Coronavirus proves government is important
Many of us have taken government for granted, but that has all changed in recent weeks. Now, governmental action or inaction — whether it is federal virus testing or recovery programs, state unemployment disbursements, or United Nations public health mobilization — have become matters of life and death.
Think tanks, politicians and their wealthy donors have disparaged and defunded government for years, while glorifying the free market as the solution to all society’s ills. We see now the bitter fruits of this anti-government lobbying, resulting in more deaths, destroyed jobs and shuttered small businesses from a mishandled pandemic.
Many of these same government-is-bad politicians will turn around and ardently support government programs that serve their corporate interests, such as the fossil fuel industry. They advocate the need for an “open” energy market and against solar, wind or efficiency incentives, while the U.S. oil and gas industries pocket $650 billion in government subsidies annually.
States force extra requirements and paperwork on unemployment and food stamp recipients, while doling out tax subsidies to corporate giants. Those workers we are asking to bear the burden in the coronavirus crisis — the health, grocery and delivery workers — are the very individuals whose families have suffered as holes were ripped in the safety net of health care, education, childcare, welfare and wages — all of those spending cuts that were made to shrink government and cut taxes.
Now we are all realizing our mistake. It turns out that fact-based leadership and dedicated public servants are absolutely critical to the survival of our society. Indeed, we need the best and brightest of our young people to again aspire to public service. And we must get dirty money out of our elections, so that we all can have greater faith in and commitment to our democracy.
The fund that I co-founded 21 years ago, SJF Ventures, has invested in 67 companies that have created more than 10,000 jobs while providing health, education, food, energy, mobility and logistics technologies and services. SJF is one of 47 positive-impact venture capital and private equity funds that are part of the Impact Capital Managers (ICM) network. All of these private funds are investing in private companies utilizing only private capital and generating market-rate returns. However, our underlying portfolio companies are very involved in delivering social and environmental results, and often are reliant on supportive government policies. And many ICM member funds got their start with support from the federal Community Development Financial Institution (CDFI) or SBA Small Business Investment Company (SBIC) programs, and with Community Reinvestment Act (CRA) bank investors. Many of these funds and their portfolio companies simply would not exist were it not for the key government programs and policies.
Indeed, there is no pure “free” market without a government creating the rules of commerce, trade and labor. Every sector of our economy has government tax and regulatory policies that either foster a more equitable, sustainable society or do the opposite. Only government can provide the essential public goods we all need for health, security, infrastructure, education and the environment. Instead of strangling government, we need to provide it with the technology and resources to efficiently serve citizens. In fact, many ICM member funds focus in part on investing in “govtech” companies that deliver the latest software to allow governments to effectively and transparently serve their citizens.
The pandemic and recession are exposing the deep societal wounds brought on by the rollback of funding and regulations for public health, gainful employment and the environment. We have another looming crisis more dangerous than the pandemic — the climate crisis — which will exacerbate the suffering we are experiencing now, especially for the poor. We will need rapid, prudent government action on a global scale, including the U.S. rejoining the Paris Climate Accord, to try to ward off some of the worst impacts of a climate catastrophe.
The word “government” is derived from the Greek word “kybernan,” meaning “to pilot a ship.” We have realized now that those who argue for “small” government often are just distracting us from their attempts to “pilot” our country in directions benefiting their own interests and those of their donors, to the detriment of most of the population. We all should become more active now in “piloting” our society. Strong and accountable local, state and federal governments are in the interests of building a truly healthy, sustainable and equitable society that serves all, not just the few.
Dave Kirkpatrick is co-founder and a managing director at SJF Ventures, a Durham, N.C.-based positive-impact venture capital fund with $260 million under management and a portfolio providing more than 13,000 jobs. He also is co-chair of Impact Capital Managers, a network of 47 impact VC and PE funds from the U.S. and Canada with $11 billion under management.
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