3.6 Public Consumption
Aside of the wants of individuals, certain needs arise when individuals are collected into a community: the public buys the services of the minister, the soldier, and the judge to perform services for the common food that are deemed necessary, "although they may often be unnecessarily multiplied or overpaid." Public consumption, like any other kind, involves the destruction of value and loss of wealth, though the question arises as to what ratio is productive consumption and what ratio is merely barren consumption.
It is virtually unheard of for government to be voluntarily funded: it takes as much as it wishes from the public and offers certain services in return. Unlike any private trader, the buyer has no opportunity to determine what he desires to buy or participate in negotiation over how much it will cost. Supply and demand and competition are not available as checks and balances of the power of government over its consumers.
Taxation is most often taken in the form of money that, as a token of exchange, is passed from one hand to another, but the net effect of purchasing goods with stolen coin is the same as if private goods themselves were stolen. Any items purchased by government and the compensation of any individuals employed by government is taken from the community.
It is "a gross fallacy" to suppose that any value taken by government is returned to the taxpayer in equal measure. The value taken by the tax payer is spent by government as it will, whether the benefit of this expenditure benefits the taxpayer is coincidental.
The character of government is not like that of an employee who delivers benefit to his employer, but more like the thief who squanders what he has stolen of others. Where the thief acts with the authority of state, he has no fear of being called to justice.
It is likewise misleading to suggest that funds taken by government and spent in the community are thus returned to the community, any more than a thief who pays a merchant in coin he has stolen from that very merchant.
Where no product results from the act of consumption, there is a loss of value; and where value is spent and no want is satisfied, that value is squandered. Where one man may squander at the expense of another, there is no discouragement.
This goes on a while, with examples drawn from governments of his time, in examining the ways in which they have misspent public funds to gratify their own ambition and vanity. It's quite a litany, but adds nothing to what has already been stated.
This is not to say that all expenditures of government are wasteful, or that all governments are so callus to their subjects - but it is rare when an administrator of the public trust applies the principles of private consumption to his management of the treasury, seeking to gain adequate value for money spent, and remaining mindful that the sum of expenditures must be kept below the amount of revenue.
The Objects of Public Expenditure
The character of actual governments aside, there are some legitimate objects of public expenditure where the benefit gained by the community exceeds the expense of its acquirement. Some examples of goods that fill such needs are:
- The personal service of functionaries (civil, judicial, military, and ecclesiastical)
- The agency of land and capital
- The navigation of rivers of seas: harbors, causeways, dikes, and canals
- Roads and bridges
- Certain land open to the public
In instances where the government administers establishments of productive industry (the porcelain manufacture of Sevres, the Gobelins tapestry factory in Paris, the salt-works of Lorraine, etc.), it is not considered a public expense, but a source of national revenue, but only when such concerns bring in more than their expenditure, "which is but rarely the case."
(EN: My sense is that what follows is going to be more in the nature of philosophy and politics rather than economics, and likely colored by the political sentiment of Say's time.)
Civil and Judicial Administration
The salary paid to individuals in public office is far outstripped by the expense of "pomp and parade" - it essentially makes no difference whether the trappings of majesty are paid directly from the treasury or if the amount paid to such persons as compensation covers its cost.
It has been asserted that pageantry is required for the public to respect its nobility, and that the general public looks to "the externals of greatness" rather than having respect simply for the functions of an office - but say considers it to be catering to the vanity of officials and the entertainment value of public spectacle - and as such is a luxury for which the public is made to pay dearly. It's implied that if the public were able to bargain, and made to pay for the benefit of public display, they would opt not to do so and be none the worse for its absence.
The compensation of the lower ranks of public officers is less lavish and likely reflects a more reasonable cost: they cannot be assessed by the value of their work, but instead a salary must be offered to gain their services away from other employments - and in that way a government clerk is generally paid slightly more than he would be for performing the same duties for a private concern.
The non-productiveness of government employees was the same as Say's time as it has been in the modern age: government employees are not compelled to be productive and are often maintained when their services are superfluous or unnecessary. There are many sinecures through all strata of government, rewarded handsomely for doing little to nothing.
In other instances, the salaries of government are set too low and wasted in procuring men who are incompetent. A talented and able minister would likely earn more income in any other profession - an advocate, farmer, or merchant. Where the offer for public service is inferior to similar offers in the private sector, the position will attract an inferior class of man. It is also suggested that where public officials are undercompensated, they are susceptible to dishonest means of supplementing their income (corruption and bribery).
