As those of you who follow our program know, I have long held the opinion that there are only two proper reasons for the existence of government: 1) To correct market failure and 2) to enforce contracts, including the social contract.
I’ve been reflecting on this lately, and — very uncomfortably — I believe I’m developing a third reason. And that is 3) to provide a public trust.
Here’s the problem. By the magic of compound interest, wealth begets more wealth. Since interest compounds over time, the first wealth to be acquired tends to be the wealth to which the greatest interest has accrued. I.e., those who acquire wealth first, whether that was in a 13th century battle or a 19th century railroad or a late 20th century tech stock, end up, over time, with even more wealth relative to newer entrants into the “wealth-market.” Or to put it another way, the rich get richer.
Since new wealth, at least in the form of property, is no longer being created in the U.S., this means that the opportunities for new entrants — immigrants, the traditionally disenfranchised, and others whose families somehow missed the gravy train in a previous generation — are limited. And even when new wealth is created — for instance, during the tech boom — the charateristics of that wealth creation are such that it tends to accrue most to those who are already wealthy. Bill Gates, remember, was no homesteader — his family already had enough money to buy him computers in an age when they were very, very expensive.
So until we begin colonizing Mars — thereby creating new wealth for the able and ambitious less-well-off — the problem remains on how we can get some distibution of wealth in the U.S. that at least provides some hope for new entrants.
And this is where government can step in. By holding lands and other wealth in trust for the good of all people, the government can at least provide a facsimile of the means and confidence that personally-owned wealth provides.
To those hard-core believers in the idea that all wealth should be privately held, I can say only that, unless and until we can create new wealth and new opportunities for the ambitious under-privileged, the government must act as agent for them.
It is critical that government begin consciously to assume this function. More’s the pity that at precisely the moment when wealth-growth in the U.S. has stagnated — precisely the moment when the government’s function as public trust is most critical — our government is led by bad men intent on gluttony.
