Comment 56457

By A Smith (anonymous) | Posted January 15, 2011 at 02:00:30

CityJoe >> You cannot sustain a City with never ending road construction, & an even larger & unending supply of personal vehicles clogging those roads.

Spending too much money on anything that is given away for free is bad for the economy, whether that be roads or LRT, because it leads to investing based on guess work, rather than facts. For example, if a business invests $2M to create inexpensive, but valuable shoes and ends up selling $3M worth, society is better off by $1M. Otherwise, people would not have given up $3M to buy the shoes that only cost $2M to build.

If, on the other hand, we allow the government to spend $2M upgrading a park, because that park is free to use, we have no way of calculating how much that park is worth to people. It may be worth $4M, or it may be worth $1m. We simply don't know the value created. Because we only know the cost and not the benefit, how can the government claim it was a good investment for society? This type of guesswork would never be allowed in science, or business and yet we feel it's appropriate when government spends almost 40% of our economic output.

If Hamilton wants an economy that produces lots of profits and tax revenues for the government, it needs to rely on real numbers, not guesswork. That means less government spending on freebies and more on things that people will actually pay full price for.

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