"There is no more persistent and influential faith in the world today than the faith in government spending." ~~Henry Hazlitt, Economics In One Lesson 1946GOP senators have released a report on waste in the Stimulus Bill. Several peculiar earmarks are highlighted and held up as wasteful government spending of tax dollars. Click here for the full story.
Fair and true enough, but opponents of the Stimulus Bill would do well to use the opportunity of press releases, cameras, and microphones to educate the public, and perchance themselves, on the basic economic fallacy that underscores the entire whopping $863 billion boondoggle.
That lesson? Whenever government spends x dollars on y projects for z purposes, those x dollars have been taken away from individuals, the chosen projects keep viable capital projects in the market from transpiring, and the purposes (earmarks) for spending occur for political, not economical, reasons.
Government has never created wealth. By definition, it can only confiscate and destroy wealth through taxation, borrowing, and inflation. Some taxation is necessary, obviously, but when public works projects occur they do so at the cost of activity in the free market; projects are funded by taking money out of the pockets of individuals and directing that money away from the free market.
If the government funds projects by borrowing, the debt is increased and the burden placed on taxpayers and the future of the free market. If government prints money for its projects, it is setting in motion a spike in inflation, and this occurs at the detriment of consumers and taxpayers.
The president boasts of "jobs saved." What about the numbers of jobs not created and jobs lost as a result of massive government spending? As Hazlitt reminds us,
"All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridges; fewer automobile workers, television technicians, clothing workers, farmers." (Economics in One Lesson)But faith in government spending persists.
