Is there even such thing as wasting money?

[IdahoMauleMan]

@Drum_God

So, are you saying that all government spending is, by definition, wasteful? That cannot be right. The Alaska/Kamchatka bridge benefits someone. Even if one person drives across it on the one day per year that it is open, that one person benefits. Now, is that worth one billion dollars to society? Probably not. However, if that bridge is built to get between two cities with populations of one million people each, then the expensive bridge might be better utilized. Everyone coughed up their part of the price and the whole area benefited with faster, safer transportation of goods and people.

Also, suppose that one billion dollars had stayed in the pockets of taxpayers. If there are 150 million taxpayers, then each contributes just under $7 each to make one billion dollars. Those 150 million people are spread across the entire country. Does my spending my $7 at a local business improve the economy of far western Alaska?

No, not necessarily. Although I think my definitions are probably a lot different than yours. I would love…LOVE! to have a long, in-depth discussion on this topic. With folks like Sam Stone, DigitalStimulus, MeasureForMeasure, and a few others.

And I’ve tried to, many times, on this Board. But it invariably degenerates into ranting and raving and ridiculous strawmen.

A few, quick responses to your post…

If the bridge is between two cities of 1 million people then there is plenty of localized utility to pay for it with local dollars, or perhaps a toll that pays back a bond issue. There is no need to tax 300 million citizens of far-flung states and insert an agent in between (the federal government or a House member on an Appropriations Committee) to manage the transaction and make a judgement call on the margin about whether to fund that bridge, or a water park in Des Moines. Let the 300 million citizens keep their money, and prevent the judgement call being made in Washington.

No, your $7 does not benefit the economy of Western Alaska. That’s the point. It benefits YOU, multiplied by 150 million other citizens. That’s the combined utility.

[Alex_Dubinsky]

Yes, if you burn money the economy will in theory perfectly adjust.

But back in the real world you’d cause painful recession-triggering deflation. See, it’s all in the practical dynamics.
Similar thing goes for the Government’s spending practices. It’s a wise observation that money goes in a circle and the Government might as well spend it on whoever (disregarding the other excellent point that it’d still be misallocating labor). But if the Government gives the money to people who won’t spend it (eg, the rich) or spend it poorly (by not comparison shopping for best value), it would have a different effect on the economy than giving it to those who would (eg, the unemployed and review-site savvy).

[Aspidistra]

@IdahoMauleMan

If the bridge is between two cities of 1 million people then there is plenty of localized utility to pay for it with local dollars, or perhaps a toll that pays back a bond issue. There is no need to tax 300 million citizens of far-flung states and insert an agent in between (the federal government or a House member on an Appropriations Committee) to manage the transaction and make a judgement call on the margin about whether to fund that bridge, or a water park in Des Moines. Let the 300 million citizens keep their money, and prevent the judgement call being made in Washington.

Doesn’t the wastage involved in setting up toll infrastucture for a private road counterbalance the wastage involved in adding layers of government to the planning process? It seems clear to me that there’s some non-productive effort going on in both scenarios, but it’s not immediately obvious which one has the most wastage.