Public Funding Private At The Expense Of Private

I recently saw this Business Insider article from a link at Foseti. The article is Nearly 40% Of Private Sector Job Growth In December Was Subsidized By The Government.

It’s not the first time I’ve heard that similar type of headline in recent months.

It’s of course a very interesting topic. Progressives would likely point to it as an example of government creating jobs and improving the economy.

Except does it really? It immediately brought to mind a story from my own life. My mother’s birthday happens to be December 25th. I can say that because of that, I have only ever bought her(as in with my own money, and not my dad buying something and letting me gift it) maybe 3 birthday presents in 26 years.

I don’t believe my mother feels short-changed, but the reality is that she doesn’t get any birthday presents from me because I’m strictly thinking Christmas at the time of shopping. Her birthday never even crosses my mind, to be honest I’m largely unaware that she even has a birthday.

Just what the hell does this have to do with economics? A lot actually. When the government spends money(and it spends a lot), it has to get that money from somewhere and it gets it from the private economy. Therefore any money spent by the government is money not spent by the market. “But it still gets spent”, the progressive says. Except it comes with the immense and inefficient government overhead as well as the horrible guidance of being a government program that is 99% guaranteed to be useless in the first place.

Considering that government spending has increased by about half a trillion dollars since 5 years ago and over a trillion since 10 years ago there better be a whole helluva lot of jobs being created. If not what is all that money going to?

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Posted on January 28, 2013, in No Hope For America, Problems to Ponder and tagged , , , , , , , , , , , , , , , . Bookmark the permalink. 6 Comments.

  1. I believe that over 50% of the jobs in US are now with the government. WIth our current economic system its a recipe for destruction.

  2. I’ll follow you because I can tell that you’re a fellow freedom-lover, but you really bewildered me here. I don’t follow your connection between not buying your mother birthday presents and wasteful government spending.

    Moreover, I’m a bit disappointed that you’re more focused on waste than the more important principle here which is private property. All public assets are the direct result of theft. Whether or not they are wasteful is quite beside the point – the key here is that there should not be such a concept as public assets unless it compromises only voluntary contributions.

    However, I can really see that your heart is in the right place, so I’m looking forward to reading more of your content!

    • I’m sorry – I meant to write “comprises” not “compromises”.

    • Thanks Tiffany.

      I don’t know why I didn’t mention the greater idea of all government money being the result of theft, but probably because that is part of a much larger philosophical debate and not what I was focused on here.

      Let me clear up my analogy, though I realize now that it doesn’t line up directly to the private vs public manner of spending.
      I look at buying my mom a Christmas present as a success, but I overlook the fact that I haven’t bought her a birthday present. The government can use these statistics to say “look we have a success”, and many people won’t even realize it came at the cost of something else.

      Sometimes my analogies make more sense in my head than when I write them down. Which is bad cause I like analogies.

  3. I understood your analogy. It’s an illustration of relativity. Your mother obtains fewer gifts and you spent less. Hypothetically you would spend more and she would obtain more gifts.

    Interesting thought is…would she notice or care? She too is accustomed to getting only one gift. Relativity is the reason the economy gets a bit of a boost with tax cuts. People are used to losing a certain percentage of their income and when they get some back in a large chunk they are happy and want to spend it. If they hadn’t put it in in the first place the perspective changes (they might have spent it or not, but it is a part of their lifestyle and there is no mental association with a windfall).

    Opinions on what is necessary are relative too. A young single person in good health is going to have a very different impression about the cost of healthcare than a family shelling out half or more his/her months wages on medical care. An old person wants his or her social security check feeling (often justifiably) that they have paid into the system all their lives, and the younger feel it is a Ponzi scheme and they don’t want to be compelled to pay anything.

    And so forth. What I see in these discussions are usually excluded middle fallacies. All or nothing propositions. Looking around my house I see very few things that government hasn’t had a hand in the production process at one time or another…with perhaps the exception of my wood table. Anything with plastic, the computer, even the food cans on the shelf (the result of funding for war innovation, in Europe), most anything and everything made of metal had some initial research component in the use of warfare equipment, the fibers in every fabric in the house, the microwave oven. The jet engine too is the product of government funded research. No business would invest billions into a satellite system to ensure everyone can navigate by GPS, or the internet so everyone could communicate with each other and shop more easily from the comfort of their home.

    Just a little over 100 years ago in this country food took up 40% of a family’s budget and 50% of our workforce. In 1903 the USDA was created and started some educational programs for farmers. By 1930, food accounted for 24% of family spending and 20% of the workforce. Today (post green revolution), food accounts for 8% of household income and 2% of the labor force.

    Now we have a global economy (this has been the case since our nation was founded, but it’s more true now than ever with the ease of transport and transactions brought on by the aforementioned innovations). Our companies are in competition with government subsidized industry overseas. So when we discuss the cost advantages versus disadvantages of writing a check to Boeing, for rough instance, understand that Europe has already written a much larger check to AIrbus, the competition. We could “let the free market” solve this….but there is no free market (as mentioned, every nation subsidizes). What happens then is our company goes bankrupt and we lack the capacity as a nation to manufacture basic parts and we become reliant. This is a state of dependence, and that is a serious security concern. It has already happened, case in point the recent grounding of all Boeing 787s due to technical problems…70 percent of its parts are imported. This is where the jobs have gone. We’re left with a service based economy, and a great deal of that comes out of the discretionary income pile aside from the two biggest, most government funded things: education and healthcare. That is a house of cards.

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