April 14, 2020 Reading Time: 9 minutes

When we hear the term “government” most of us likely think of politics – of states, regimes, capitols, agencies, bureaucracies, administrations and, of course, the politicians themselves – the presidents, legislators and governors who govern us. We call them “officials,” presuming they possess a unique, elevated, and authoritative status.

But that’s only one type of governance in our lives, is it not? Let’s label what we typically call “government” simply “public governance,” to begin distinguishing. Certainly public governance may be the most prominent or dominant type of governance in our lives – which can be problematic, even dangerous (see North Korea or Venezuela) – but we mustn’t ignore or deny that there are three main types of governance: public governance, private governance, and personal governance. Think of these as “the 3 Ps of governance.”

Personal Governance: The Individual Sphere

By personal governance I refer to the daily routines, regimens, plans, and schedules that most individuals adopt and try to obey, to varying degrees, pertaining to diet, nutrition, hygiene, health, work, finances, home and car maintenance, travel, exercise, romance, family, friends, religion, and charity. Of course, some individuals perform better at these things than do others, because they’re more self-disciplined and because they’re good at striking a proper balance among competing claims on their time, energy, and resources.

We may call such folks “good governors,” which really means they’re good self-governors, or good personal governors. If we’re smart (and just), we don’t envy them but emulate them. Others, we also know, are less good (or poor) at self-governance; like large infants, they’ll be cared for, if truly loved, but only by other adults who are responsible (i.e., self-responsible). 

There’s considerable virtue in taking responsibility for your own thinking, choosing, and acting; in today’s vernacular you take “ownership” of your life, with pride. But there’s also much vice in those who default on self-responsibility and pass the work or the burden onto others. Those unable to succeed fully in life “through no fault of their own” are in a different category, of course, and should be grateful for voluntary private charity; but this doesn’t negate the idea that people should be self-responsible, else inhumanly parasitic.

Private Governance: The Group Sphere

By private governance I refer to that which occurs in the groups, assemblies, and associations that are crucial to our lives and happiness. Consider not just marriages and families but also “circles of friends,” or “houses of worship,” plus clubs, teams, leagues, firms, companies, corporations, stock exchanges, reading groups, networks, alliances, affiliations, coalitions, associations; even, in war, informal “bands of brothers.”

Here too we see a type of governance – neither purely personal nor purely public – which nevertheless provides purpose, structure, and sustainability to the act of assembling and working or playing together. Effective private governance may rely on simple vows, on formal or informal norms, etiquette, rules, even by-laws. There will be expectations, performance, and accountability; also rewards and punishments, promotions and demotions. In short, group self-discipline. Real “governing” – but private governance.

Why private governance? Few people wish to live as hermits, apart from others. Much can be achieved by an individual, as part of a group, which can’t be achieved (or as well, or as cheaply) alone. But not just any group will do. A mere loose association of individuals without a real purpose, ungoverned or ungovernable by norms or rules will be a wasteful, failing group. Also, while groups require loyalty to some degree, even patience among occasionally disgruntled members, certainly no group succeeds that succumbs to “groupthink” or demands conformity from independent-minded members; or it “succeeds” only by exploiting certain members for the sake of others, or by inflicting idiocy and harm on outsiders. 

Experience also confirms that the better members of good groups are typically those who already are good personal governors. They know what it means, what it takes, to succeed individually, and thus also collectively. Groups work best not when members shirk their responsibilities or “free ride” on others but when they engage in mutually beneficial acts.

Public Governance: The Political Sphere

Public governance is the better known of the three types of governance, but less known is its proper proportion and right relationship to personal and private governance. Public governance can foster and enhance the other types or instead distort and squelch them; at times, under certain conditions, it can supplement and bolster them, or displace and suffocate them. If so, the erosion of personal and private governance can exert a negative feedback effect, making just and effective public governance even less likely than usual.

Some of the best human achievements in history and best things in life have been made possible by just and proper public governance – by real-life governments that have been constrained in their size, scope and power by a proper constitution. By “proper” I mean a constitution devoted to preserving, protecting and defending individual rights (including private property rights) instead of violating them. This alone is a rare human achievement – thus the heroic reputation of America’s framers, for those who know the facts. A genuine, rights-preserving political constitution constitutes governance of the governors; it’s a form of public governance that works best (and justly) precisely to the extent it preserves and protects the size, scope and power of personal and private governance.

