Of Public Interest

Volume 3, Number 16
October 2001

In many respects we are a long way removed from the time when Calvin Coolidge could assert that the business of America is business. It would seem that a significant line of activity for American government any more is to bail out failed commercial adventures. In 1971 Lockheed Aircraft received $250 million from Congress, while in 1978 Chrysler received $1.5 billion. The price tag on the savings and loan bailout that began in 1989 is close to $500 billion.

We have become quite accustomed to bailouts and subsidies for commercial adventures that work out badly for sponsors who are well connected politically. Indeed, the very term bailout suggests a kind of rescue operation. Expensive commercial decisions turn sour, threatening large number of jobs in the process. Rather than put up with the economic disruption that would otherwise result, government bails out the affected enterprises, keeping those jobs in place in the process.

Now it seems to be commercial airlines that will be receiving a bailout. In the wake of the terrorist attacks on 11 September, a $15 billion package of aid to airlines quickly received official approval. About $5 billion of this package is in immediate cash, with the rest being in such things as loan guarantees. There will also be some federal support for victim claims.

While this program is universally described as one more bailout of private enterprise, this does not seem to be an accurate description. The destructions of lives and the resulting economic blow to commercial airlines points to something else that gets covered over in the repeated references to airline bailouts. That something is the culpability of the federal government in this tragedy. Repeated references to airline bailouts casts a smokescreen over the failure of the federal government to deliver on its most important service to us: our security against violence, internal and external.

The first concern of government should be the preservation of good civil order. This is what justice, police, and arms are all about. The very foreground of political attention should be occupied by concerns of maintaining domestic tranquility and promoting peaceful relations abroad. It is here where we need good government performance to ensure, as well as is possible, that we can go about our ordinary lives.

We don’t need government to get involved with the economic arrangements by which we tend to our retirements, our medical care, and our education, to mention but three instances where massive federal political energy is currently directed. There are thousands of sources available for tending to our retirement, our medical care, and our various educational requirements. If the federal government disappeared from these areas of our lives, we wouldn’t miss it a bit. There are just too many competitive options already available already, even without taking into account all those that would come into play in the absence of the federal government.

There is, however, no good alternative to the federal government in the provision of good civil order when the threats to that order come through such threats as terrorism. If the federal government doesn’t provide us with a program to finance our retirement, we can pick from any one of thousands of programs that free enterprise brings to us. If the government doesn’t provide us security against terrorist acts, we don’t really have a good alternative, other than to stay home and keep our powder dry.

We all know that attention is limited, and that someone who tries to be involved in everything does nothing well. It is the same with organizations. We saw an example of this on September 11, though this is far from the only example. It stands to reason that a government that is preoccupied with the minutiae of our retirement activities will have less attention to devote to the threats to our security, such as that which surfaced on September 11. What has gone forward does not seem to be so much a bailout of airlines from poor commercial choices as it is an indemnification to cover over the political failure to deliver the level of security that should reasonably have been delivered, had only these issues of security had received full governmental attention.

The noted Italian scholar Bruno Leoni, published a book titled Freedom and the Law in 1961. There, Leoni noted that in classical Greece the sponsors of legislation could be tried and held liable for the bad consequences of their legislation. Indeed, Demosthenes, the orator who became famous for trying to shout over the sea while holding pebbles in his mouth, was famous for this trials of errant legislators. Classical Greece was long ago and far away, but some of their practices are still worth thinking about.

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Public Interest Institute at Iowa Wesleyan College
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