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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (361173)	12/3/2007 9:43:17 AM
From: combjelly	Respond to of 1574122

"Why don't you think government spending creates wealth? " Because Tim seems to feel that they eat the money. When put that way, he denies it, but somehow when the government gets around to spending the money it has collected in taxes on salaries, roads and such, it doesn't generate any economic activity. Now it might be that he, like TomCat, believes that investment is the most important component of economic activity. And Tim just takes it one step further and believes that all other forms are insignificant when compared to investment...

To: Road Walker who wrote (361173)	12/3/2007 1:21:45 PM
From: TimF	Read Replies (2) \| Respond to of 1574122

Directly, government spending does often create wealth (although some of the spending is indeed useless or even counterproductive, I certainly wouldn't extend this to all government spending, and I'm not even arguing its true for most government spending) But the money has to come from somewhere, and getting it in the first place destroys wealth. Money spent on federal museums, aircraft carriers means you get a real result. The Museums might be interesting and/or informative. The aircraft carriers might be useful in some conflict or to deter conflict. Your getting something real created for the money. But all the money spent on the museums or aircraft carriers represents money not used for private consumption or investment. And your not just losing the resources that go in to the museum or carrier, but also incurring the dead weight loss represented by compliance costs and perverse incentives (lower taxes would reduce both, simpler taxes even without less total government income would also reduce both) Money spent on infrastructure such as roads (at least if the infrastructure is actually needed and isn't some bridge to nowhere pork project), might have a net positive thats larger than the combination of the resources directly pulled out of the private sector. Money spent on defense if it happens to deter a war, or reduce our losses in a war, or cause us to win a war we would have otherwise lost, can have positive consequences that greatly exceed the lost resources, OTOH if it does none of these things, than most of it is total waste, and its difficult, sometimes impossible to determine if any particular spending does one of these things or not, even in hindsight. Money spent on "bridges to nowhere" is mostly waste, although the actual bridge in question would get some use, its benefits would be unlikely to be enough to ever justify its cost. Money spent on most federal farm price supports and similar interventions is worse than a waste, its a net wealth destroyer. Transfer programs just move wealth from one person to another. The direct overhead costs may be low as a percentage, but they also don't create new wealth they just move it around, and since they have to be financed they also create dead weight loss (technically the taxes to fund them do, but if you have the program they have to be paid for by taxes at some point) But even if the spending in question is in the first category, one with benefits that exceed the direct costs + dead weight losses, you still have to consider the costs and losses so the actual benefit will typically be much smaller than promised. All of the categories (except transfers) typically create wealth if you look only at their intended purpose and their direct results. Even the "bridge to nowhere" would be useful to some people. But in many cases when you consider ALL of the costs and benefits, the costs are larger than the benefits.