Just as President Reagan predicted a torrent of private investment in response to this summer's huge tax cut, he now foresees a "torrent of private initatives" aimed at taking over some of the social welfare responsibilities of the federal government in response to budget cuts.
As examples of these private initatives the president cited a commitment by 35 corporate leaders in San Antonio to increase local United Way Campaign giving by 20 percent, the training of prison inmates in computer programing by Honeywell Corp. and Baltimore's Blue Chip In project designed to encourage local corporations to sponsor 42 community projects threatened by budget cuts.
Despite the enthusiasm and good intentions represented by these examples, a hard look produces serious questions about the ability of the private sector to solve significant public problems on its own. The first question is one of cost: can the private sector, voluntarily, provide the funds needed to replace the billions of federal dollars slashed from public program budgets? 1982 cuts amounted to some $45 billion, and all indicators from the president point to a push for even larger reductions in '83 and '84. By comparison, all corporate giving in 1980 was a grand total of $2.7 billion or less than the cut in the federal public service jobs program alone. Baltimore's much- touted Blue Chip In campaign seeks to raise $500,000 to provide jobs and training for 200 while local unemployment climbs over 40,000 and federal CETA support to Baltimore dropped by over $50 million cutting employment and training assistance to tens of thousands.
The new tax act does encourage corporate giving by raising the tax exemptions on charitable contributions to 10 percent of pre-tax earnings, though the impact may be minimal since average contributions ran at only 1 percent in spite of a cap of 5 percent.
Even if private-sector giving does not replace government spending dollar for dollar, the White House argues that the private sector can be more effective by eliminating government waste and developing innovative solutions to tough problems. Some new private initatives creatively "leverage" charitable giving. For example, James Rouse is raising $15 million in grants from major foundations and corporations for the Enterprise Foundation. A subsidiary of the Foundation, the Enterprise Development Co., invests the funds in real estate developments, with the profits going back into the charitable trust. The trust in turn makes grants to community organizations to provide housing for the poor. Voluntarism can also draw on private sector talents that are more valuable than dollars and cents. Twenty businesses in Baltimore's Adopt-a-School program contribute the time and energy of their employees to stimulate student interest in careers and encourge skill training.
The greatest shortfall of the president's campaign on voluntarism, however, is not an issue of giving time, talent or money but of scope. While a business may help support the symphony orchestra or a park or a scholarship, relying on business voluntarism in protecting the environment, keeping safe job sites, energy conservation, and providing job opportunities for blacks and women is a risky proposition.
Too many public needs involve high short-term costs and yield only long-term benefits. Affirmative action today may lead to greater stability in our inner cities tomorrow, but the extra expense of training unskilled, under-educated workers is a heavy burden for a business to carry when it is competing with other businesses that may not voluntarily make the same commitment to minorities. Likewise, the cost of installing pollution control equipment can be prohibitive to one steel mill if its competitors don't bother.
Confidence in the ability of business to plan for long-term public needs is further eroded by the failure of American business to plan ahead for its own business needs. One of the chief reasons for the superior performance of Japanese industry is its ability to invest in new plant, equipment, and technology today that will pay off over the long haul--a five-year plan instead of the American preoccupation with the quarterly profit-and-loss report to stockholders.
Even for companies that are sensitive to public problems, their effectiveness at encouraging other businesses to follow suit may be sharply limited. Peer pressure among business people, which may work well at raising funds for the university or the opera, does not work so well in other areas. Few business people will want to walk into a competitor's plant and say "you're discrimating against blacks," or "your factory is unsafe."
We've come to take for granted that the government will act as our conscience so that we will have a fair and just society and preserve our resources for future generations. Government got into the business of regulating because business itself wasn't willing or capable of taking the responsibility on its own.
The public sector also has an important role in broadening the scope of charitable giving. Even in support of art and culture--where the private sector should be able to carry the lion's share of responsibility--government has opened new horizons. For example, the nationally acclaimed Baltimore Voices, originally funded by the National Endowment for the Humanities and the Department of Labor, started as a team of CETA workers interviewing dozens of older Baltimoreans about their neighborhood's history. The stories were melded into a stirring drama of neighborhood life by a group of Theater Project actors. A tremendous success, Baltimore Voices is now largely privately funded and expanded into community forums on health and safety, education, and community organizing.
Certainly there is much untapped potential for business to reach out and acept a larger share of the responsibility for the general welfare of the community. Business is not, however, capable of solving public problems on its own. Unfortunately a greater part of the president's effort is aimed at abdicating the federal government's share of the responsibility than at seeking to forge a more effective partnership with business.