It was previously mentioned that the compensation of a profession often has non-monetary elements, such as the esteem attached to an individual who performs a given function. This can be true of government, where an official provides a legitimate service for which the people are grateful, he is greeted with a high degree of respect and deference. As such, public office is highly pursued by individuals who crave such esteem - though they too often assume esteem is automatically attached to the office rather than the competent performance of duties that actually render a service to the public. Where an official occupies an office but does not provide such a service, he is viewed with great scorn for the waste of public resources and the betrayal of public trust.
Bad government requires the work of many hands: a multitude of prisons, soldiers, and spies is necessary to inflict violence and justice upon a large number of citizens, enforcing a plethora of arbitrary laws that do not contribute to the public welfare.
Say also considers the old-regime practice of selling public offices and titles of nobility. At best, a person who buys a title does so to gratify his vanity, and does nothing with the authority he has been granted. At worse, a person uses the authority he has been granted to recapture the cost of obtaining the title, and far more. In such an instance, the government has not merely sold a title of distinction, but has sold its own citizens into serfdom to such a parasite.
In spite of every precaution, the public will never be served so well or so cheaply as individuals. The provider of any good or service is held by his customers to deliver value for the price demanded, or they will take their business elsewhere. The provider of a public service is held to no such standard, and his greatest profit is in doing as little as possible to have the appearance of justifying the revenue granted not by his customers, who know the truth of things, often to another administrator who is easily deceived.
The Military
The establishment of a professional military is considered to be akin to the specialization of labor in general: if each citizen were required to spend some portion of his time farming to raise his own food, he would be less productive at activities at which he is most efficient and effective. Likewise, it would be inefficient where each citizen were liable to be dragged from their productive employment to defend the nation, not to mention that during time of military service, his production would fall to zero.
(EN: A historical point is that many military conflicts in medieval time were held during the season in which farm hands were idle and their crops could grow untended for the duration of the conflict. Where economies have shifted to manufacturing, a year-round occupation, there are no occasions in which the factories can remain productive if unattended.)
As soldiering has become a trade, it has benefitted from the specialization of labor, but has also take on some of the necessary expenses: a professional soldier spends a long time in training, and must remain in constant practice to maintain his military skills. When roused to action, a professional army is extremely effective - but until action is necessary, a professional army is extremely expensive, and produces no value in return for the resources devoted to its maintenance.
As a consequence, wealth has become indispensable to modern warfare: a poor nation cannot withstand the onslaught of a rich one, even if its population is far more numerous. And given that wealth can be acquired only by industry and frugality, it seems safe to predict that any nation whose agriculture, manufacturing, and commerce are ruined by bad government will inevitably fall under the yoke of its neighbors.
The cost of the military would be very severely underestimated if we account only for the cost of its maintenance: consider as well the havoc occasioned by warfare, in damage to the land and property, and in the discouragement of production and trade during times of conflict. This is the epitome of unproductive consumption.
There's an oblique mention that modern warfare differs significantly to warfare in ages past: it is no longer a domestic militia defending the population against the wanton destruction of barbarian hordes, but generally the extension of squabbles among despots and monarchs, arising from the arbitrary division of the globe into territories. Modern warfare is likened to dog-fighting, in which soldiers are "brutes that are trained to fight and tear each other to pieces for the mere amusement of their savage masters."
Civilized nations seem to be slow in the realization that they have no genuine interest in fighting one another. The spoils of war seldom recover its expense and the cost of maintaining dominion over a conquered territory far outstrips the profit that can be had of it. The greatest degree of prosperity occurs in peace-time, when citizens can be productive and trade freely among themselves as well as with the citizens of other nations.
It is Say's hope that people will recognize this, and will be more reluctant to give their assent to warfare. The national military establishment should be "reduced to what is barely sufficient to repel external attack. For which little more is necessary than a small body."
Public Instruction
The value of knowledge to mankind cannot be disputed: the better a man understands the nature of things, the more effective he can be at any endeavor, and the inventiveness and productivity of educated minds ahs greatly served to increase the general prosperity. The question at hand is whether the education of citizens is to be done at the expense of the community.
In every country that appreciates the benefits derived from knowledge, it has been considered a necessity to support academies and institutions of learning as a means to gain the benefit of educated citizens. But everywhere such institutions are established, they soon become corrupted and subverted from the intention of their founders. Say does not describe precisely how, but does suggest that such academies become marks of privilege - that attending a given school is considered a credential regardless of any knowledge gained.
Especially given the trend of manufacturing, the amount of knowledge that is necessary has decreased to the point that on-the-job training of a very short duration will suffice to teach an individual as much as he needs to know to do the work required of him.
