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Politics : Formerly About Advanced Micro Devices
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To: Road Walker who wrote (372231)2/28/2008 12:19:58 PM
From: TimF  Read Replies (1) of 1578504
 
The government and private industry have a cost of capital, and the governments typically is lower, but the interest payments are transfers not dead weight losses.

Private companies have to pay to raise funds, but perverse incentives and anything resembling compliance costs are a non issue. You don't have anything like all the tax dodges for those trying to avoid taxes, anywhere near the amount of inefficient distortion of investment, or all the costs for tax preparers and tax lawyers. You don't have anything like payroll taxes discouraging on the books labor, or taxes on investment pushing down investment. You don't have nearly as much investment channeled politically rather then for efficiency and profit from private sector initiatives and concerns as you do from government.

In some cases government might be more efficient, but you have to consider not only the efficiency of the government vs. a private company in those areas, but also the costs and inefficiency the activities cause in third parties.
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