How Is Government “Special?”


The phenomenon of crowding out is one of the
key things to understanding accounts of public spending. Ultimately, there’s only a certain
amount of investment capital around. To the extent that the government is using that money,
whether for investment or for current spending, it’s not available to other people. So,
if the government sells lots and lots of bonds to private investors and uses the money it
gets from selling the bonds to fund its current spending, those private investors are not
investing in other kinds of economic activity which might well be more productive than investing
in government debt, given that the government activity may not be very productive. The question of whether or not government
money is always going to be less productive than private spending is, ultimately, an empirical
one. We
can say that, in principle, we would expect this to be the case. That’s because, generally
speaking, if you’re spending your own money on yourself, you’re going to do it very
carefully. If you’re spending somebody else’s money on yourself, you’re also going to
be reasonably careful about it. However, if you’re spending somebody else’s money
on somebody else, which is what is the case with governments, then you have no real incentive to use that money effectively
or efficiently. And there are many, many examples from history that bear this out. There is a case for saying that there are
certain kinds of spending which are more efficient when carried out by government because of
the economies of scale that government possesses. However, this is almost always outweighed,
and I would argue in fact, always outweighed by the huge inefficiency costs that come with the less productive public management and
the fact that public provision does not face the profits and
loss incentives which lead private providers
to constantly look to improve the quality of their service and cut out wastes and unnecessary costs.

28 thoughts on “How Is Government “Special?”

  • @IJUSTLOVETURTLES I think that corporate giants should get no special privileges or penalties. They are responsible for their actions so if they do good things they should be able to prosper unimpeded but if they mess up and cause damage to people or property then they need to be punished.

  • @IJUSTLOVETURTLES One thing to remember is that lots of big corporations get loads of government subsidies and special deals. This artificially props them up, contrast this to a free market. They get these deals because all they need to do is some lobbying, and the average citizen doesn't know or care enough to vote against or do anything, so special interest wins the government.

    In a free market, the government doesn't have enough power to do this in the first place…(Cont.)

  • @Jotto999 …And so the money flows wherever free individuals send it of their own will, rather than having it taxed from them and then given away to institutions that they don't necessarily even support.

    Leftists think expanding the government can protect the little guys, but free marketers think this approach is flawed. Instead, the playing field should be made even by giving more liberty to individuals – including what they do with their money. That's the protection we need.

  • @IJUSTLOVETURTLES – Hey, juyst a question I think could raise an interesting discussion.

    Why do you think any business (in laissez-faire) would "expolit" its workers? Its workers would receive what the market offers by supply and demand.

  • @IJUSTLOVETURTLES those aren't malicious acts. All business need to decide what the best way to run there business is, big or small. As long as they don't violate anyones natural rights it's ok. My advice to you is if you disagree with their practices then don't shop there. But don't try and have the government enforce your personal beliefs on them. I mean, how would you like it if someone forced their beliefs on you through the government? As I'm sure you know, it feels shitty.

  • @IJUSTLOVETURTLES – 1) Wages are determined by supply and demand. If there was only 30 people in the world that can work on walmart tills then their salaries would be pretty high.Plenty of people can do that. they are paid low wages because their demand & supply is low & productivity is sufficient enough to justify that wage. Their is no Marxian conflict.
    2) Why do you want to deny Indians market opportunities, to improve their lives, if they can provide a more efficient way of doing something?

  • @manor1730 – But why would any business violate a consumer's "natural rights"? They simply cannot afford to because, unlike a government, their existence depends entirely on providing the consumer with something they value. But nice to see other libertarians around youtube. It's not an easy thing to discuss that a business isn't exploitative … thanks to Chomskians! :p

  • @Chad9976 You only have rights if you are strong enough to keep them. If not, you have none. The idea of rights is a joke.

  • @Chad9976 You're right maybe this will work. The idea that people have rights given by someone or something else is laughable. People have to be willing to fight for their "Right" to life. A persons "Right" to life will not be protected by "God" or Government. It never has, and never will be. The examples you gave are testament to that. It would be nice, if people didn't have to fear the initiation of force by "God" or government. Until that happens, people will have to fight for their "rights".

  • @Chad9976 Nice straw-man. Where did I say rights don't exist? What I said was you only have them if you are strong enough to fight for their rights. I.E people who are willing to fight to protect their rights. Also, the idea of rights is a joke. If people are expecting god or government to protect them. They will be left with nothing and wind up slaves or in an oven. Instead of trying to find fault in my wording why don't you try to bring a valid point to the discussion.
    Or do you not have one?

  • @LewisDunnHasOpinions If someone were to kidnap you, and then provide you with food and shelter, would you be indebted to your captor?
    If your parents buy you a meal at a restaurant, and a chef provides you food, are you then obligated to obey the chef?
    If someone pays for a service, and then demands that the service be rendered to you, you have no debt to the provider of the service. Furthermore, if someone provides a service without first demanding a price, you are not indebted.

  • @LewisDunnHasOpinions Your personal feelings of debt seem to be a non-sequiter. Can you clarify why you feel indebted to the government, and not the doctor that pumped your stomach? Why do you perceive the government as "giving" you benefits which it pays for with money that it takes from others?

  • @LewisDunnHasOpinions What if I never consented to those services? Suppose your neighbors hire a gardener, but you elects to take care of your own landscaping. One day he tends your garden without asking. Does that give him the right to demand payment, using legal means to extract them?

  • Sorry for the late reply, but again, you don't owe the government. The government is merely providing services that it uses other people's money to pay for. If the government has a monopoly over a particular service, and no other alternative consumption patterns exist, can you really say that you "choose" to use the government service?

  • @LewisDunnHasOpinions No, not unless you agreed beforehand to pay them for the service rendered, and having my neighbor, without my consent, agree for me (aka vote for socalized medicine) also doesn't count as me agreeing to pay.

  • Other people pay for your healthcare. The government is the medium that takes the money from those other people.

    That is not a value statement on whether it's good or bad. That is just what is happening.

  • "Love it or leave it" may not have moral authority behind it, but shit, if there happened to be an unsettled continent waiting beyond the pacific ocean rather than Asia, I'd be gone in a heartbeat. Liberty died the day it was discovered the earth is round. Perhaps other planets will revive it.

  • Government is special because it has all of the weapons the best criminals and a massive propaganda machine to tell you how good it all is for you.  Only moronic peasants vote for their own oppression.

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