Pyle: Weak government can sting
"Government is not the solution to our problem; government is the problem." Ronald Reagan, First Inaugural Address
I don't think this is what the Gipper meant. But some good digging by The Salt Lake Tribune's crack staff in just the last few days turned up at least three cases where government was, indeed, the problem. Not because of what it did, but because of what it failed to do.
• The 2010 failure of the Kaysville-based Barnes Bank, along with the collapse of another 34 banks that went belly up between December 2008 and February 2011, was the subject of a recent report from the Office of the Inspector General of the Federal Reserve. In the case of Barnes, which turned out to be the largest commercial bank failure in state history, the OIG found that regulators stood and watched as the bank piled up a portfolio of more and more real estate loans. (Cue the ominous music.)
Like a lot of lenders, Barnes Bank was all in on making deals that assumed a continually growing real estate market. If that irrational exuberance had proven to be grounded in fact, of course, that wouldn't have been a problem.
But leveraging your bank to the point that you have 373 percent of a bank's capital tied up in such loans can only come to a really bad end when, as all bubbles do, that one bursts.
The report blames the bank's managers and board, of course. But the OIG calls out regulators for their failure to do more than make suggestions and raise their eyebrows as the situation became more and more untenable.
They didn't, the bank failed and the FDIC's insurance fund coughed up $271 million.
• The Utah Department of Workforce Services is in trouble with the Legislature because of an apparent increase in errors and delays that have left some deserving people without services and left a few more facing demands that they repay money they collected in food stamp benefits that they hadn't really been entitled to. Not because of fraud, but because of (overworked) clerical errors.
Well, what do you expect? In the middle of a recession and jobless recovery, when the DWS caseload shot up some 50 percent, the agency tried to hobble by with a decrease in case managers and a 25 percent cut in its operating budget.
Former Utah Gov. Mike Leavitt, now apparently the chief wonk for Mitt Romney's proto-transition team, used to explain that government is different than private business. In a recession, private business has fewer customers, so cutting back on staff and budget is usually sensible, and often necessary. In that same recession, government has more customers and, if it cuts back on staff and spending, had better come up with some really big economies of scale to keep from making things worse.
• At least one of the firefighters on the line of the Seeley Fire near Huntington told The Tribune the other day that his crew was on the verge of containing the blaze when its only helicopter was called away to help fight the much larger Wood Hollow Fire. Without the chopper, the fire grew out of control and, by Thursday, had consumed some 9,000 acres. The obvious remedy? More helicopters.
Of course government at all levels can be too big, too nosy, too much in everybody's way. It is still a human institution, after all, and falls far short of the glory of Plato.
But when our politicians get ahead by demeaning and belittling the very idea of government, it can become a horrible self-fulfilling prophecy.
George Pyle, a Tribune editorial writer, makes no claim to being wisely governed.
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