What Are The True Costs of Government Spending?

[bldysabba]

@Voyager

Ah, “extort,” “steal,”, the marks of an extreme position. This theft was done by duly elected representatives under duly passed laws. If that is theft then so is paying for cops or the military.
BTW, the justification for the interstate highway system was to provide an effective way of getting military equipment across the country. I’m not sure of the business case for that.

Lots of bridges are based on tolls - certainly all the ones across the Bay are. But there are also tons of minor bridges, across creeks or narrow rivers. Should they be private also? What would the economic cost be of making people pay tolls every quarter mile? I pay for your bridge I never go over and you pay for mine. It pretty much evens out.

Voyager, while you’re right that extortion and stealing are the wrong words to use for taxation, there is no getting around the fact that taxation is coercive in nature. If you don’t pay tax that goes to fund government policy, you are penalised, regardless of whether you approve of the government’s policies. While this does not mean taxation shouldn’t exist, it does mean that taxation should be limited to the extent possible. To me that means limiting government spending to things that can be clearly defined as public goods. You and I may be in perfect agreement on this. For instance, there is certainly a case for government spending on highways, but as emacknight’s post indicates, it needs due diligence.

The reason why (IMO) even well-intentioned government spending tends to be more wasteful than private spending are threefold - preferences are approximated, capabilities are limited, and accountability is diffuse. Government expenditure is about spending other people’s money to fulfill other people’s needs. The government’s abilities for capturing these needs are primitive and open to exploitation, (e.g, lobbying, PR). And since governments are responsible for many different things, they are often responsible for very little.

I am at no point arguing that all government spending is wasteful. I am, however, arguing that government spending should be limited to those areas where it is essential (public and quasi public goods), and even then monitored with great rigour (which in turn is made easier the more limited the areas where you spend).

[LSilas]

Gov. spending is a huge problem especially since its been operating without a budget. My reality is that I have worked for over 30 years, I paid my dues done as I was raised, worked hard got my education and asked no one for anything. I now have to choose between food and gas money. I have family members who go out everyday and apply for any job available they too don’t ask for anything all they want to do is work they walk away without jobs. Food is going up gas is going up we pay those who work in governement well. Yet those of us who do go to work have nothing to show for it. Our savings are depleted because we went from 2 incomes to 1 and that 1 gets half the pay it used to. Now we are expected to fork over more jobs and money to illegals, we pay drug addicts to do drugs, we allow people to lay around and have generation after generation of welfare babies. We are on our knees and no one gets it. We are going to be forced to get insurance we can’t afford and most likely won’t pay very much of your healthcare expenses and we will be fined if we don’t. Many people have their heads in the clouds dreaming of the free ride they have no idea whats about to happen to their free ride. Social Security is not a retirement plan. There are so many disabled people in my area it amazes me that the counties can run. ( They Can’t) Things like car tags, licenses, titles etc have gone up 100% . I say the governement way over estimates employment losses and those who are out of work. I say employers who utilize illegals don’t do it out of kindness they do it to skate on paying taxes plus they can work the illegal 7 days a week 16 hrs a day. Social Security should be paid out to those who put into it period. Drug addicts should be cut off from their free money supply. Baby mommas should be cut off after the 1st oops baby. Those who serve We The People don’t deserve lifetime anything. Our military deserves lifetime benefits period. Sorry so winded but I work in the medical field I see whats happening its not pretty. Our governement hasn’t got a clue about whats going on in this country, to the 51% of us who pay taxes, to those who served this country with their lives and to the detriment of their families. Thats my reality.

[Voyager]

@bldysabba

Voyager, while you’re right that extortion and stealing are the wrong words to use for taxation, there is no getting around the fact that taxation is coercive in nature. If you don’t pay tax that goes to fund government policy, you are penalised, regardless of whether you approve of the government’s policies. While this does not mean taxation shouldn’t exist, it does mean that taxation should be limited to the extent possible. To me that means limiting government spending to things that can be clearly defined as public goods. You and I may be in perfect agreement on this. For instance, there is certainly a case for government spending on highways, but as emacknight’s post indicates, it needs due diligence.

