What to Do About $40 Billion

GOVERNMENT IN BUSINESS

HOW far has "creeping socialism" crept? Farther than most businessmen think.

The astounding fact is that the U.S. Government is now operating some 100 separate types of business enterprises in which it has sunk at least $40 billion. Among other things, the Government has become the nation's largest insurer, electric-power producer, lender, landlord, grain owner, warehouse operator and shipowner. It monopolizes the world's biggest potential new industry: atomic energy.

How did this giant rival to business get so big? Many of the activities, such as atomic energy and synthetic rubber, were vital to national security, and only the Government was big enough to finance them. But the Government also still operates many a business that has no such reason for existence. President Andrew Jackson began Boston's 119-year-old Navy Rope Walk so that the Navy would not be dependent upon Russian hemp. U.S. ropemakers can now supply all the Navy's needs, but the Boston Rope Walk goes merrily on, with that hardy indestructibility peculiar to Government businesses once they get going. In 1902 the Navy started to experiment with paintmaking. By 1951 it produced an estimated 2% of all U.S. paint, although paint manufacturers say that they could supply it cheaper.

In patient digging into such activities, the House's Committee on Government Operations has compiled four thick volumes of testimony showing how incredibly broad the Government's competition with private business has become. Government enterprises even compete with each other: the Pentagon's printers claim that they can print half as cheaply as the Government printing office.

Post exchanges, begun as a wartime convenience to provide tax-free soap, razorblades, cigarettes, etc. to servicemen, have proliferated into huge discount houses selling everything from lingerie and jewelry to Laundromats and power lawnmowers. Boxmaking, begun as a convenience in small shops at Army posts, has grown into a Government industry that boxmakers estimate is now making 10% to 15% of all U.S. box production. In Philadelphia, four Government box plants compete with eight private companies.

The Government is engaged in everything from tire-recapping to coffee-roasting, from binding books to freezing ice cream (162 plants) and making brooms and spectacles. It owns some 122,000 housing units, and by the Comptroller General's estimate, rents them at a loss. Every Washington agency operates its own fleet of motor vehicles, although one central motor pool (not to mention taxis) could handle the job. General Services Administration maintains a fleet of trucks for moving Government furniture about Washington, and since some of the trucks may be used only half a day a week, private movers could do it cheaper. The Government spends an average $625 per lot storing the effects of overseas servicemen in Government warehouses, v. a cost of $97 to keep them in private warehouses, which have 8,000,000 sq. ft. of empty storage space while the Government maintains 3,000,000 sq. ft. ($18 million worth) of its own.

Before the war, the Army and Navy relied chiefly on private tugs and barges for towing and delivery jobs. During the war they acquired their own tugboat fleet, and now, possibly to keep bureaucratic empires from shrinking, there is a $100 million expansion program under way. (One House committee witness told how the Government spent $43,369 hauling $4,368 worth of scrap iron from Alaska to California.) When the Defense Department authorized its three forces to spend $10 million a year reclaiming their scrap, the Navy's Pensacola Air Station promptly spent $25,000 on a scrap press and $5,000 to install it. Near by was a bigger private press which in ten days' time could have smashed and baled all the scrap the base had. Empire-building bureaucrats have occasionally found it necessary to beat strategic retreats and agree to reduce their operations. But they have seldom eliminated them.

Often the argument that can be made for the public operations of a TVA or new projects too big or risky for private industry is used to justify many another project. But even a veteran public-power advocate like Bonneville's Administrator Paul Raver now argues that the Government need not control northwest projects, that they should be built, financed and run by interstate authorities. Thus, when there is a will to get the Government out of business, it can unquestionably be done. To do so, the new Administration will have to overcome all the resistance, obstruction, delay and evasion of the bureaucrat-at-bay. It will have to hack through the plausible defenses which inertia and tradition have accumulated over decades. But the further it gets into the problem, the sooner it will learn that the only way to stop Government in business is to stop it.

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