Tuesday, June 10, 2014

Starting in the Right Place: The Poverty Debate as a Regulatory Debate

A few weeks ago, Tim Carney wrote a piece in the Washington Examiner that is stuck in my mind. The piece titled Conservatives, big government and the duty to care for the poor discusses what Carney sees as a shift in the rhetoric conservatives are using in reference to the poor and other vulnerable populations.  Carney notes that Senate Minority Leader Mitch McConnell (R-KY) recently referenced a “shared responsibility for the weak.”  Carney continues:

Step away from policy debates and think about that phrase. Do you have a responsibility to help the weak? Do you have a responsibility to feed the hungry? To aid the poor?

 I think I do. I think everyone does. The Catholic Church teaches us we do.

Conservatives sometimes shy away from this idea, though. One reason is a strong (and overblown) distaste to "helping the lazy." Another reason is that conservatives fear it implies the Left’s answer: big federal programs.

But, in fact, you can grant that you have a duty to the poor and the weak, and then have a really good debate:

Is that duty individual, or some sort of a communal duty?

Does the government have the legitimate right to transfer wealth to satisfy that duty, or is it solely an individual responsibility to fulfill that duty.

If aiding the poor is a legitimate government role, at what level is the aid appropriately delivered — local, state, federal?

I really don't see this as a new debate, but I agree it is a shift from the poverty debate I have seen over the past decade or so. This shift, though, goes back (at least) to the debates of what I remember in the 1980s and early 1990s. The question then, as I recall my vigorous (sometimes informed) college and early career discussions, was not whether the poor needed help. The question was how best to provide that help.  (I'll note that even then, conservatives were likely to call me liberal, and liberals often called me conservative. Some things remain the same, I guess.)  

Carney frames the conversation appropriately, and asks the right questions because it starts with the right assumption: that helping the poor is required.  He notes: 

Then there’s plenty of very practical debates: Are federal programs inevitably too bloated and inflexible? Or alternatively, maybe only the federal government has the economies of scale (and ability to make its own money) needed to run a safety net, particularly in economic downturns.

So, what does this have to do with business law? Well, in part, if we agree there is a duty, we must talk about whose duty it is.  Is it individual? Is it a communal governmental duty? A communal non-governmental duty?  Is it a duty of all people, including corporate persons?  To what extent? 

Further, the role of government in protecting the weak extends beyond poverty programs. It applies to securities regulation, environmental regulation, and tax policy, all of which are directly, or at least very closely, related to business law.  In all of these cases, I think the question of the poverty debate carries through: how do we carry out, as Sen. McConnell put it, our “shared responsibility for the weak?”

The conversation that follows that question is a good one because it does not reduce all arguments to some version of "caveat emptor" or only the "government/market will fix it."  Instead, the questions can be, for example: Does less regulation increase risks to vulnerable parties or increase access to opportunities for such parties?  If the answer is both, as it often is, how do we balance those risks and opportunities?  

The market is often the best solution, but one still needs to explain why that's true, rather than blindly relying on some amorphous, all-knowing "market."  And as those of us who work closely with regulated industries know, we need to acknowledge that all markets have rules (public and/or private), and those rules impact how effective that market will be and for whom. As such, the poverty debate is also largely a regulatory debate.  In all cases, if we start in the right place, better policy is likely to follow.  



Ethics, Joshua P. Fershee, Securities Regulation, Social Enterprise | Permalink

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Your topic is one of interest. I have recently revisited Tocqueville’s Democracy in America. This Frenchman’s observations of the US somewhat contemporaneous to its birth spoke of the industriousness and interest of the citizens acting through panoply of private free-association organizations to address issues of social policy and other concerns. He comments on the fact that “associations” abounded for a multitude of purposes. These were formed without the shadow of local, State and certainly not federal government. They were effective. He observed with surprise the degree of citizen participation on the part of the constituent residents of communities. He observed how different these Americans were not having entrenched government like his native France.

It is important how a society “treats it weak and poor.” How one chooses to act with regard to “the weak and poor” is principally a choice of personal conscience. It is also a reflection of the type of society. I would argue that just as explosive government growth and regulation has morphologically tracked the decline in US entrepreneurship, so, too, individual motivation for personal involvement to address social or economic ills has declined as government has moved to make these areas of “weak and poor” predominantly its own province.

Various studies tend to reflect that highly taxed jurisdictions have very low charitable giving participation in relation to population. The attitude? Purportedly - if government is going to tax me heavily, then government should look to me for no more in solution.

It was not government that led to the major reforms with regards to minors in the latter half of the 19th century. It was predominantly private and faith based organizations that moved to address issues of poverty and necessity. Care was community based. It did not flow from a blind, cold government coffer with no “tie to bind.” Bonds were built between the individuals within a community who served one another. Did you knife, shoot, steal from or destroy the property of the neighbor or community that was there and stood with you in times of trouble?

I was watching the History Channel the other day when the topic of discussion was bank robbery in the “Old West.” There was no FDIC and insurance to “make whole” depositors. The bank was an instrument of the local community and the community was also the constituent of the bank. This particular episode addressed how (1) the bank teller knew the deposits were the life blood of the community and gave his life rather than give the robbers access; (2) that the citizens rallied with their own firearms, killed many of the robbers at the site; and (3) pursued the robbers. They didn’t delegate these duties to the sheriff!

Today, the mindset of addressing microcosmic issues is wholly different. Generally, no citizen would respond but would flee from a bank robbery. After all, the accounts are FDIC insured – they are not invested. It’s the government’s role to make whole, pursue and prosecute wrongs committed. By analogy, we have continued to foster the disconnection between one person’s obligation to another as we cede more and more the obligations of neighbors and community to the machinations of government.

Government has a role in creating the environment to address “the conditions of the weak and poor.” However, without an engaged community and body politic, it is simply cold redistribution achieved primarily for political ends. My experience with seeking assistance from regulatory bodies on behalf of clients over the last 17 years not lacking private resources to seek recourse has generally fallen on “deaf ears.”

Posted by: Tom N | Jun 11, 2014 8:39:47 AM

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