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If government money is needed to produce something than it probably shouldn't be produced at all. Imagine a person living in a city row house. Perhaps this pe
by bokonist 18y ago
If government money is needed to produce something than it probably shouldn't be produced at all.
Imagine a person living in a city row house. Perhaps this person would be willing to pay $1,000 a year extra to live in the suburbs. But the price of a car, gas, and tolls would add up to $1,500, so he decides at that price he'd rather spend his money on a yearly family vacation.
Now government comes in, and taxes him $750 to pay for roads. Tolls are now nearly free compared to before. Thus moving to the suburbs now would only cost an extra $750. The $750 in taxes is a sunk cost that will be spent anyway.
So under his calculations now, he decides that spending $750 to move the suburbs would make him happier than spending $1,500 on a vacation. Thus he moves.
The government's tactics has made this person worse off. This person decided for himself that moving to the suburbs was not worth the expense - he'd rather spend his money in another way. But the government overrode his decision and forced him to spend a money in a way he did not original prefer.
Typically, government spending is only justified for public goods - goods that benefit everyone but are non-excludable. Basic science falls into that category. But end products - such as planes, roads, space programs, etc., do not.