"Adam Smith argued that government was more reliable than the market in providing infrastructure."
>>> In terms of the 'public commons', then yes indeed. That is one of the classicly identified shortcomings of a Capitalist economy... when everyone can use a resource at no cost (grazing sheep on the public commons... industries dumping pollution into the public waterways, etc.), that resource becomes over-allocated and degraded.
>>> Government DOES have a valid and necessary role in providing for certain infrastructure needs, the common defense, nation-wide rule of law, etc.
"In any case, how ever it were ideologically pigeonholed, my only point is that government activity often has a productive side that helps to increase GDP."
>>> Yes, government spending can have a stimulative effect in the economy... but that effect is LESS, dollar for dollar, than the stimulus one gets if those same dollars are spent by the private sector.
>>> For example, by one commonly accepted rule-of-thumb, spending on the military by the government will have a 'multiplier effect' of 3 in the overall economy... i.e., each dollar spent will produce three more dollars in economic spending.
>>> While, that same dollar spent by the private sector will produce a multiplier effect of 7, 8, 9, or more. |