Nor can personal or private governance survive or thrive in a state of anarchy, devoid of any public governance whatsoever. What’s needed and necessary for human flourishing is not anarchy nor tyranny but constitutional republicanism, a system in which the power of public governance is objectively delineated and circumscribed (by the principle of rights). Anarchy and tyranny are not mere alternative governance types but nearly synonymous, as each condones a nearly unlimited scope for the initiation of force against innocents.

Proper Balance of the Governance Mix

In discussing personal governance, I’ve noted that some people are better at it because they’re more self-disciplined and better able to strike a proper balance among rival claims on their time, energy, and resources. It is likewise within the sphere of public governance and with the relationship among the three types of governance. Some governments are better than others at public governance – at protecting rights – partly because they’re more disciplined (self-disciplined, if you will) by a proper constitution, one with a separation of powers, checks and balances, an independent judiciary, federalism, and citizen voting. They’re also better at protecting rights because they’re careful to preserve and protect a maximum sphere for both personal governance and private governance.

It’s important to recognize and grasp the principle that public governance might be improperly extended into non-public spheres of governance; it’s important because public governance necessarily entails compulsion, whereas personal and private governance is voluntary (and if not, rights have been violated and can be vindicated by an appeal to public governance). A state is defined as that unique institution with a legal monopoly on the legitimate use of force in some finite territory. By monopoly is meant that there is a citizen right of self-defense (and to bear arms) but no vigilantism; by legitimate it is meant that states must not initiate force and may only use it in retaliation (punishment) against those who initiate it.

The state is fundamentally different from a person, a family, a club or a corporation; the exercise of will power or economic power just isn’t in the same category as the exercise of political power, because the powers differ not in degree but in kind; the first powers are private and voluntary, while the latter (political) is distinctively compulsory. The real challenge is not to rid the world of coercion; that would be nice, but it’s not realistic, because humans, having free will, may elect to coerce. The key is to have a rational, public governor checking it, and, simultaneously, constitutional checks on that same governor.

Objectivity and Applications

The principle that optimal, objectively definable spheres of governance can be identified will be doubted, of course, by those who doubt that objectivity itself is possible (and thus doubt that individual rights can be objectively defined or defended). But the objection is self-excluding and self-refuting; if one declares it impossible to be objective, the statement alone names no truth; one is self-relegated to the realm of the subjective or arbitrary. No argument there.

Supposing objectivity to be possible, we should acknowledge that 1) three spheres of governance exist to some extent and are identifiable, 2) a proper relationship exists among the spheres, where each does best, and 3) numerous applications of the first two aspects are possible, in realms crucial to our well-being, including health, wealth, housing, education, infrastructure – even national defense. In all these realms (and more) the governance mix may be optimal and wonderful, terrible and lethal, or somewhere between. It would sure be nice (and humane) if we could discern the right demarcations.

In future essays I’ll examine some of these applications, using the tripartite governance model. Right now, I only have the time and space to indicate briefly how severe imbalances have arisen in recent decades, to the great detriment of human betterment.

  • The first imbalance occurred in the realm of national defense (and homeland security), during and after 9/11.
  • The second occurred in the realm of wealth, with the financial breakdown of 2008-09.
  •  The third imbalance occurred in the realm of education, with the inflation of student loans and the assault on for-profit schools. 
  • The fourth imbalance has occurred more recently, in the realm of health, with the perverse policy response to the outbreak of the COVID-19 virus.

In each case, imbalances reflected improper extensions of public governance; in some cases, it displaced or suffocated personal and private governance, while in others it corrupted them and subsidized reckless, irresponsible behavior (aka “moral hazard”). 

But before providing a closer (and future) examination of cases, I want to warn against falling for a methodological trap, a fallacy common to governance analysis – common because logical reasoning isn’t taught (or practiced) as rigorously as it once was, and because the three governance types range over both individual and collective action.

I call it “the fallacy of we.” Look for it and beware, for by now it’s ubiquitous. Tragically, it impedes clear and objective analysis of governance; as such, it obscures the guideposts needed for proper policymaking, whether in the home, office, or halls of political power.

The Fallacy of “We”

What’s the fallacy? For a hint, see how I began this essay, referring to “we” and “us” – as if I could blithely presume what “we” (all) must be thinking or doing. Mine isn’t a terribly unjustified premise (about what most folks mean by “government’), but it’s also not a valid approach – because it’s not a logical one. This is the problem of we, “the fallacy of we.” Here are just two examples, pertaining to recent handling of the COVID-19 virus; I underline “we” for emphasis only.

