Private enterprise does more for the national good than it gets credit for.
Alexis de Tocqueville reported that “Americans of all ages, all conditions, all minds constantly unite. . . . Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you will perceive an association in the United States.” Tocqueville went on to observe that these civil associations serving every imaginable end were the product of what he called “self-interest well understood.”
Tocqueville reflected that “the beauties of virtue were constantly spoken of” in “aristocratic centuries,” but he doubted that men were more virtuous in those times than in others. In the United States, he had observed, “it is almost never said that virtue is beautiful.” Rather Americans “maintain that . . . [virtue] is useful and they prove it every day.” This is what Tocqueville meant by “self-interest well understood,” which he illustrated with this quotation from Montaigne: “When I do not follow the right path for the sake of righteousness, I follow it for having found by experience that all things considered, it is commonly the happiest and most useful.”
Twenty-first century Americans have forgotten this ancestral insight—that “self-interest well understood” “forms a multitude of citizens who are regulated, temperate, moderate, farsighted, masters of themselves; and if it does not lead directly to virtue through will, it brings them near to it insensibly through habits.” Perhaps “self-interest well understood” sounds too much of Adam Smith’s invisible hand for present day Americans whose habit, like the French of Tocqueville’s time, increasingly is to look for solutions not to private collaboration but to an omnipresent government. Nineteenth-century Americans who turned to both neighbors and strangers in pursuit of mutual interests would be puzzled at the hard and fast boundary their twenty-first century descendants draw between public and private interest.
Young people applying to colleges know that their prospects for admission will be enhanced if they have a record of public service. They also know that volunteering for a nonprofit organization dedicated to helping the needy or preserving the environment qualifies as public service, and that working for a profit-making business, even if as an uncompensated intern, does not count as public service. This distinction conforms to one of the standard dictionary definitions of public service: “something that is done to help people rather than to make a profit.”
Other definitions of public service include the supplying of what economists call public goods (e.g. clean air, national defense, street lights) or what might be described as public necessities (e.g. water, electricity, sewer, transportation) and the work that someone does as an employee of government (more commonly called the civil service in this country). These forms of public service are like the first in that they describe things done for reasons other than profit. The non-excludable and non-rivalrous nature of public goods prevents them from being supplied for profit. It would be unseemly if not immoral to allow anyone to profit from the provision of public necessities. And government is by definition a not-for-profit activity.
Politicians often tout their record of public service as a reason they should be elected or reelected. Often that record includes previous elective office or government employment. Many government employees similarly profess that as public servants they warrant special consideration and respect because they are engaged in public service. The implication, if not explicit declaration, is that they have somehow sacrificed their personal self-interest for the good of the public.
In some cases this claim of personal self-sacrifice is true. Members of the armed forces, particularly those whose assignments put them in harms way, risk the ultimate personal sacrifice and warrant both our gratitude and respect. The same is true of law enforcement officers, fire fighters, and emergency response personnel. Although it is also true that career military and public safety personnel often have generous compensation and retirement benefits, their core mission of protecting others from harm surely warrants both generous financial rewards and recognition.
We might also include among those who sacrifice for the public good those legislators who receive meager salaries—the remnant of a bygone era of citizen legislators who supported themselves and their families through parallel private pursuits. With legislatures meeting more frequently and spending ever more time on legislative business between sessions, it is often no longer possible for elected representatives to maintain a private sector career. In some states, these folks have a legitimate claim that they have sacrificed for the public good, although many are happy to do so in return for the satisfactions of exercising power, and others have personal wealth (the Center for Responsive Politics reported that in 2010, 42 percent of U.S. House Representatives and 66% of the U.S. Senators were millionaires).
There are probably others who qualify as self-sacrificing public servants, but for the overwhelming majority of government employees, including public school teachers, there is really nothing to distinguish them from their fellow citizens employed in the private sector. Indeed, if most public employees have anything that distinguishes them, it is that, on average, their compensation (including benefits) is more generous and their work hours more regular than those of private sector workers.
I do not mean to suggest that public employees should not be respected and fairly compensated for the work they do, or that the work they do is unimportant. Nor do I mean to assert that public employees do not contribute to the public good. Rather, my point is that a public employee is not any more of a servant of the public good than are many, if not most, who work in the private sector.
