It has become popular to cast the United States government as the foolish, bungling bureaucracy that has no vision and that only unfettered free enterprise can efficiently run things. Of course, the government cannot defend itself, it stands mute. It can’t waste our tax dollars defending itself from attacks no matter how biased, while private groups can spend millions on the attacks.
What happens if we look at the real story? Has government done anything right? How inefficient is the government? Has the government shown any vision? Has the government ever effectively helped? Is it true that the most frightening words are “I’m here from the government and I’m here to help”. Could the government be as worthless as represented? Perhaps we should take a page from the critics and evaluate the government as a business. We want to know about the history, corporate vision, prospects, financial position and growth. What is the real track record of Government USA, Inc.? Would you rate the stock a buy?
The company USA started as a forced breakup from the ‘parent corporation’, Great Britain in 1781. At that time the company consisted of 13 largely independent divisions (colonies) clinging to the Atlantic Coast. It was of a new, untried organizational structure that even the Board of Directors (Founding Fathers) called “an experiment in democracy” and it had significant debit and no defined income. This was truly a ‘penny stock’ in the high risk category. Since then Government USA, Inc. has invested in land, people, businesses and technology.
The young ‘company’ invested by purchasing Louisiana, Alaska and Gadsden. (The Gadsden Purchase was solely for the southern route of the transcontinental railroad.) It acquired land from Mexico and Spain through hostile takeovers known in international circles as war. It has grown from the original 13 colonies of less than 360,000 square miles to 2,959,064 square miles stretching from the Atlantic to the Pacific and beyond. It produces great agricultural and mineral wealth. Just the ten major crops produced $77.2 billion and last year mineral output was $64 billion. The gas and oil wells supplied 70 Billion cubic feet per day of gas and 7.5 Million Barrels per day of oil and that was before fracking.
America Inc. invested in people through education. Consider universal education and the land grant colleges in the 19th Century and the GI Bill in the 20th Century among other programs. It supported individuals with Unemployment Insurance, Social Security, Medicare, and housing programs. The Tennessee Valley Authority, National Park System, and the Interstate Highway System show the variety of programs aimed at making peoples’ lives better. In the past, the Homestead Act and Rural Free Delivery had a significant impact on peoples’ lives and helped open up the West. Rural Free Delivery also provided the delivery infrastructure making the early mail order companies like Sears and Montgomery Ward possible and created the model for the modern mail order industry.
Business and Agriculture Investment
The government invested in business directly through contracts, subsidies, special grants, and tax breaks. The Department of Agriculture provided research, support and outreach to farmers creating an agricultural surplus beyond anything seen before. The Commerce Department and the Small Business Administration provided services directly to business at home and abroad. The government has supported the development of whole new industries through infrastructure programs like the Federal Airways System and the Interstate Highway System. These infrastructure projects laid the foundation for trucking, air freight and airline industries. Competition in the private sector was made possible by the ‘level playing field’ of government infrastructure. The transcontinental railroads were created using government subsidy and the automobile is only practical because the government provides the roads. The government lead space programs for the many years before space became profitable for private corporations. Most of the early communications and TV satellites went into space on refurbished US military rockets launched using government facilities.
In terms of innovation, Government USA, Inc is the leading supplier of technology to the world. In spite of all the current propaganda to the contrary, most current technology depends on, or has depended on, the government to get started or is dependent on the government for infrastructure. The government has been in the technology business going all the way back to the 1830’s. The critical core process of the machine age, interchangeable parts, came from the government. The process was transferred to private companies that went on to make things for the civilian market like bicycles, typewriters, sewing machines and clocks. Without the replaceable parts concept, the automobile as we know it would not be possible. The process, called the American Method, is now universally used for making the mechanical things we see around us.
The government organization, Defence Advanced Projects Agency (DARPA) invented the internet and GPS among many others. Either of those would provide major bragging rights for any private company. Many of today’s drugs came from government laboratories and supported university research. Fracking which may make the US independent of mid-East oil was the result of many years of government led development.
While many of these programs are old and some discontinued, it is important to see that the government has been investing in the people, private business and technology since the beginning. In these ‘giveaway’ programs the government invested in people and industries by giving them opportunity and providing the infrastructure for new industries.
Looking at the record, it is clear that the government has gotten excellent pay back for its investment. In terms of vision, the government has supported new technologies like aviation and electronics for years until the risk was reduced to the point that free enterprise was willing to support final development and create the products we enjoy.
The government has come to the rescue when the private corporations got in trouble in 1929 and 2008. By pouring money into the collapsing economic system the government managed to stabilize key industries and get the economy going again. Like when your child falls off his bike, Uncle Sam picked up the private sector and got it back on its bike and moving again. (Just like the kid, the private sector never said thank you.)
When the nuclear power industry was starting up and no private insurance company would provide insurance because it was too risky they went to Uncle Sam for insurance. (Without government indemnification there could be no industry.) Then the industry promptly accused the government of making it hard on them with too much regulation.
Government USA Inc is now the bluest of blue chip ‘companies. While the debit load is large from the first decade of the 21st Century due to war and bad judgement, the debit ratio is manageable. Even with the current debit load its bonds are in demand, its interest rates are low. With income last year of $2.9 trillion and a gross domestic product of $15 trillion it is a far cry from 1781. For well over 200 years Government USA has grown larger and stronger. Looking at the record, it is easy to see that stock in Government USA Inc. should be in any prudent portfolio. Certainly the rest of the world thinks so.