Well of course taxation is coercive. So are nearly all laws - if they did not coerce someone, we wouldn’t need them, right? Laws keeping factories from dumping poison in rivers are coercive too.
But we levy taxes not just for fun, but for a purpose. It might be done to reduce what is seen as bad behavior, like cigarette taxes. But for the most part I agree that taxes should be set just high enough to pay for things that are rewarding to the public - but what is rewarding is quite complicated to determine, and depends a lot on where you sit. The factory owner who is stuck paying for cleaning up his pollution is not going to see EPA as a public good - he is paying taxes which hurts his bottom line.

The reason why (IMO) even well-intentioned government spending tends to be more wasteful than private spending are threefold - preferences are approximated, capabilities are limited, and accountability is diffuse. Government expenditure is about spending other people’s money to fulfill other people’s needs. The government’s abilities for capturing these needs are primitive and open to exploitation, (e.g, lobbying, PR). And since governments are responsible for many different things, they are often responsible for very little.

Yeah it would be great if every penny were spent effectively. That’s true in business also. Ain’t going to happen, not with the class of humans we have now.
Government gets lobbied, businesses get sales calls. I can assure you that the rules government has about accepting stuff is a lot stricter than business rules. I once did some work for the government, and I had to take a special class on what normal things we couldn’t do. Not to say it doesn’t happen. My daughter interned for a state legislator, and she got lunch free every day because the lobbyists brought it in, and had to make it available to everyone.

I am at no point arguing that all government spending is wasteful. I am, however, arguing that government spending should be limited to those areas where it is essential (public and quasi public goods), and even then monitored with great rigour (which in turn is made easier the more limited the areas where you spend).

And I’m saying that it isn’t, as a rule, more wasteful than much business spending - unless that is unless you disagree with the very premise of the spending. If you think government shouldn’t help pay for sick people who can’t afford care on their own, Medicaid is wasteful by definition. If you don’t like drones they are wasteful.
Though there is one place I’ll agree that government is a mess - that is, being directed by idiot elected representatives voted in by even stupider voters. Some intances of the Texas and Kansas Boards of Education, anyone? How about those who forbade the government to negotiate for lower drug prices? But I don’t think an intelligence test for congress would go over too well.

[Voyager]

@emacknight

The question isn’t about what are the benefits of government spending, that’s easy. The issues is about the costs, or negative externalities, of those program.

The Interstate Highway System provided plenty of benefits, but it also meant the death of the rail industry, while at the same time creating the American dependence of the personal automobile. And now we’re dealing with the results, most notably the environmental impacts of smog, and the need for ever wider highways. An economy dependent Middle Eastern oil leading to multiple wars. When the shift went towards domestic drilling you end up with massive oil spills like Exxon and the Gulf.

Now when highways get more and more congested, the only possible solution is to spend more to widen them, so that they can get even more congested. The fact that the government subsidized the highway system means that rail and public transit is fucked in the US. When asked people seem to rather money be spent on wider highways than on a light rail system.

Because the government subsidized driving from NY to DC you altered your behaviour. If you had to compare the real cost of flight, vs train, vs what a highway actually costs what do you think you’d end up choosing?

Actually, when I lived in the East and went to Baltimore or DC for meetings, I took the train. If you’ve ever been on NJ Transit during rush hour you’ll know that lots of people still take the train - if you are lucky enough to live near train stations on both ends. And I’ve been around Europe enough to appreciate good train systems. But trains don’t work too well in Montana. Or even much of California.

BTW, I live in California, and though I pay more for gas than most people, we did away with most of the smog. There are very few bad air days, and I can see the mountains, which didn’t used to be possible. That was the government at work.
There are also a lot more light rail systems than there used to be. I drive along one every day - if I lived closer to work I’d use it - lots of people do. Also government subsidized.
Cities like New York have great public transit, cities like LA, not so much, and that problem predated the interstate highway system. Nonetheless, highways gave unprecedented freedom and ease of transit. Just read “On the Road” to see what it was like before them.

[bldysabba]

@Voyager

Well of course taxation is coercive. So are nearly all laws - if they did not coerce someone, we wouldn’t need them, right?
<snip>
And I’m saying that it[government spending] isn’t, as a rule, more wasteful than much business spending -

I added [government spending] for clarity.

But you see, there’s the big difference between wastefulness in business and government spending. It’s ok for businesses to be wasteful. The resources that a business spends are freely given to them by people with no hint of coercion involved. Which then implies that those people accept the risks involved in those resources being wasted. (Of course there is nuance, but this is broadly correct). Taxation and government spending on the other hand, need to be held to a wholly different standard.

