Basic tax / government waste theory

Discussion in 'Economy' started by Toronado3800, Nov 19, 2009.

  1. Toronado3800
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    I worked myself into a hole at lunch discussing tax theory. My point on government waste was lost to the following theory:

    Any money the government takes in is obviously spent, usually in our own economy. Republicans and Democrats have run deficits since WWII. Obviously infrastructure is an investment. We need sewage and roads. Let's take a look at some "bad" cases though.

    Terrible but we still don't loose anything If the government spends a billion tax dollars building an space ship that explodes on takeoff is it a total loss? The ship was. But, that billion dollars was spent with Boeing, Lockheed, their subcontractors, their workers, whoever builds that stuff. The corporation and their workers are going to spend that money again.

    Total loss scenario: of government spending I can think of can be foreign aid spent the wrong way. All the dollars spent with the Marshall Plan rebuilding countries against communism left the U.S. economy. What did we get for it? Maybe peace if it was well spent. Aid for Lybia? I suppose I can imagine a return if it makes them hate us less. Aid for the Mujahideen in their war against the Russians, maybe, maybe not well spent.

    Ok, so what I need are examples of tax money going to something that doesn't recirculate in our economy. My friend brought up a study of pig sex in Iowa or something like that. Darn it if we didn't figure that money wasn't even wasted because professors at whatever University won the contract. We kept thinking the worst thing for America was when them Boeing employees bought "made in China" DVD players or one jokester said Chinese range finding equipment for hunting.
     
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  2. Oddball
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    See: Broken window fallacy.

    Bastiat: Selected Essays, Chapter 1, What Is Seen and What Is Not Seen | Library of Economics and Liberty
     
  3. Toronado3800
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    I agree with
    The lost space shuttle has numerous opportunity costs. Lost time, in any space race with the Chinese or whoever, and the 1.10 point.

    What about the balance between something more common like the government spending a billion dollars on an aircraft carrier vs taxes being lower and citizens spending a billion dollars on Vietnamese furniture.

    The time my tax money sits in the government's "pockets" is lost. As is a certain amount of its value in times of inflation. Still probably not equal to the amount of good the government hiring another employee to update the SEC rulebook will do.

    I'm reading on. That's a good link.
     
  4. Oddball
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    Something like an aircraft carrier involves (ostensibly) national defense. Or, the collectivized manifestation of the individual right to be free from outside aggression. There's a difference between a public good (a highway available to all) and a public service (like gym or sports stadium) that are only available to a few.

    Any time your money pays a politician or bureaucrat it is lost, as they produce nothing of added value for the general economy.
     
  5. Toronado3800
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    An answer about pointless government spending. The modern analogy would be a debate if the homeland security department was needed or if the FBI and CIA just needed to refocus.
     
  6. Oddball
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    Yes...Or if the DEA or ATF were necessary at all.
     
  7. Toronado3800
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    Have welfare on my mind now:

    An effect of taxing me $100 is I have $100 less to spend on luxuries or something important like rent. This fights inflation and may cause deflation in local rent prices.

    Let's assume that $100 is redistributed to someone so poor without it they'd be desperate enough to kidnap my child for ransom (like happens in Mexico) or resort to some kind of crime. This $100 has proven useful for maintaining my lifestyle. It has kept the poor man on the good side of the law where he is more likely to get a job.

    That Bastiat argument against the $100 welfare tax would be without it I'd have money to spend at a business which would hire the desperate broke man.

    Hmmm, an argument against....as an American I'm silly enough to spend my $100 on Korean goods causing a loss of some percentage of that money.
     
  8. Oddball
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    Problem with that scenario is that $50.00 of that $100.00 ends up in the pockets of tax collectors, social workers and other bureaucrats, who produce nothing.

    Private charity is much more efficient and doesn't overstate the costs of aiding the needy.
     
  9. Toronado3800
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    Very true, a good percentage is lost to the wages of folks public working for either public or private charitable organizations.

    Having been raised Catholic and to marvel at the majesty of all Rome's ruby's and gems I don't believe private charity to be significantly more efficient than government work. The televangelist revolution of a few decades back left me jaded also. Maybe off topic and a sign to pick your charities CAREFULLY.

    ****************
    So then my mind is to deficit spending. Or borrowing from tomorrow to benefit the person who "needs" the welfare today. Preferably by having that person who needs the welfare do something for the public good be it digging a ditch or building a windmill.

    I can argue against deficit (gasp: credit card!) spending with the best. It increased the cost of whatever is purchased by whatever interest is collected. Comparing to micro scale, making payments for that automobile allows one to get to work to earn money for not only the car but the rest of life.

    Once again I buy decade old cars which I pay for with time under the hood, but I understand the potential bad turn of events which could make a car payment necessary.

    I'm on 1.8 Public Works in the link
     
  10. Oddball
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    Don't mistake crooks like Jim and Tammy for charities like Goodwill and DAV. Also, a giant centralized operation like the Vatican can hardly pass muster as a "private" charity, even though it's not a governing body over a given geographical region.
     

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