ShackledNation
Libertarian
Nobody is saying the money disappears from the economy forever. If I insinuated that, I apologize, but I don't feel that I did. The money stays in the economy, but the point is it is not used as effectively as it could be.Not all spending is equal. And government tends to spend money in a very inefficient way, producing less wealth than otherwise would have existed. Furthermore, bureacrats have to be paid to adminster the law. Plus, our government spends more money fighting wars overseas than boosting our economy.I don't follow your "common sense". Are you suggesting that the government is somehow taking money out of the economy by taxing? Because I was under the impression that every single penny the government takes, it immediately spends back into the economy.
The OP is arguing to use the taxes for more infrastructure spending. Which would put the money right back into the hands of construction companies, architectural firms, their suppliers and their employees, not somehow magically leaving the economy.
First let me say that I'm not disagreeing that it is inefficient. It is. I've done work for the government before. We would laugh at their specs because it was unnecesary and charge them for the extra time that was needed.
But the wasted money doesn't really go anywhere. It stays in the economy. All the extra money they spent on these wasted extras went to our company. To our employees and to our owner. My point was, this wasted money doesn't dissapear out of the economy. You can argue that its not fair for the government to take money from one area and put it into another at their discression. But the idea that this wasted money somehow dissappears from the economy is bogus.
Think about it. If there is no negative economic effect of spending money in unproductive ways, then why ever spend money in a productive way? You could always just say "its not wasted, down the line someone will get it." If that was how everyone thought, nothing would be produced. Here is a simple example to illustrate the point.
Bob has $10,000. He uses that money to produce goods, hire workers, etc. Those workers and the receivers of that money then obtain that money, and can spend it or invest it or whatever it is they will do with it just as before (which will in turn also result in the production of goods). So in the first instance, Bob is being productive and growing the economy. The workers and any other receivers of Bob's money then spend or invest the money, growing the economy as well.
Now the government comes in and takes the $10,000. Bob can no longer uses that money to produce goods. The government uses that money, but it is used (as you admit) in a less productive and efficient way. It is true that the money ends up back to workers to then be used just as it was by the workers of Bob. But clearly there is a negative economic effect. In the first instance of the use of money, there is less productivity than there would have been had Bob used the money. The error in your argument is "skipping" this first instance and looking only at the later owners of the money. But you can't do that. You have to look at all uses of the money, each use of which can lead to more or less productivity.
The only way government spending, then, can increase productivity is if you argue that it is more productive at using money than individuals operating in the free market. Some do argue that, but such arguments are often easily debunked. But if you say you agree that government spends money less efficiently, then giving more money to government to spend instead of the original owners of that money will in general lead to less productivity. Such a conclusion follows naturally from the initial premise that we both agree on (government spends money less efficiently).
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