The Great Transaction

This country, like all democracies, runs on what we can call “the great transaction.”  From the private sector we earn our money, do our work, and, if lucky, create products that are illuminating, educational, useful or just plain enjoyable for society.  The problems left over from such activity, however, are actually massive and remain largely untouched by the private sector.

During this pandemic, we are being reminded again of just what gets left out of our money-making activities.  Healthcare, security, national protection in a scarier world, education, rule of law, democratic exercises like civil society, guardianship of contracts and agreements, the establishment and furtherance of peace in the world, the promotion of culture and various rights – these and much more aren’t of prime importance to the capital-raising apparatus of modern economics.

But they are vital, and so a construct was put together that would see money taken from us to pay for such necessities on the correct assumption that the private pursuits of life would never cover such amenities.  Taxes were introduced as a means whereby we willingly contributed to the larger pursuit of such ventures because we understand well enough that if we  had to pay individually for such necessities it would end up costing much more.

That’s not always true, of course.  Governments, as the collectors of those taxes, can frequently be inefficient, wasteful, even, at times, criminally negligent.  But overall, we get services that most of us, especially lower and middle-classes, would never be able to afford for ourselves.

In recent decades, we have gone through a series of phases that saw to the downsizing of the public sector in favour of private sector pursuits.  Eventually, glaring inequities began to emerge.  Poverty and homelessness grew, wages were driven down, wait times for a vast array of government services were extended, our natural environment came under attack, advancements on gender equality stalled, post-secondary educational costs became onerous.  These problems, despite all the money being generated in the global marketplace, have increased, not declined.

On the private sector side of the ledger, vast amounts of money have been made, especially on the tech side, and a kind of systemic imbalance has set in that, despite all that wealth generated and invested, has come at the expense of the public sector.  There was a period of time when private investors saw their pursuits greatly limited by legislation from democratically elected governments, to the point where productivity itself was hampered, hurting the balance between the two sides.   But those days, for big businesses at least, are long in the past. 

Strangely, capitalism itself, despite all the gains, has failed to maintain its vital connection to Main Street, as it embraced all things Wall Street.  These last few years have shown us, however, the great chasm that has been generated as we watched Wall Street reach record levels of gain in a fashion completely out of touch with average citizens and small and medium-sized businesses.  The real economy – where people live – was being ground down, while the elite economy flourished and actually existed in a place of its own making.

Today, families and individuals making income pay a certain percentage of it in taxes.  In turn, they procure all those amenities listed earlier that they could normally never afford themselves.  Yet, over time, people have been urged to denigrate government, somehow believing that if they paid less taxes they would be better off.  The result has been the lessening of opportunity for most and the embellishment of riches for a few.

COVID has changed all that – practically and by perspective.  There is a grudging acknowledgement that without government stimulus, great portions of society, might not have prevailed without such investment.  What was remarkably at the beginning of the pandemic was how light the opposition was to government take on the leading role in pandemic management and care.  Political parties, even financial institutions, normally adverse to such government oversight powers, understood that societies couldn’t survive without it.

Suddenly, those taxes we had paid over the years, and which we denigrated so mercilessly, became our lifeblood.  And all those investments in healthcare and research, even as they declined in recent decades, became our lifesavers.  A new awareness has infused modern society, reminding us that society itself is like a patient – capable, expansive and, at times, too selfish, but also vulnerable and too disconnected.

The contempt for government and taxes, so often a ruse promoted by the private sector, has now become dormant as we all seek to get through the pandemic.  There will always be mistakes in balancing the public/private enterprise.  At times, capitalism itself can be starved to the point of exhaustion by governments holding little respect or understanding of what our businesses, investors and manufacturers actually make possible.  In recent decades, however, it has swung in the opposite direction, perhaps for too long.  We need our public institutions, we require our governments and regulators overseers, and we now must invest again in those dimensions.

Is it time to bring renewal to the Great Transaction, to reinvest in each other by the means of taxes, the energies of capitalism, and the efficient management by governments.  We have failed too much in recent decades.  Growing poverty, climate change and rest were not sufficient to pull us together as modern societies to make the adjustments required for better lives.  COVID has changed that equation, giving us the chance to reset the balance.  One can only hope that the political sector, with its craving for power, the private sector with its pursuit of money, and citizens themselves, with their desire for complete autonomy and independence, will lay those things aside and work together for the next, more productive, healthy and equitable, stage of human development.