, meth, bath salts, is HUGE. But society has got to re-think this issue. The police are out of control, jails are multiplying like crazy and now juveniles are ended up tangled with the police for every little minor infraction in school.

Meanwhile many other crimes are being neglected. Petty crime and theft (usually drug related) are being ignored. People are just told candidly to forget it.

Anyway, Christians want more jails. They want laws controlling moral behaviour. I know many who would bring back Prohibition. They want to outlaw smoking, gambling, control music and television, regulate clothing, food, speech, journalism, education, and establish religious tests for officeholding etc...

Your last point is interesting...

I guess I would argue rights are both man-made and God given but largely I find I'm emphasizing the man-made part when talking about this with people.

When I'm arguing with a total secularist I will push the transcendent argument in order to try and force them to acknowledge universal concepts in the realm of ethics etc... Something they can't account for.

When I'm arguing with Christian Rightist then yes I tend to push the fact that our social relations are person to person and one can't appeal to God given rights in order to wield power or exploit someone else.

It's complicated.