NOR DOES THE STATE LIVE BY BREAD ALONE D. B. Timmins, PhD A wise man once observed that "Man does not live by bread alone". Political philosphers have long debated the nature of the State. But wherever one comes down on the specifics, it is impossible to escape the view that the state is a human creation, not a natural phenomenon, and exists to further the interests of man -- whether by contract, implicit or inherited, by divine right, or by spontaneous evolution resulting in numerous different solutions to the problems common to all mankind. Montesquieu's profound insight set forth in his Esprit des Lois that all government and all laws grow organically out of the different backgrounds and historical/social experiences of different peoples and cultures is probably as close to the mark as any later elaborations of the complexity of human relationships. When considering what the state is and what its limits should be, most can agree, in accordance with the rule of using limited resources to achieve maximum benefits, that governments should concentrate on doing what society can only do as a result of overall group effort, or what government can clearly do more effectively or efficiently than individuals or private associations. This notion has been getting a better press since the dissolution of the Soviet Union and Deng's black mouse and white mouse comparison than it did among intellectuals for the better part of this century. Even if one accepts this formula, it leaves wide open the determination of exactly what the state can do better than individuals, or groups organized at less than society-wide level, e.g. partnerships or corporations. Societies and Governments are More Exquisitely Variant than Most Understand It is customary to think of governments and economic systems in terms of discrete classes: Monarchy vs. Aristocracy vs Democracy. Or dirigisme vs. laissez faire . Or socialism vs. a market economy. In fact, with a bit of reflection, it can be recognized that both governments and their executive, legal, parliamentary, and economic manifestations are continua -- with separate and often overlapping frontiers for virtually every plane of social and individual existence. There are thus near-pure democracies, i.e. freedom of individual expression and veto of undesired domination -- as in classic Athens with its process for banishing leaders who proved too brash; and the New England Town meeting. Or, with a significant aristocratic admixture, in the historic legislature of Poland, where a single negative vote could doom a legislative initiative -- combining an extreme lack of democracy in society at large (since in classical Polish society where the right to office was inherited and the commonality had no vote at all); or extreme openess in popular voting procedures, as in the contemporary United States where even paupers and convicted felons can vote, combined with substantial plutocratic elements (since one must be a millionaire or near millionaire to afford the costs of running for office in a free market electoral system) -- combined with (generally unrecognized) aristocratic elements, since the legislature exempts itself like the pre-Revolutionay French nobility from much of the social legislation it imposes on the hoi polloi. Or a nation may take the middle ground, as have most European countries, where free and equal television time is provided for all candidates and even a popular local union leader can not only be elected, but rise to ministerial responsibility. In the UK, until very recently indeed, the notion that education and property had rights of their own, was preserved since university graduates could vote for the Oxford (or Cambridge) representative in Parliament, and businesmen had a separate vote for the M.P. where he held business property and paid business taxes. Thus the vote of the well-educated and well-endowed often had three times the weight of the vote of the ordinary working man for a hundred years after the Reform Act. Likewise, a prime minister may ride a bicycle to his office, as until recently in Norway and Denmark -- or practice "Imperial Leadership", where politicians can no longer leave their heavily defended living compound without cavalcades of armored vehicles, outriders, sirens and streaming flags, as in Morocco (not a notably democratic society), or the pre-Gorbachev Soviet Union, or the contemporary United States (widely heralded as the epitome of democracy and model for the world). In short, as Montesquieu noted nearly three hundred years ago, the governments and laws of the world are more unlike than any simple system of categorization can handle. And are probably getting more variant as time goes on. No Apparent Relationship Between Economic Prosperity and Political Freedom Some have held that democractic political institutions and free markets go hand in hand. This view is particularly widely held in the United States. But history demonstrates otherwise -- and it is possibly not even true for our times when radio, television, and desk-top publication make freedom of expression and the exchange of views more difficult than ever for governments to control and many think democratic institutions are on a roll. Many of the most prosperous countries of history had limited popular participation in the process of government: Austria-Hungary, pre-Revolutionary France, Spain, Germany. And the most rapidly developing of the Newly Industrialized Countries (NICs) of today, including Korea, Taiwan, Hong Kong, and Singapore, are virtual autocracies. Many hope that rapidly industrializing China will be compelled to liberalize politically. But the experience of the Shah of Iran in trying to industrialize his country rapidly provides another lesson. U.S. Ambassador Stapleton Roy, who was born in China and has spent most of his career as a professional diplomat involved in Chinese affairs, recently reminded a group of visiting American businessmen that China has never known democratic