I think it is obviously wrong that government spending cannot ever result in a net benefit to society. Let's say, for example, that the global warming problem is as dire as it has been portrayed by leftists. This means that society is facing impending doom (whatever time frame that implies) and some action necessarily must be taken to avert that doom. Government can create a bubble in an industry, so it would probably be desirable in this case to create a bubble in the field of research for alternative energy sources, or CO2 sequestration or whatever it is. If a government funded researcher developed a method for safely eliminating excess CO2, this would obviously be an enormous gain for society, assuming it would avert the demise of a liveable environment. What innovation could be more productive?
I think it would be disengenous to argue that a private (profit driven) researcher would somehow arrive at an adequate solution better/faster than someone researching through federal subsidy. Who knows? You can certainly say that, on average, private innovation is much more efficient than public innovation. This is probably true, because the profit motive is a powerful driver. But for a given case, you cannot assume that a publicly funded innovation might not be greater, or achieved sooner, than a privately funded one.
Public action can be argued against on political/ideological grounds (i.e. the anarcho-capitalist view that government power is inherently aggressive and thus incompatible with natural rights). But in real terms, we are dealing with magnitudes of importance. If it is, for instance, evidently true that the risk of nuclear weapons falling into the hands of genocidal individuals is eminent, would any reasonable individual deny the need to mobilize resources toward stopping this threat?
To be clear, I find the Austrian perspective persuasive and appealing. I am not advocating any particular energy policy or military action. I am simply raising a theoretical question that I have not seen adequately addressed in my time reading this forum or the mises blog/website.
Josh:I think it is obviously wrong that government spending cannot ever result in a net benefit to society.
A few criticisms:
1) 'Society' is only an abstraction which can only be conceived of as resolving into the individuals which make it up.2) All 'costs' and 'benefits' are subjective and only comprehensible in relation to a given individual's evaluations.3) These 'costs' and 'benefits' can in no way be quantified as against one another4) Therefor, 'society' has no aims, goals, motives, values, gains or losses.5) While it is true that it is conceivable that the state make investments which are appropriate given the relative scarcity of resources, having no profit and losses there is no way ex ante or ex post to determine this.6) Therefor, neither in the value nor the marketable goods sense can we in any way say that state activity is valuable except to politicians and bureaucrats.
"The first Accounts we have of Mankind are but so many Accounts of their Butcheries.All Empires have been cemented in Blood..."
- Edmund Burke, A Vindication of Natural Society
Regarding global warming, if anthropogenic causes are significant, it is simply unstoppable. Population growth will far outstrip anything attempt to counter it.
Josh: I think it would be disengenous to argue that a private (profit driven) researcher would somehow arrive at an adequate solution better/faster than someone researching through federal subsidy.
I think it would be disengenous to argue that a private (profit driven) researcher would somehow arrive at an adequate solution better/faster than someone researching through federal subsidy.
Well, if private research agencies really believe that global warming could be a serious problem that people would be concerned about in the future, they have better incentives than the government.
And since the global warming debate has a lot to do with the issue of externalities, a dig into economic reasoning will tell you why strengthening property rights is the best way to protect the environment.
And you can't justify huge government spending on vague projects just by surmise! The same argument was used to justify Government backed infrastructure projects in the US, as if private companies never made an initiative to rake in profits. Here's a good article.
I'd far sooner trust private, for profit insurance agencies to assess the reality of this risk than any government...
To darkness I condemn you...
It was Stranger or JonBostwick who recently put it so well. The government is one big externality. So unless someone proposes a government which will ONLY address a single externality like AGW (play along with the premise) then it's only adding an array of externalities in the form of socialized defense, welfare, law, etc to deal with a single externality.
Sort of like drinking a poison to kill a disease.
That of course assumes that anything about AGW is real, which I suspect it is not, and is just the latest thrust of the modern eugenics movement.
If you find something evil that wobbles, push it. - Gary North
Knight_of_BAAWA: Josh:I think it is obviously wrong that government spending cannot ever result in a net benefit to society.It's not wrong. Consider where the money comes from.
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You are, of course, correct. On the other hand, it would come at the expense of something else. And so, any gains made in one area will result in a loss of equal value somewhere else. It is the redistribution of money, not the creation of capital, and at worse it is a loss of capital, since taxation discourages investment.
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"Net benefit" seems to imply "social utility". We can't go anywhere with that. However, you could suppose that by some freak accident a state program could invent something profitable.
"You are, of course, correct. On the other hand, it would come at the expense of something else. And so, any gains made in one area will result in a loss of equal value somewhere else."
I'm quoting from the above poster, not sure how to do the quote thing. Anyway, I think this statement is wrong because it ignores what would happen with the money. You probably never get a gain and loss of equal value if you are looking at what those resources (money) go on to be used for. We assume that resources in the private sector are generally employed more efficiently and thus create more value. But you could easily imagine a scenario where this is not the case. Imagine some government funded research discovered an interdimensional portal that spits out food and water, thus solving the scarcity of food an water for all man kind. That's an enormously productive/valuable discovery, undeniably more valuable than whatever private use would probably have come of the money.
Hi Josh! Productivity gains are caused by increased capital per worker, and more roundabout production methods; so yes, government spending, if spent on capital, could cause productivity gains. The question is; can the government spend its money on capital more efficiently than the market? History tells us no. Maybe your radical pseudo-scientific global warming phenomenon could be an exception to the rule, theoretically of course, since global warming is not caused by human industrialization.
Josh: I think it is obviously wrong that government spending cannot ever result in a net benefit to society...
I think it is obviously wrong that government spending cannot ever result in a net benefit to society...
Benefits are subjective to each individual, therefore, the rest of your argument is flawed.
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It should also be considered that while in a private market research by different companies will come about simultaneously, because each is using its own capital, the government must inherent redistribute capital from the private sector to the public sector, and so government spending always comes at the expense of an equal amount of private spending.
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