On March 22nd President Trump tweeted that “we cannot let the cure be worse than the problem itself. At the end of the 15-day period, we will make a decision as to which way we want to go.” On April 1st we heard from Neil Ferguson, who said “We don’t have a clear exit strategy,” for ending mandatory “lockdown” orders and getting back to work without risking a wider virus spread. Ferguson, a research scientist at Imperial College of London, was the man who just a month earlier had instigated many of the world’s lockdown orders by predicting a high death rate of 4%, which he later lowered unilaterally to just 1%.

What you see in these two examples is a heavy use of “we.” But who is “we” exactly? Individuals? Groups? Experts? States? Is it somehow all of these, or some, or a mix of them all? Who is the “we” that shouldn’t let the cure be worse than the problem? Millions of many now-idled individuals and firms might well have been eager to avoid that error, perhaps by trying a policy of “herd immunity,” which in the past has successfully and quickly vanquished diseases. Were we free to try? No.

On COVID-19, the “we” of public governance has often simply overridden both personal governance and private governance, indeed, on a scale never seen in American history. It is likewise with Ferguson, who suddenly worries that “we” have no exit strategy, even as he was critical to convincing the “we” of public governors to forcibly shut down the freedom and options of individuals and groups operating in their own, legitimate realms of governance. Having helped the public realm enter, he can’t locate an exit, but blames that failing not on him but on “we.” This is irresponsible policymaking, not only because it’s based on bad models and forecasts; the deeper issue is the fallacy of we and the lack of accountability (punishment), since culpability is so easily cloaked under the veil of “we.”

To the extent “we” have problems today dealing with COVID-19, it’s mainly because there’s no sense of the proper balance of governance among the personal, private, and public. This much I do know: the “we” that’s most in charge these days consists largely of those working as public governors; they’re dictating what personal and private realms must do, allegedly to “mitigate” the harm of the COVID-19 virus – staying at home, out of work, and staying away from others, regardless of whether they’re sick or vulnerable to the virus.

Restricting the mobility of the infectious is the aim of a quarantine, and debate about its scope, efficacy, or justice stays open; but restricting the mobility of the healthy is plain tyranny, and that’s occurring to some extent today, with open debate about it squelched.

Today “we” (the world?) has a real problem (let us suppose), but too few people know enough about what others are doing, or why, when, and how long. It’s a collective mess, because the method and core organizing principle is collectivist instead of individualist.

By an individualist approach I mean a more diversified approach which eschews the high-risk, one-size-fits all policy, an approach that leverages the specialty and respects the inviolability of each realm of governance, which acknowledges the law of comparative advantage – that some functions are best left to the personal and private sectors and others to the public sector – an approach justified not only on practical-efficiency grounds but more important on moral grounds.

Must there be, as Trump, Ferguson and so many others insist, only one “entry strategy,” only one “exit strategy,” only one “cure,” or some single date on the calendar when some one official (or gaggle of them) declares “the economy” (which one?) officially “open?” The absurdity of all of it is implied in the questions, but are these not precisely the absurd questions we’re now hearing? They come from absurd premises, which we should reject.

A new approach to governance is needed – a tripartite approach – one that’s truly safe, effective, scientific, logical, empirically grounded, and well-diversified. Only somewhat reservedly will I close my essay by insisting “we” can and must do better, in just this way.

Richard M. Salsman

Richard Salsman

AIER Senior Fellow Richard M. Salsman is president of InterMarket Forecasting, Inc. and a visiting assistant professor of political economy at Duke University. Previously he was an economist at Wainwright Economics, Inc. and a banker at the Bank of New York and Citibank. Dr. Salsman has authored the books Gold and Liberty (1995), The Collapse of Deposit Insurance and the Case for Abolition (1993) and Breaking the Banks: Central Banking Problems and Free Banking Solutions (1990), all published by AIER, and The Political Economy of Public Debt: Three Centuries of Theory and Evidence (2017).  His fifth book – Where Have all the Capitalists Gone? Essays in Moral Political Economy – was published by AIER in 2021.

Dr. Salsman earned a B.A. in economics from Bowdoin College (1981), an M.A. in economics from New York University (1988), and a Ph.D. in political economy from Duke University (2012). His personal website is https://richardsalsman.com/


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