Raise the Hammer

Jason, how do you explain the fact that countries (Russia, China, Vietnam, Eastern Europe, India and Bangladesh, etc.) currently moving from government directed spending to private sector consumption, are leading the world in economic growth? If individual freedom is such a detriment to real output, these economies should be in tough shape, but the opposite is true.

Conversely, if I am wrong and government spending is better at increasing output, why not let them make all the spending decisions? That way, consumers will be better off than had they spent their income themselves. Furthermore, if government is better at making spending decisions, they are probably better at making all economic decisions. Thus, we could have politicians decide what jobs there should be, how long we should work, the optimal size of our family, etc. I mean, as long as politicians are superior in making decisions that benefit society, why let individuals make any decisions?

This of course is bull%$@, because if it worked, the fastest growing countries would be centrally planned, which is not the case. Even in Canada, the provinces that are growing the fastest are the ones who have either cut taxes and/or spending the most, such as Alberta, B.C. and Saskatchewan and even NFLD. In contrast, provinces like Ontario, Quebec, and the Maritimes that turn to the government for direction, suffer because of it.

The fact is, private sector driven economies produce the most output, jobs and real wages. This is because capital is deployed with an eye towards profits. Therefore, before money is spent, there is a way to measure the effectiveness of this spending. Furthermore, if a business does not make wise investments, the market stops giving them money .

In contrast, government spends money with complete disregard as to what the return on each dollar is. Their concern isn't to grow their fortunes, it is to simply get reelected. This means that much of the spending that takes place in our country is spent exactly with that goal in mind, getting members of parliament another 4-5 years in office. There is no concern as to whether this is adding value to society, but simply whether it will keep our beloved politicians in power. Hardly a great rationale for investing limited capital.