[puddleglum]

@Voyager

The purpose of the press, and things like open meeting laws, is to combat the government problem as much as possible. And we have similar issues in industry. When CEOs move corporate headquarters, they wind up near the home of the CEO. There are plenty of cases of execs getting sweetheart loans, and we still have the compensation without adequate metrics problem. People are people. Corporations are no more inherently bad because they are sometimes run by crooks than government is inherently bad because elected officials are sometimes crooks.

By UAW bailout do you mean GM and Chrysler bailout? Is that the new right wing name for it? Because if you do, that has paid off big time. It avoided the massive collapse of manufacturing in the area, and by profits and jobs has pumped lots of money into the economy and the tax base. And it let GM steal market share from the Japanese. This is bad?
I just figured out the Klansman must have been Byrd. He admitted he was wrong. You guys should try that some time.

Using what metric for efficiency? Some companies are very efficient, some less so. Ditto for government agencies. I damn well had a better customer experience in my local DMV than in my local WalMart.

The problem for the most part is not crooks. The problem is wasteful spending is not illegal. Take for example the auto bailouts, current laws state that in a bankruptcy secured creditors are taken care of before unsecured creditors. The UAW was an unsecured creditor but due to political influence they got a better deal than they would have in a regular bankruptcy. They also got the government to give the new GM tax abatements from losses incurred previous to the bankruptcy which is not the normal practice. These two factors made the autobailouts cost an extra 30 billion.
The press does not need to call attention to this because candidate run ads bragging about how they saved the auto industry and were a friend of the working man. Politicians spent 30 billion dollars of taxpayer money to help themselves be re-elected and it is all perfectly legal. Since 30 billion is a drop in the bucket for the federal budget no one person can feel themselves harmed but every UAW member knows he was helped out.
This is not an isolated example. Take the stimulus bill, despite all the rhetoric about shovel ready projects implementation of most of the infrastructure projects were put on hold for a year while prevailing wage studies were done. Prevailing wage studies are done to make sure the workers building government projects are not paid to little and undercut union members. So in the midst of the great recession, the government spent millions of dollars and delayed projects to make sure it could waste tens of millions of dollars overpaying workers. There is nothing legally corrupt about this and it would be illegal to not do it. This is because of politicians buying votes from special interests using taxpayer money.

A simple analogy; You go to dinner with ten strangers and everyone has seperate checks. At the end of the meal you are deciding whether to order dessert. The desserts at this restaurants cost 10 dollars each. This is too expensive so you skip dessert. If you are at the same dinner and instead of seperate checks the table gets one check and divides the cost equally. So when dessert comes around if you order it you get to eat the entire thing but your portion of the bill only goes up by one dollar. In that case you probably order the dessert. Everyone at the table would probably order the dessert even though everyone individually thinks that the desserts are not worth the price.

I have had poor experiences with Walmart and so I hardly ever shop there anymore. I have had poor experiences with the DMV as well, and yet the next time I need my license renewed I will be going to the DMV, and everyone who works there is well aware of that.

[emacknight]

@Voyager

Nonetheless, highways gave unprecedented freedom and ease of transit. Just read “On the Road” to see what it was like before them.

I’m starting with this quote because it highlights the point you’re missing. You’ll notice that the highways were built using government money, but what good is it if people don’t have cars/trucks and gas? Why is it that we left the auto industry to private businesses, instead of having the government build and distribute cars to every citizen? Are you able/willing to see a cost associated with that sort of program?

Other countries have nationalized the oil and gas industry then subside the product, why not in the US? Any downside to doing so?

Cars in most of the US are now a requirement. Look at any attempt to raise gas taxes, or tighten driving regulations and you’ll see how dependent people are. So why isn’t the government providing free cars and free gas to use on the free roads?

@Voyager

BTW, I live in California, and though I pay more for gas than most people, we did away with most of the smog. There are very few bad air days, and I can see the mountains, which didn’t used to be possible. That was the government at work.

So you admit that there was smog, and the smog was caused by driving. That is a cost associated with the government subsidizing highway driving. As a result the government had do to work to solve that problem, which again came with costs. And even if we tighten emission requirements, as you said the government continues to add more lanes, which means more cars, which means more pollution.

