Letter: Government spending: Comes with a price, not a magic wandA letter writer last week promoted the economic fallacies that have shackled what should have been an economic recovery and bankrupted the nation.
By: Chris Gandrud, River Falls, River Falls Journal
A letter writer last week promoted the economic fallacies that have shackled what should have been an economic recovery and bankrupted the nation.
The writer believes that local government can increase aggregate economic demand by hiring more teachers, cops and social workers who will consume more goods and services and stimulate economic activity.
The prime conceit is the belief that government can divert those resources from productive activities without requiring cuts in consumption or investment.
The money to hire public workers must first be taken from the private sector or borrowed or printed — all of which have negative consequences for growth.
That bridge to nowhere or DMV clerk is paid for with money that may have expanded a factory or bought a research lab.
The hidden cost of government intervention includes the private sector jobs that were never created and the private investments never made.
Government spending is not free and results in an equal fall in other parts of GDP.
Steve Jobs did not invent the iPhone because there was “consumer demand”
for it. Companies are not started with the goal of creating jobs that pay middle-class wages and benefits.
The people with ideas and money to create new goods and services are sensitive to taxes on income, capital gains and dividends because they need to make a profit.
If a private company doesn’t generate more in wealth and value than it consumes in resources, it goes out of business (or should.)
Public employment does not pay for itself. It is dependent on the private sector to sustain its pursuit of public service.
Ironically, those who produce wealth are called greedy while those who consume wealth produced by others are declared to be selfless.