In legal terms, a “public servant” is simply a public employee. The term derives from the traditional common law description of employers as masters and employees as servants. A master-servant relationship exists where the employee serves at the will of the employer (subject to a steadily growing array of legislative and regulatory limitations) and the tasks performed by the employee are under the direction and control of the employer. The relationship is distinguished from that between a principal and agent, where the agent is authorized to act on behalf of the principal in relation to third parties, and that between an employer and an independent contractor, where the independent contractor employs his own processes and methods to perform work prescribed by the employer.
In the context of public employment the term servant persists but has come to suggest a self-sacrificing individual dedicated to serving the public good. Government workers take pride in being called public servants. But in the private sector, no employee aspires to be called a servant, presumably because of the inferior status often associated with those called servants (think “Upstairs, Downstairs” or “Downton Abbey”).
Given modern sensitivities and our pervasive egalitarian inclinations, it is entirely appropriate that we have abandoned the practice of calling those who provide domestic services servants. It is, on the other hand, unfortunate that we do not think of those who work in the private sector generally as public servants—or at least as people serving the public interest in important ways.
How do private sector workers contribute to the public good? An obvious answer is that they volunteer their time outside of work as soccer coaches, den mothers, museum docents, and deliverers of meals on wheels. And many of the most successful in the private sector—people like Andrew Carnegie, John Rockefeller, Bill Gates, and Warren Buffet—establish philanthropic foundations serving many public ends.
To be sure, our communities and our nation are better off for all of these private voluntary contributions, but there are even more important things most private sector workers do to promote the public good. They invent, innovate, invest, and labor. They take risks, celebrate success, and pick themselves up after failure. They are entrepreneurs, managers, computer programmers, office workers, and laborers who provide for themselves and their families while producing goods and services to meet a dizzying array of human needs and desires. And together they create the wealth that makes it possible for governments to function.
It is probably natural that we should think of the actions of government and voluntary associations as serving the public and the actions of business as serving private interests. Business, after all, must make a profit to survive, and providing for oneself hardly qualifies as volunteerism. Government, on the other hand, exists to serve the public, though its immense powers are too often put to the service of private interests.
Somehow we have accepted and made a part of our civic culture this distinction between doing good for others and doing well or just providing for oneself. Profits are often viewed as excessive and unearned, and therefore fair targets of regulation and taxation without regard to the reality that they are the lifeblood of business. And we ignore that business is the lifeblood of employment, philanthropy, and government.
It is admirable that at least since the New Deal our national government has encouraged particularly our youth to volunteer their time or accept modest compensation for service to others. President Franklin Roosevelt’s Civilian Conservation Corps built public facilities that still provide pleasure and public pride. President Kennedy established the Peace Corp and President Johnson the Job Corps, Vista, and the National Teacher Corps. More recently, President George H. W. Bush launched the Points of Light Foundation and President Clinton created AmeriCorps. These are all noble and well-intentioned initiatives, but without funding they wither, and without profit-making businesses there is no funding.
Beyond tax revenue, the public interest in private enterprise rests in the human fulfillment that comes with providing for oneself and collaborating to solve mutual problems and achieve shared goals. While there is at least temporary comfort in support from government, there is pride in providing for oneself and helping others. And in a society where government has assumed responsibility for providing for those in need (though with mixed success), those individuals who provide for themselves and for others relieve government from assuming that burden.
In less than two centuries we have allowed the world described by Tocqueville to be turned on its head. Where we once understood that fulfilling our own interests depended on working with others in pursuit of their own interests, and that through such private collaborations we helped build a strong community, we now believe that the pursuit of self-interest is selfish at best and destructive of the public good at worst. We teach our young people that the public good is the exclusive domain of government and that public service requires self-sacrifice. We teach them that business is about profits and self-interest. We teach them that only government and self-sacrificing volunteerism serve the public good.
Tocqueville recognized what nineteenth-century Americans understood and practiced—the public good is served by the individual pursuit of “self-interest well understood.” Among our most public-spirited citizens are those who work with others, without the intervention or aid of government, in creating and sustaining the businesses upon which our economic and social prosperity rest. We should celebrate their public service.
James Huffman is dean emeritus and formerly the Erskine Wood Sr. Professor of Law at Lewis and Clark Law School in Oregon. He served as dean of the law school from 1993 to 2006. Huffman serves on the boards of the Foundation for Research on Economics and the Environment, the Western Resource Legal Center and the Classroom Law Project and is a member and former chairman of the Federalist Society Property and Environment Practice Group. He is the author of two books published in 2013 by Palgrave Macmillan: Private Property and State Power and Private Property and the Constitution. Huffman is a visiting fellow of the Hoover Institution.
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