When the state becomes the pusher

We all know that there is an endless list of addictive substances that present a real danger to people. Alcohol, cocaine and heroin just to name a few. But a powerful addictive substance provided by our own government is public money. Few things can get individuals and institutions more hooked than that.

Although we’ve known for a long time that government largess often comes with negative consequences, what recently brought this to mind was a series of stories revealing which businesses and non-profit organizations received public funds from the Paycheck Protection Program (PPP). These reports question whether the program — intended to preserve jobs by helping small businesses get through the pandemic — has served its intended purpose.

For example, the Small Business Administration released information which shows that private equity-backed chains and some companies owned by members of Congress received money from the Paycheck Protection Program along with almost 90,000 employers that would not commit to retaining their employees. Just in the Sacramento area, more than 800 companies borrowed money from the federal government including powerful lobbying organizations and law firms.

Although initially resistant to releasing data on PPP disbursements, the federal government relented when faced with possible litigation. While the exact amounts of the loans to specific recipients were not disclosed, the Treasury Department and Small Business Administration made available a list of the thousands of businesses, nonprofits and others that received at least $150,000.

To be clear, this column is not necessarily a criticism of the program either in its intent or execution. In fact, unlike other grants of government support, PPP is more than justified given that it was government which slammed the brakes on the nation’s economy by ordering everyone to shelter in place. When government shuts businesses, then government has a responsibility to ameliorate the economic impacts. The pandemic presented such a threat that an immediate and dramatic response was necessary.

Nor should there be an expectation that PPP was going to be efficient. Government programs by their nature are inefficient and fraught with waste. This is doubly true with programs created in response to an emergency. The point here is that even the most well-intentioned and necessary government distribution of public funds will be accompanied by negative consequences. The selling point of PPP was to address the threat to small mom and pop businesses barely hanging on during the crisis. It is doubtful that many Americans thought large lobbying firms with millions in cash reserves needed help from the federal government.

Businesses, nonprofits and individuals should always be careful when accepting public dollars even when clearly entitled to participate in a government program. For example, some conservative nonprofit organizations, such as the Ayn Rand Institute, which received PPP funds exposed themselves to charges of hypocrisy by the liberal media for taking public funds. Of course, criticism of nonprofits such as Planned Parenthood were more muted.

For private businesses, non-profits and individuals, merely receiving public dollars is not inherently evil. Nonetheless, government money can be addictive and, over time, can result in less freedom and independence. The examples of this are endless. Everything from government contracting to welfare to so-called “public-private partnerships” can create a culture of dependence and, in a free country, that can be dangerous.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.