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More money spent on government projects does not guarantee a proportionally greater benefit, and comes at the expense of other factors which are necessary for g
by nybble41 8y ago
More money spent on government projects does not guarantee a proportionally greater benefit, and comes at the expense of other factors which are necessary for growth, such as private investment. Most of the things a healthy economy needs do not come from government and are not paid for via taxes.
As a simple counter-example, let's say 100% of income were taxed and spent on the best educational and transportation systems money can buy. You'd have excellent schools and the best roads, but zero incentive for anyone to work, much less start a business. The capital needed to produce the goods people want would be consumed without replacement. That's a recipe for economic collapse, not growth.
- dv_dt 8y agoThe response to both dramatically increased taxes (as in South Korea), and dramatically decreased taxes (as in Kansas and the US), would seem to point to the fact that taxes as they affect growth mostly don't matter.