The Public Philosophy > Chapter IV. The Public Interest > The Equations of Reality
A rational man acting in the real world may be defined as one who decides where he will strike a balance between what he desires and what can be done. It is only in imaginary worlds that we can do whatever we wish. In the real world there are always equations which have to be adjusted between the possible and the desired. Within limits, a man can make a free choice as to where he will strike the balance: If he makes his living by doing piece-work, he can choose to work harder and to spend more. He can also choose to work less and to spend less. But he cannot spend more and work less.
Reality confronts us in practical affairs as a long and intricate series of equations. What we are likely to call "facts of life" are the accounts, the budgets, the orders of battle, the election returns. Sometimes, but not always, the two sides of the equations can be expressed quantitatively in terms of money, as supply and demand, as income and outgo, assets and liabilities, as exports and imports. Valid choices are limited to the question of where, not whether, the opposing terms of the equation are to be brought into equilibrium. For there is always a reckoning.
In public life, for example, the budget may be balanced by reducing expenditures to the revenue from taxes; by raising taxes to meet the expenditures, or by a combination of the two, by borrowing, or by grants in aid from other governments, or by fiat credit, or by a combination of them. In one way or another the budget is in fact always balanced. The true nature of the reckoning would be clearer if, instead of talking about "an unbalanced budget," we spoke of a budget balanced not by taxes but by borrowing, of a budget balanced by inflation, or of a budget balanced by subsidy. A government which cannot raise enough money by taxes, loans, foreign grants, or by getting its fiat money accepted, will be unable to meet its bills and to pay the salaries of its employees. In bankruptcy an involuntary balance is struck for the bankrupt. He is forced to balance his accounts by reducing his expenditures to the level of his income.
Within limits, which public men have to bear in mind, the choices as to where to balance the budget are open. In making these choices, new equations confront them.
Granted that it is possible to bring the budget into balance by raising taxes, how far can taxes be raised? Somewhat but not ad infinitum. There are no fixed criteria.
But though we are unable to express all the equations quantitatively, this does not relieve us of the necessity of balancing the equations. There will be a reckoning. Practical judgment requires an informed guess: what will the taxpayers accept readily, what will they accept with grumbling but with no worse, what will arouse them to resistance and to evasion? How will the taxpayers react to the different levels of taxes if it is a time of peace, a time of war, a time of cold war, a time of social and economic disturbance, and so on? Although the various propositions cannot be reduced to precise figures, prudent men make estimates as to where the equations balance.
Their decisions as to where to balance the accounts must reflect other judgments - as to what, for example, are the military requirements in relation to foreign affairs; what is the phase of the business cycle in relation to the needs for increased or decreased demand; what is the condition of the international monetary accounts; which are the necessary public works and welfare measures, and which are those that are desirable but not indispensable.
Each of these judgments is itself the peak of a pyramid of equations: whether, for example, to enlarge or to reduce the national commitments at this or that point in the world -~ given the effect of the decision at other points in the world.
We may say, then, that public policy is made in a field of equations. The issues are the choices as to where the balance is to be struck. In the reality of things X will exact an equivalence of Y. Within the limits which the specific nature of the case permits - limits which have to be estimated - a balance has to be reached by adding to or subtracting from the terms of the equation.
Oftener than not, the two sides of the equation differ in that the one is, as compared with the other, the pleasanter, the more agreeable, the more popular. In general the softer and easier side reflects what we desire and the harder reflects what is needed in order to satisfy the desire. Now the momentous equations of war and peace, of solvency, of security and of order, always have a harder or a softer, a pleasanter or a more painful, a popular or an unpopular option. It is easier to obtain votes for appropriations than it is for taxes, to facilitate consumption than to stimulate production, to protect a market than to open it, to inflate than to deflate, to borrow than to save, to demand than to compromise, to be intransigent than to negotiate, to threaten war than to prepare for it.
Faced with these choices between the hard and the soft, the normal propensity of democratic governments is to please the largest number of voters. The pressure of the electorate is normally for the soft side of the equations.
That is why governments are unable to cope with reality when elected assemblies and mass opinions become decisive in the state, when there are no statesmen to resist the inclination of the voters and there are only politicians to excite and to exploit them.
There is then a general tendency to be drawn downward, as by the force of gravity, towards insolvency, towards the insecurity of factionalism, towards the erosion of liberty, and towards hyperbolic wars.