government in five thousand years of history, but was nevertheless the most advanced and prosperous country in the world until defeated by barbarians with gun powder. (Let us not forget that gunpowder was invented by the Chinese, but sublimated by China's philosopher rulers into fireworks diplays for national and religious holidays). And China, cautions Ambassador Roy, takes a less idealistic view of politics than Americans (or even many Europeans). Tiananman was intended as a strong signal to Chinese society that while change was on its way, and people could expect a more rewarding and satisfying life if they'd only hold their horses, it should be understood that there'll be no nonsense regarding popular government in any of this. China's economic growth is currently leading the world -- outpacing even Japan's phenomenal post WW-II reconstruction. But, says Ambassador Roy, if people haven't got the message, and expect more than doubling their personal income within five years so they can covert their bike into a small car and their black and white into a 18" color TV with VCR, there will yet be more Tiananmens. Why Governments, Like Individuals, Can't Live on Bread Alone So what has all this to do with Goverments needing more than bread for survival? Most peoples in the world demonstrate far less individualism than Americans and both expect and are willing to receive more of their rewards in terms of social goods rather than high individual incomes. Perhaps this is because most countries were settled centuries, if not millenia, ago, while Americans are but a couple of generations from the Frontier -- which valued initiative and individualism above all else. Swiss and Austrians take great pride in their beautiful Alps and are willing to subsidize farmers to continue producing high cost milk and cheese to assure that the lower slopes and high meadows are regularly mowed, presenting the appearance of well-tended parks. A side benefit is that the generally conservative voting pattern of the countryside remains uncontaminated by big city liberalism. And people seem intuitively to realize that it is the scenic beauty of the Swiss landscape which brings offsetting rewards in terms of tourism receipts. The Spanish, for similar reasons, have deliberately decided to preserve the rolling hills of La Mancha and Estremedura covered with olive trees and flowering almonds, rather than letting them revert to maquis , then having to employ the displaced farmers more (nominally) productively in big city factories. And strongly secular France is willing to invest millions in the repair and upkeep of ancient Catholic cathedrals, considering them national artistic treasures, and to subsidize French farmers to remain in the countryside, rather than raize the Cathedrals to provide space for higher rental construction projects or invest in more smokestack industries to employ the farmers. Canadians, who are in so many ways closer to the traditional American cultural norm that several of our most noted TV commentators are Canadian by birth and education, insist on paying more for some goods and magazines to assure that south-of-the-border advertising doesn't contaminate their airwaves or reading materials. The Notion of Product Differentiation Applied to State Social Choices In a paper published almost thirty years ago, I likened this phenomenon to that observed by Professor Edward Chamberlain of Harvard University, who first provided an economic explanation of brand names and advertising, calling this The Theory of Monopolistic Competition or, simply, Product Differentiation . Borrowing Professor Chamberlain's terminology, I called this observation of governments' willingness to forego some of the benefits of Free Exchange in the interest of preserving cherished elements of a distinctive national lifestyle -- as a private person might prefer Post Toasties to Kelloggs or Fords to Chevrolets -- The Theory of Social Product Differentiation. The time has now come to broaden this notion beyond the desire to preserve aspects of a national life style, to the desire to introduce new programs and new elements into national life. Well-to-do individuals are not often criticized for devoting part of the income earned in their more profitable enterprises towards subsidizing less-productive hobbies, e.g. horse breeding, car racing, or art collecting, with otherwise bring them great personal satisfaction and fulfillment. But, as we have already noted, certain types of economists and certain brands of voters, insist that it is wrong for governments to go beyond bread and butter issues, e.g. national defense, roads and highways, education, and (just perhaps) national health insurance, to undertake ventures into wider realms. But, as it has also already been argued, it becomes difficult to define just where the interest of the State leaves off and the interest of the individual predominate. My father knew a man, eighty years ago, who, unmarried, argued that it was wrong to tax him to help educate his neighbors children. A community leader eventually succeeded in convincing him that he'd rather live in a community with literate, civilized neighbors, than one of the shoot-'em-up, cut-'em-up frontier communities in neighboring Nevada or Wyoming. When this prosperous, if celibate, businessman began to appreciate the wider implications of education, he became a willing, if not enthusiatic payer of the school levy. And in a country which deplores social ownership, while holding joint-title to over 60 per cent of the land in the twelve largest states in the Union -- perhaps a quarter of the entire territory of the third largest nation on earth -- it ill behooves Americans to deplore well-conceived social spending, diverting some of the national tax share of the profits of our more successful enterprises to new programs and policies needing "infant industry" help to get on their feet -- or whose payoff may not come in pecuniary terms at all. Problem is, with the national