What Reagan's 'tough little tug' won't do
The decrease in government funding and the deregulation of social welfare programs are now a reality. The call of the private sector has been heeded, the cuts made and the taxes scaled down. What wasn't counted on, however, was the architect's addition of a last-minute codicil. The private sector, the President declared, ''is that tough little tug that can pull the ship of state off the shoals and into open water.'' This unexpected turn has uncomfortably placed an unwanted re-sponsibility on corporate leaders to establish a reasonable and effective response for addressing the social problems of our society.Skip to next paragraph
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Whether the private corporation is willing to assume this newly defined role of social responsibility or even see it as appropriate is questionable. Given the philosophy and principles which historically reflect the American business enterprise, it is doubtful that this sector will enthusiastically or spontaneously embrace the spirit of volunteerism envisioned by the current administration.
A brief analysis of the major functions of public and private sectors reinforces the role and responsibility of the government to promote the common welfare, leaving economic goals and the development of capital to the private sector. To exchange basic government functions with the private sector challenges a delicate balance which has existed for over two centuries.
Current corporate giving provides one perspective on the private sector's role in social programs. In 1978 corporations spent $2 billion in philanthropy, about 5 percent of all private giving. This money went to education, cultural, civic, and health and welfare programs. If all $2 billion were suddenly directed to social needs, it would amount to only 4 percent of the cuts which have been made in social programs at the federal level.
Even granting the need for more efficient and effective programs, the gap between the private sector's capacity for giving and the need, as reflected in the cuts, resembles more a chasm than a gap.
The Urban Institute has calculated that private giving would have to increase by 39 percent in 1983 in order to begin replacing the excised public expenditures. This rate of increase is three times faster than the rate of increase in private philanthropy in the recent past. The effects of the continued stagnation of the economy and the new tax laws reducing the maximum tax rate on unearned income from 70 percent to 50 percent, thereby increasing the price of giving, make it even less plausible that the private sector will be able to increase its contributions even marginally. The facts indicate that this corporate rescue of social programs suggested by the Reagan administration resembles more fancy than fact.
Even if giving were to multiply by these staggering amounts, there is little likelihood that corporations would assume the traditional public role of protecting the politically weak and sponsoring programs directed at ''unpopular'' causes.
Corporate requirements for maintaining a good public image inherently conflict with supporting controversial programs for spouse abusers, drunken drivers, or adolescent pregnancy, to give but a few examples.
Large, established institutions with a capacity for fund-raising, proposal writing, and good corporate and public relations will have more success in the boardroom. Thus the largest recipients of corporate philanthropy in 1980 were the American Red Cross, Public Broadcasting Service, Boy Scouts, YMCA, and Massachusetts Institute of Technology.
Corporate support can be neither controversial nor altruistic. In the final analysis corporate giving must meet corporate goals, and serve the corporation's direct interest.
Dissatisfaction with big government spending was ventilated at the polls in 1980. Nevertheless, the ensuing vision of a return to the romanticized period of a voluntary service capable of meeting today's needs is problematic. The expectations that the corporation and other segments of the private sector should or will step in as the bulwark of the new federalism have little basis in reality.
The major reliance on private sector initiatives as a replacement for diminished government spending amounts to the imposition of further desperation on the poor by the comfortable. Private sector initiatives, volunteerism, and corporate social responsibility are all welcome and needed but not as a substitute for appropriate government support.