Where will public goods stand in Trump's administration?
Everybody’s “market basket” consists of a mixture of private and public goods. Private goods are the goods and services that people acquire and consume as individuals or families. Public goods are those that are consumed in common, since no one can be excluded from using them and one person’s consumption does not reduce their availability to others. Some public goods, such as air and ocean water are provided by nature; others, including parks, infrastructure, and national defense, are generally provided by government. One of the major differences between our two political parties is over whether the major effect of taxes is to reduce the money available for private consumption or to increase the revenues that can be used for public goods.
One of effects of the steady shift of political power from the Democratic to the Republican Party in the last few years has been an implicit decline in the valuation of public goods, with the exception of national defense. The increasing incursion of private projects into some of our national parks is one indicator; the decline of our infrastructure to what many regard as third-world status is another.
It might look therefore, as if President-elect Trump’s heavy emphasis on rebuilding the nation’s infrastructure signaled a reversal of this decline. But a closer look at the details of what is closest advisers are recommending suggests the opposite. Their suggestions involve incentivizing the private sector, through tax credits, to focus on projects that could potentially yield revenues, like toll roads or bridges. But many of the most critical projects — improving roads, repairing the 60,000 bridges with structural deficiencies, or modernizing the air traffic control system — would not yield revenues and therefore would not be attractive to private investors. The very fact that these projects would fall into the category of public goods guarantees that a program based entirely on private equity would not address them.
So far, I’ve been talking about public goods at the national level. But international public goods are critically important as well. Throughout most of the period since World War II, the dominant strength of the United States has enabled us to take responsibility for stabilizing key regions of the world through a combination of our own military expenditures and strategic alliances. Our guarantee of global security reached its peak, we thought, with the collapse of the Soviet Union at the end of the 1980s. But soon various developments began to undermine this apparent tranquility: the increasingly nationalistic demands of Russia and China for recognition as major players in the international system; turmoil in the Middle East; and the financial crisis of 2007-2009 and the Great Recession that followed.
In the economic sphere, the United States took leadership in establishing rules for across-the-border trade and financial transactions by leading the creation of international organizations like the International Monetary Fund, the World Bank and, later, the World Trade Organization, and then underpinning a succession of international agreements that liberalized trade and finance.
If President-elect Trump’s statements are to be believed, his goals are to reverse these developments enabled by American leadership and power: the Pax Americana. He has spoken repeatedly about tearing up NAFTA, driving the nail in the coffin of an already moribund Trans- Pacific Partnership, and burying any efforts to achieve a similar arrangement with the European Union. In the security field, he has said he will make our security alliances on which many countries depend, contingent on their paying an increased share of the costs; has suggested a rapprochement with Putin’s nationalistic and authoritarian Russia; and has indicated that perhaps Japan and South Korea should acquire their own nuclear weapons.
Unless the President-elect changes his stance in important respects, the outlook for a rise in the priority of public goods, at both the national and the international levels, is bleak indeed.
Marina v.N. Whitman is a professor of business administration and public policy at the University of Michigan. She was the first female group vice president at General Motors.