Thursday, July 1, 2010

IS GOVERNMENT SPENDING BAD?

Government spending is bad when it (1) increases the deficit and public debt, (2) when it adds no physical assets, productive capacity, or wealth creating improvements to the economy, (3) when it creates another government agency that is not necessary, (4) when it provides another entitlement that adds to the public debt and gives people another incentive not to help themselves, and (5) when it is just wasteful spending or pork barrel legislation.
When is additional government spending good or necessary? During times of emergency, disaster, national defense, and defending vital interests.
What programs can be considered to be defending vital interests? Most obvious of course is military spending, but there are some others like the space program, re-building infrastructure such as bridges, roads, railroads, and protecting our health care system.
Also there are industries that need help and should not be allowed to decline, or even disappear from the nation, such as steel, electronics, medical equipment and services, automobiles, aircraft, and some other vital industries too many to list here. To preserve our industries under the private capital business model, we need to have fair trade, not "free trade", where American business is on an equal competitive footing with foreign companies.

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