Why government spending is (mostly) bad


Government spending replaces the judgment of the market with the judgment of politicians. The judgment of the market refers to the billions of decisions that we collectively make each day, decisions that we freely make, that we believe will advance our self-interest. That is to say, the market is characterized by mutual agreement and voluntary consent.

What about the judgment of politicians? In a free market, in order to effect a transaction with someone, each side has to please the other. But politicians have the tax system, which allows them to take money from us by force. Then, when they decide how to spend money, decisions are often made to satisfy those who seek political favoritism instead of participating in meaningful economic activity. So government spending, then, grossly distorts the free market system.

The more government makes spending decisions for us, the poorer we become.

There is a limited set of things that government does well and should spend money to do. At the national level, we know that there are those who wish to do us harm, so we need a national defense. Locally we need police, courts, and prisons to keep us safe from criminals. There may be cases involving infrastructure where government is more efficient than private industry.

At the federal level, though, about two-thirds of the budget consists of the government taking money from one person and giving it to someone else to whom it does not belong. Both major parties are equally guilty of this. This type of government spending is wrong, no matter who does it. As the economist Walter E. Williams says:

Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.


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