However, too great a focus on practical skills results in a citizenship of small-minded individuals: the occupation of the lowest class of laborers is reduced to one or two operations that are continually repeated, and their intellectual faculties are rarely called into play. Such men are "rendered incapable of uttering two words of common sense out of their peculiar line of business and utterly devoid of any generous ideas or elevated notions."
The lower classes of society "earn little more than a bare subsistence" and can barely see to the basic needs of their family. Such individuals cannot be expected to provide for the education of his children - and if a community wishes to have the benefit of more knowledge and intelligence in the laboring classes, it must be dispensed at the public charge.
With that in mind, Say feels it reasonable to establish at public expense primary schools where basic knowledge - literacy and arithmetic - are taught. Public education should go no further than that, as the basic skills are the groundwork of all knowledge, and are quite sufficient to provide a basis from which an individual may educate himself in other matters. Books are very cheap, and anyone who can read can access a great amount of knowledge for very little money.
Beyond basic knowledge, men are motivated by self-interest to gain knowledge and skill: education and apprenticeship are undertaken at each student's own expense with the goal of gaining competence that will be repaid in the form of earnings. Where a field of study has no material recompense, it is arguably little more than a distraction or a gamble that some practical use may be made of it.
Religious instruction ought to be provided by the religious institutions themselves, each of which teaches the doctrines of its preference - especially given that each denomination holds its own opinions to be truth and anything else heretical, it would be unjust for anyone to be taxed for spreading propaganda they feel to be objectionable.
Public Benevolent Institutions
There is much debate over whether the distress of an individual grants him entitlement to public relief. If infirmity and want is caused by the public, it seems proper that the public should restore any who have suffered such injury, on the principle that the harm suffered by few has resulted in the benefit of many. But aside of restitution for those who are harmed, there is no justification for charity at the public expense.
Public institutions of charity are instated in the same manner as insurance: each productive person contributes a portion of his revenue to entitle him to claim a benefit in the event of accident or misfortune. No man can reckon himself immune to misfortune, the apprehension of which should encourage him to set aside some of his earnings to see him through - though the presence of charity tends to decrease his tendency to do so.
Institutions that tend to the needs of the young and old, or to others who are incapable of being productive, enable more of the population to be engaged in labor rather than in tending to those members of their families that fall into these groups. It is arguable whether eliminating such institutions would return their expense to the laborers in sufficient measure to obtain private services of the same nature, as the cost would be less evenly (though more justly) divided.
Most nations find a middle course between neglect and support, providing public relief for some but not others. Though it is more likely the result of incompetence rather than intent that the conditions of such institutions are such that any who have sympathy for the welfare of their family find other arrangements for their care if they can come by the means to do so.
Say refers to work-houses as "excellent institutions of public benevolence" whereby work is found according to the respective capacity of their residents. Some of them are open to any workman out of employ, others are kinds of houses of correction where vagrants, beggars, and debtors are kept to work for fixe periods. Even some jails enable convicts to work during their confinement to defray the cost of public support. In some instances, such establishments are able to meet or exceed their consumption, and are no longer an encumbrance to the taxpayers - and are, in fact, productive enterprises.
Public Works
The category of public works encompasses a great many things that provide some benefit to the population of an area, but it can be extremely difficult to calculate the benefit that is derived.
The cost are clear enough: one may consider the value of the land that is used in light of the rent or profit of sale that might be had; plus the capital expended in the construction or improvement necessary to render it fit for public use; plus the annual charge of its maintenance.
But how can one calculate the utility of a public park? The value of a park is in its natural splendor and the recreation and relaxation that can be had there. The residents of a town find great value in having such a place, but it would be impossible to affix a precise financial amount on this value.
Public conveyances seem more likely to be seen as having practical value: the roads, bridges, and canals serve a purpose in conveying goods to market, workmen to their places of employment, merchants and customers to a market, and the like. One may have a sense, in aggregate, of the degree to which production and commerce are facilitated - by the exact amount, and the identity of the beneficiaries, cannot be effectively calculated.
Say niggles a bit over the breadth of certain roads, particularly given that there are many broad roads leading into Paris whose traffic could be accommodated by a narrower one, and he calculates the acreage lost to roads and considers it a wasteful luxury. Ultimately, he suggests that the value of a road or canal derives from the amount of traffic upon it, which may be difficult to estimate except in hindsight.
There is also great waste in "public works on no utility." Palaces, monuments, and the like are all items of prestige - were they to be constructed by an individual for his own vanity, they would be considered prodigality and squander, and there is no reason to consider them otherwise when they are erected at public expense.