Raise the Hammer

Don't Forget, I agree with you that military spending is preferable to things like public health and education, but even more important is a strong private consumption element to the economy, unless you want to end up looking like North Korea.

Private consumption, which is based on price signals, pushes capital into activities where companies can make the most profits. Since profits are a sign of consumer demand, the free market ends up allocating limited resources in a way that maximizes consumer utility. In contrast, when government invests capital, it has no way of knowing how much their end products are in demand. Since anything that is given away for free, including public education, health and roads, will have infinite demand, the government has no accurate way of judging the true value of its capital investment.

Over time, those economies that allow government to waste limited capital on investments of unknown return, end up falling behind in the production of real output relative to other nations who rely more on individual consumption decisions. Since prices indicate relative value amongst goods and services, not taking advantage of this extremely beneficial tool means that capital deployment will be hit and miss at best. A prime example of this can be seen in the economic misfortunes of countries that have embraced central planning in previous decades and to a lesser extent today.

Therefore, the free market is the best way of maximizing innovation as well as consumer satisfaction. Since there is simply no way a small group of people can understand the wants and needs of millions of people any better than they can themselves, the best way to increase real wealth is to let individuals make the spending decisions and not politicians. By doing this, you ensure that limited capital is always invested in the most profitable goods and services, which equates to what people are demanding the most. Anything else, is a waste of capital, since the free market puts zero restrictions on what it is that they will produce in order to meet consumer demand.