Tuesday Tremor: What is the role of the government?
It’s been a while since I’ve been at the blog. Graduate school is rather fantastic at getting in the way of one’s education. But I have been spending the last 8 months thinking about how loosely organised human beings can make a difference to the world’s poor. And today I embarked on a discussion that made me think a little bit more deeply than I had reflected in a while.
This post is an initial muse on the role of the government as it relates to poverty alleviation. I know I have grossly oversimplified principles of economics, political science, sociology, and likely every social science discipline one can think of. Please be kind to a bemused engineer in your comments. I’m likely to pick up with interesting comments in future blog posts. Feel free to read along and think with me as you will.
Poverty, typically conceived, zooms in on what a person lacks materially. The World Bank looks at expenditure (what people buy) and consumption (what people consume) to gain some sense of whether a person is poor. Typically, we think of poverty in terms of money, but a lot of the concerns at the World Bank at the moment involve food. [The world’s poor “work” disproportionately as subsistence farmers with some wage-earning activities so you have people trying to eat both by growing their own food and working for money.]
Yet, poverty has an structural twin: inequality. It’s not exactly a new problem. Entropy aside, stuff builds up in rather predictable places. I know that my dirty clothes will likely pile up beside my bed unless I actually expend the energy to move them into the dirty clothes bag. I know that soda cans will likely pile up on my desk as I’m working on a term paper. I know that spare change piles up on my bedside table. The behaviour of dirty clothes, soda cans, and spare change is all predictable. Moreover, the creation of dirty clothes, soda cans, and spare change happen over the course of daily living. In my mundane expression of living my own life, I have things build up in predictable places. And really, my parents will be the first to tell you that I could benefit from some regular engagement with someone who cares about the condition of my flat.
Generally where we have poverty, we also have inequality. And where we have poverty without inequality, we have some huge problems.
So really, I think one of the first roles of the government is to follow the money. Interestingly, in the United States, the Treasury is one of the original 4 cabinet level positions outlined in the Constitution [alongside Foreign Affairs, War, and Attorney General]. Unfortunately, I think some people might read that sentence and think that I’m asking the government to keep an eye on the spare change atop my dresser. I’d like to propose an alternative starting point: the national border. Every government has some territory that it tends to. Living in the world increasingly means that you have people, stuff, and money crossing the border. Money tends to be exceptionally strange because the government usually provides a very valuable service at borders: letting things in and permitting things out. Therefore the government makes money at the border. We see some of the largest exchanges of money at the borders. By having a good and solid system to track money, the nation has sound financial policies that allow the government to protect natural resources from undo exploitation, streamline economic processes through transparent mechanisms that prevent corruption, and identify big giant huge economic players with a plethora of resources.
The border is also a space to check for the diversity of actors that ensure an attuned market place. Do people have legitimate choice for providers? Increasingly, we trade not so much with other nation-states (do we really have all of the tea in China?) but with multi-national corporations. These multi-national corporations tend to follow money around much like the government, only with some very different reasons behind following that money.
When a government follows the money, I think the government benefits from asking where the money is not flowing. If I start at the borders, the little places that are hard to reach in the middle of the country are the least likely to have money flowing around in those places. Where the money doesn’t flow, we may find ourselves looking at poverty. Money moves around to indicate consumption exchanges. And money flowing makes the economy run. Finding out where money does not flow invites further investigation.
The government, keeping track of what’s going on at its borders, has resources to figure out what’s happening within the borders. If the government only looks at its borders, then we’re dealing with my spare change problem on a much larger scale. For the most part, people and goods move past the borders. In doing people things, the money flows pretty naturally. The government can watch the money like a nice flowing stream, with different things springing up to life along the flow of money. To continue with the water analogy, the government benefits from locating drought and flood conditions.
The problem with floods of money is that most people don’t experience the flood of money as a bad thing. But much like my cans of soda, the money pools in predictable places where some people can’t access the money. Now, money might pool in urban areas because businesses find it easier to do business in urban areas. A government that notices that money pools in urban areas can work with businesses to create new market opportunities for everyone. The government’s perspective adds value to the overall task of helping goods flow to the broader citizenry.
If money starts at the border, money is likely to pool at the border. The government has a ton of options when it concerns how to support business and industry in the middle. Sound investment can create new opportunities to make sure that various forms of stuff can leave the borders and go out to other countries. And so a government following the money knows what’s going on in a broader global context regarding what their people consume and what their people produce. Money flows might get knotted up because of fluctuations at a global level; governments can act to keep people relatively insulated from broader global realities.
As governments look to see where flows get cut off owing to broad trends, it’s possible for governments to become aware of the people wholly outside of the whole money game. And again, the word for government action here is options. Just like most people aren’t the big giant huge entities moving stuff constantly across the border, most people aren’t wholly outside of the whole money game. A government works well to be mindful of these people at the very bottom. Knowing what’s going on at the very top and knowing what’s going on at the very bottom helps the government be a good tying-together force in society. After all, at the very bottom, the money doesn’t flow.
It’s in this tying together that we encounter the stickiest wicket of them all: taxes. No one, particularly the people most poised to support the activities of the government, wants to do so with taxes. Yet, the government creates an environment to enable money to flow. If a doctor creates an environment to help a patient heal, we expect that doctor to be paid for the doctor’s work. When the government watches money flow around, the government watches for places where the money pools. Money can pool at individual levels through inheritance and massive mergers. But in both of these activities, the government provides a service.
Additionally, getting to know the people at the bottom helps us understand what might be helpful to start money flowing. For instance, a person may be working full-time but garnering absolutely insufficient resources. Something like living wage legislation might make sense. Another person might be working a range of jobs because of family obligations. Creating options for health care support, more flexible hiring, or respite for family obligations might make sense. Still another community might be completely out of the money game because all of the major employers left town. Working to harness the creative potential of that town along core economic sectors might prove exceptionally fruitful. The government may also discover needs in areas where markets consistently don’t work very well (especially in a locally-grounded service like education or natural resource management). Taking a long-haul look at service provisions might be extraordinarily fruitful.
The government should recognise where the government adds value to society (such as by tending to national border and enabling goods to move within the country) to generate the government’s income and invest accordingly along key priorities that improve the well-being of people apparently out of the game. I would contend that without looking at inequality, a government cannot look at poverty at all. Poverty exists mainly as a relative term with few absolutes. How can you know the poor if you don’t also know the wealthy?
As a final aside, I would like to point out that my suggestions involve the government focusing on the big giant huge players and the people completely sidelined in the system. Most people in the middle get concerned about being perceived as a big giant huge player. This post is called a Tuesday Tremor because it hits a bit of my nerve to post such a reflection. Again, please be kind in the comments.