When General Motors announced the downsizing of U.S.-based factories, netting an expected loss of thousands of jobs, President Donald Trump tweeted, “… We are now looking at cutting all @GM subsidies, including … for electric cars … ”
The president’s comments reflect a new pattern in government policy that has been subtly gaining traction over not only this presidency, but the two previous presidencies as well.
At best, it is a shift away from public values and toward a world in which political elites pick winners and losers. At worst, it is policy based on rewarding and punishing the behavior of individual people and businesses.
In either case, it is a shift toward patronage, the most common form of government corruption around the world, and it doesn’t belong in our public policy.
The president threatened to cut government benefits specifically for GM in response to a private, internal strategic decision made by the company. GM currently benefits from tax credits offered on an even playing field to consumers of any qualifying vehicle — not any kind of special benefit only available to GM. The president’s comment therefore signals a willingness to pick and choose among players in the market rather than leveling the playing field for all worthy competitors.
I understand that the GM decision deals a significant blow to our collective aspirations for the American auto industry. The downsizing is causing hardship for thousands of families — families that helped pay for auto industry bailouts that helped GM survive and who now rely on the company for their livelihoods. I don’t mean to minimize the magnitude of this decision and its impact on GM employees or our economy.
However, this trend goes deeper than a single company, a single policy or a single tweet.
If we focus for a moment only on the auto industry, we will see that among the subsidies, bailouts and other programs offered to car manufacturers, the Department of Energy provided loans to automakers under the Obama administration to incentivize the development of clean technology. As my co-author and I wrote, these loans were unique in that a panel of government workers and advisers had discretion to determine which companies received loans and which did not. Similar programs existed under the George W. Bush presidency.
This approach is very different from most federal government subsidies, tax credits and other more customary programs in that a panel of individuals made decisions on a case-by-case basis about which businesses should receive funding and which should not, rather than setting statutory rules that any company could follow to access funds.
These decisions were made with a great deal of discretion, and the panel and its members had little or no accountability for their choices.
This isn’t isolated to a single program, either, or to the federal government alone. As we slowly witness the erosion of public sector values and shift government more toward “operating like a business,” we see local, state and federal governments making decisions as though they were typical free market agents — with little public accountability and an alarming disregard for traditional values such as equity, fairness and transparency.
These practices can easily lead to corruption. In some cases, these practices are corruption.
In response, we should actively seek to restore fairness, equity and transparency to our public institutions at every level of government.
We can start by calling out politicians who single out people or companies for subsidy or punishment on an uneven playing field. We can demand accountability for funding decisions that are made with discretionary power rather than through fair and equitable policies and procedures.
And we can remember that if government were meant to operate “like a business,” we wouldn’t need government in the first place.