We have seen natural disasters, perhaps some of us have been affected by ones in the past. However, none of us have seen anything like the current pandemic. It has been more than 100 years since we have seen a health crisis in the world like this, or any other natural disaster.
Such a tragedy could not have been foreseen. And no one would argue that the government needs to help limit the devastation as much as possible, to individuals and businesses that provide jobs but have been shut down. And the Federal government passed laws to give over $2.5 trillion in help.
A key part of that funding is help targeting small businesses who would struggle to keep from going bankrupt. But we are finding that money isn’t always going where needed or intended.
The money set aside to help small businesses ran out after just a couple of weeks. Imagine that, the largest amount of money from the federal government ever allocated for any program at one time, and it ran out in weeks, and so Congress had to pass another law to make more money available.
Yet, we are learning that a lack of money may not have been the real issue, or at least not the only one. And that’s because the money didn’t always go where needed or intended.
A few examples:
The Los Angeles Lakers, one of the wealthiest sports franchises in the world and with the largest merchandise sales of any team in the country, applied for and received $4.6 million from the government. There was no danger of the Lakers going under.
Harvard University, with the largest endowment in the world at an estimated $41 billion, received several million dollars in bailout money. There was no danger of Harvard closing its doors.
Ruth’s Chris, the high-end steakhouse, had profit last year in nine figures but they also received money as did other large and well known national businesses. The list is actually pretty long
Fortunately, the resulting publicity resulted in the Lakers announcing they are returning the money they received. And the President shamed Harvard. After defending their request for money, they changed direction and have said they will also be returning the money, as are some other large national businesses.
But the question remains as to why large companies and institutions, who are in no danger of going under, applied for and then received money from the taxpayers? The bottom line is that when government transfers money, rules have to be written that apply to everyone and so the rules have to try to anticipate every possible situation. And we know that’s just impossible.
Taking this specific situation, let’s apply it more broadly for a moment, as well. This instance, though it involves vast sums of money only once imagined until a couple of months ago, is similar and just larger in scale to other programs where the government hands out money. If we think of other programs even down to the individual level, where the government wants to give money to those in need, most disagreement over them boils down to whether the money will go to those who actually need it.
And government is fairly bad at getting money just to the places where it’s needed. Philosophically, this is why conservatives generally distrust government solutions to helping those in need. We know from some fairly detailed research and polling data, that those who identify themselves as conservatives give much more to charity than average. So presumably they want to help those in need and it would seem like a contradiction to be against government trying to do the same thing. However, it isn’t. In many, if not most cases, people want to help out those in need but they want to make sure it only goes who need it. Because the government has to write rules that they have to try to apply to every situation, there is a lot of inefficiency and wasted money. We know you can’t foresee every situation and you also will have those who try to take advantage, such as Harvard University and the Lakers (to be sure, I’m not suggesting they did not abide by the rules but simply that they didn’t need it and the rules were not written to make sure only those that needed it, got money).
That’s why private solutions are almost invariably better. People can use their judgment on where their money goes and don’t have to follow ‘rules’ so they won’t be sued. That is not to say that government programs are always bad, but they should always be viewed with a healthy skepticism.