budget in deficit for all by one of the past fifty years, with the national debt having tripled within the last twelve years alone, and with over eighty per cent of this money being spent on subsidies benefitting individuals rather than on programs of benefit to all, it has become exceedingly difficult to propose or defend any new social programs. John Kenneth Galbraith was perhaps the last economist of note to defend the notion that, as a nation, America spent too little on projects of public utility. Nevertheless, the fact remains, that just as Free Trade doesn't exist except in abstract theory on university campuses, justifying real world governments in taking any number of calculated departures from the free trade norm in the interest of restoring reasonable "second best" equilibrium to the international trading system, it is only an unbelievable dose of national hypocricy which enables Americans to hold to the notion of an ideal, non-interventionist, laissez faire national government with respect to any number of programs which would be of enormous national advantage. Regrettably, while governments receive substantial support from t business for second best (if not outright protectionism) where the benefits accrue directly to them, their is, as in the case of my father's psoperous celibate friend, little support for programs whose benefits do not directly benefit an individual firm. But while hypocricy can keep one going for a while, the time comes, as the poet has it, when "sin at first of hideous mien, is at length endured, then fast embraced". The Washington government became involved in national road building when returning GIs (and a returning GI President) could not deny the wonders of the autobahnen of the defeated Third Reich, insisting on equivalent transportation at home (abandoning in the process on overriding national defence grounds the traditional view that highways were a state preserve). Similarly, at the height of the Cold War, the Federal Government invaded the states' monopoly of higher education, again on national defense grounds, offering tuition loans to those willing to study engineering and the sciences. Some Programs the Government Might Yet Adopt in the Interest of Promoting Further National Social Product Differentiation A National High School Qualification Examination The nation is stunned to realize that our vaunted American system of education is failing. American students finish last not only in mathematics, but in world geography -- not even knowing what countries lie to the north and south of us. Inevitably, we will be compelled to adopt a national qualifying examination for students to become certified high school graduates, as is already the practice in virtually every other civilized country in the world. Student Stipends as a Reward for Staying in High School and Earning Passing Grades. Another prospect: the number of individuals enrolled in higher education on the wane, in part because the maturing second generation of the baby boom has ended, in part because with the rising cost of higher education less can afford it, and in part because with over half of American kids now receiving some college evel education, the salary premium for a bachelor's degree has been substantially eroded away. As a result, American colleges are becoming increasingly dependent on enrollment of foreign students. As many such students stay on in the United States to take high paying jobs, many are becoming exercised about the evasion of normal immigration procedures this poses, as well as about the fact that American kids are not being educated for these better paying jobs. Already the Clinton Administration is proposing to waive repayment of student loans upon performance of a year or two of public service as an encouragement for more American youth to better prepare themselves for the work force. Soon it will be seen that (perhaps even at high school level) public money will be well spent to provide a stipend (possibly on a means tested basis) as an inducement to keep central city kids attending schools and earning passing grades until they fit themselves for literate, productive, adult life. Payment of Subsidies to Stimulate Creation of Sump Industries to Reduce Welfare Dependency and Promote a Sense of Self Worth Finally, with not a few recipients now entering the fourth generation of welfare dependency since the introduction of federal welfare schemes in the mid-30s, the time has come to recognize that almost 20 per cent of the population is at least two standard deviations below the operational average for fully independent, self-directed living in the modern world. We provide sheltered workshops for the lowest two per cent of this group. Perhaps it is time to start spending some of our trillion and a half dollar national budget to subsidize some private sector operated "sump industries" to employ the seriously deprived 18 per cent who can no longer find adequate employment doing the simple work or pre-Agro Industry farming or working in the simpler unmechanized forest and mining industries of a couple of generations ago. The contribution this would make to eliminating welfare dependency and replacing street person despair with a sense of self-worth and value might alone justify the investment. But clearing the parks of street people, giving them a decent barracks in which to live and sleep, while providing a morale bolstering something to do for the down and out or between jobs individual while awaiting the next economic upturn or personal stroke of luck, should justify such a "not by bread alone" measure in the mind of even the most doctrinaire or cost-culculating individual. Surely bringing private industry into the picture should help develop ideas going beyong the leaf-raking, park fence building, forest trail construction jobs of the CCC -- though there are again many worthwhile jobs of this sort which could well be undertaken in our deteriorating cities and national parks and monuments.