Free Market

How Utah Conservatives Are Helping Progressives Grow Big Government

“Here I encounter the most popular fallacy of our times. It is not considered sufficient that the law should be just; it must be philanthropic.”—Frederic Bastiat, The Law

This week during debate over HB 96 (to fund preschool programs using a new “post-performance” funding model), Representative Dan McCay asked a prescient question: “is post performance becoming the new way to grow government?”

The question can be answered in the affirmative. In the case of post-performance funding models for government programs, the critical debate is shifted from whether government should be involved in something to whether the program will effectively meet its goals—effectively surrendering the fight over the former by only focusing on the latter. In other words, addressing efficiency and funding sidesteps and thus ignores the underlying question: does the program fall within the proper role of government?

These creative funding models help progressives (as they’re generally called) shift the debate away from the proper role of government to the effectiveness of government programs in solving social ills. For progressives it is unacceptable that government be constrained to a narrow set of activities; such persons believe that public policy must philanthropically help those in need. Thus they seek to change the question from if to how.

Those who oppose “progressive” policies are often accused of being heartless or not caring about the plight of those harmed by a particular social ill. In reality, these opponents act for a variety of reasons, such as:

  1. Fiscal conservatives oppose particular policies or programs for being too expensive, not cost efficient in accomplishing their goals, or requiring the raising of taxes.
  2. Social conservatives disagree over value judgements about the desirability of the goals or methods of the program, or believe that a program would have a negative moral consequence for society.
  3. Limited government conservatives believe that the proper role of government precludes the use of government resources or power for the particular program.

It is this last group that we rely on to ask the right questions during these debates in order to remind their associations of the proper and limited role of government. It seems that this last group frequently joins the first group in articulating a unified message that government action should be scrutinized for efficiency and effectiveness. This may be strategic, as the pragmatic position focusing on finances seems more tolerable by most, avoiding accusations of being unreasonable or rigidly idealistic. Recall the progressive accusations noted by Bastiat against those who object to government means to achieve progressive social ends:

Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.

We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.

In the face of these accusations, it sounds more reasonable to object to government expansion on grounds that a program is too expensive, too risky, or potentially ineffective in attaining its goals. Nevertheless, over time, this pragmatic fiscal message crowds out the more fundamental message about the role of government as such considerations are de-emphasized, muted, ultimately ignored. While pragmatic policy makers expand government utilizing cost effective and efficient methods to solve social problems, advocates of liberty and limited government are left ostracized and obsolete, relegated to the sidelines of the debate.

This is particularly true when post-performance funding models are utilized.

Recently, Representative Greg Hughes introduced HB 96—a controversial bill to create a new statewide preschool board to grant money for the expansion of preschool for at-risk children. Since private investors would finance the program initially, the bill was marketed as fiscally conservative because it did not risk state funds. This post-performance funding model utilizes a concept often referred to as “social impact” bonding where private investors pay for the initial investment for socially progressive government programs with the promise of being repaid at a profit by the government if the program is determined to be successful.

The brilliance of this tactic is that progressives can avoid the concerns of fiscally conservative lawmakers who might object to funding a new or unproven program. Such concerns are irrelevant since private investors bear the risk if a program fails to meet its goals. Social impact bonds are a recent fad made popular in Europe and quickly growing in the United States. It is heavily favored and discussed by socially progressive groups. The concept is also supported by President Obama and was touted in his 2014 budget as a way to minimize financial risk to the government of new or innovative social programs.

While some may refer to this strategy using the buzzword “public-private partnership” it really is not a true partnership at all. It could more aptly be described as “private profit from progressive public policy.” In a partnership, costs or responsibilities are typically shared. In this arrangement, nothing is shared. If a program is determined to be successful at the conclusion of the pilot phase, the government pays the full cost plus a profit to the investors—no private money is shared with the government.

Some might argue that private investors “share” by shouldering the risk of up-front investment. While this is nominally true, the reality is that these are not public policies the government is necessarily pursuing at present; rather, the allure of this unique investment model goads policymakers into committing the government to future financial obligations for new, expansive government programs. Moreover, large financial institutions like Goldman Sachs would not be investing billions of dollars in these arrangements if it was a high risk venture.

Performance outcomes can be tweaked in such as a way as to ensure the program is successful and results in a payout; with millions of dollars on the line, it’s not unreasonable to suggest that numbers might be fudged a little to ensure the continual cash flow from state coffers. Furthermore, private investors realize there government spending is one of the few economic sectors that is likely to continually grow (at least nominally).

For the taxpayer, these arrangements are really not much different from buying on credit. A bond is a restraint and bonds do not make us free—they tie our fiscal hands in the future. Most public bonds are subject to voter approval; social impact bonds are financial agreements that may, for the time, elude government balance sheets. Post-performance funding is just a new and creative way to avoid the difficult fiscal conversation at the front end, but the result is the same—taxpayers will be on the hook for expansive new programs.

More important than the fiscal considerations is the fundamental abandonment of liberty that seems to sneak past fiscal conservatives. As progressives utilize new and innovative ways to involve government in our lives, people lose sight of the more important questions about what government ought to even do at all. Post-performance policies, put simply, facilitate a shift in focus from individual rights to collective welfare.

Using big data, technology, and innovative problem solving, progressives aim to show how the expanded use of government authority and resources can fashion a brighter future for the collective. Centrally fashioning the future by centrally planning the present diminishes an individual’s ability to act and compels him to be acted upon by decisions made by past politicians to whom he never gave consent nor support.

Where was Utah’s “conservative” majority in the House during this important fight? They were tricked by the fiscal sleight of hand from this post-performance funding model, having become unmoored from the fundamental question of the proper role of government that should form the foundation of “conservative” political philosophy.

To help counteract this trend, Bastiat’s wise words should be shouted from the rooftops of the Capitol campus::

Nor is it sufficient that the law should guarantee to every citizen the free and inoffensive use of his faculties for physical, intellectual, and moral self-improvement. Instead, it is demanded that the law should directly extend welfare, education, and morality throughout the nation.

This is the seductive lure of socialism. And I repeat again: These two uses of the law are in direct contradiction to each other. We must choose between them. A citizen cannot at the same time be free and not free.