The problem here is that the cost (pollution) isn’t directly tied to the benefit (free highways). When the two are linked, people are able to make choices. That is generally how private enterprise works. If you want the benefit of having a car, you have to pay the cost of owning it. IF the cost outweighs the benefit you make alternate choices. In the US, the cost associated with owning a car has been significantly distorted making it seem cheaper than it is.

If people driving cars had to pay more directly for the costs, the problem balances itself out. London did this by charge per car that entered the downtown core. When the government removes those costs and spreads it around, the individual has no incentive. You benefit from those extra lanes, but aren’t required to directly pay for the costs.

@Voyager

There are also a lot more light rail systems than there used to be. I drive along one every day - if I lived closer to work I’d use it - lots of people do. Also government subsidized.

Your decision on where to live was altered as a result of government spending, and for many people it’s the direct result of free highways. This helped create the problem of suburbs which seem cheap, because the main costs are spread out. But suburbs have an associated cost like the destruction of good farming land so people could have McMansions. The McMansions were then subsidized (encouraged) through mortgage tax deductions.

If you make light rail free (or subsidized) you’d have people alter their behavior towards living close to light rail stations. The money spend on the federal highways system could have been put into all kinds of other projects (like rail) with different inherent costs.

Like I said before, any partisan hack can come up with benefits for government spending, while at the same time bitching about the evils of corporations. The point here is to be able to see the costs of government spending while seeing the benefits of private enterprise.

[Voyager]

@emacknight

I’m starting with this quote because it highlights the point you’re missing. You’ll notice that the highways were built using government money, but what good is it if people don’t have cars/trucks and gas? Why is it that we left the auto industry to private businesses, instead of having the government build and distribute cars to every citizen? Are you able/willing to see a cost associated with that sort of program?

First, the important thing is that the investment in the interstate highway system paid off economically. I was also referring to additional benefits. The private car industry clearly predates interstate highways. So, people had cars already. And driving is not free, but neither is riding a train. What would the benefit be to giving away cars? It is not clear that it would put significantly more cars on the road; in fact less because many families have more cars than family members now.

Other countries have nationalized the oil and gas industry then subside the product, why not in the US? Any downside to doing so?

Actually subsidization is the last thing we should do if we want to reduce oil usage.

Cars in most of the US are now a requirement. Look at any attempt to raise gas taxes, or tighten driving regulations and you’ll see how dependent people are. So why isn’t the government providing free cars and free gas to use on the free roads?

Is there a major problem with people not having access to cars I haven’t heard of? Or are you just making stuff up. And free highways predate cars - there are plenty of roads which began for horses.

So you admit that there was smog, and the smog was caused by driving. That is a cost associated with the government subsidizing highway driving. As a result the government had do to work to solve that problem, which again came with costs. And even if we tighten emission requirements, as you said the government continues to add more lanes, which means more cars, which means more pollution.

Huh? Smog did not begin with freeways. If the same number of people commuted on back streets, and spent a lot of time waiting for traffic lights, pollution would increase. Many lanes being added are carpool lanes which should decrease the number of cars on the road. Pollution is also a function of trip length - if commute time decreases relatively more than the number of cars increases, it is a win for the air.

The problem here is that the cost (pollution) isn’t directly tied to the benefit (free highways). When the two are linked, people are able to make choices. That is generally how private enterprise works. If you want the benefit of having a car, you have to pay the cost of owning it. IF the cost outweighs the benefit you make alternate choices. In the US, the cost associated with owning a car has been significantly distorted making it seem cheaper than it is.

Not at all clear. BTW, roads are not free. They are paid for by gas taxes, and gas taxes are a function of miles driven and fuel efficiency. In fact people are worried ab out paying for roads as people move to electric cars. Even in my Prius I’m probably not paying my fair share anymore, though I am reducing pollution. And yes, I am in favor of increasing gas taxes to better pay for needed roads and road repair.

[/quote]

If people driving cars had to pay more directly for the costs, the problem balances itself out. London did this by charge per car that entered the downtown core. When the government removes those costs and spreads it around, the individual has no incentive. You benefit from those extra lanes, but aren’t required to directly pay for the costs.

[/quote]

New York does also, in a sense, by having tolls on most of the major ways into Manhattan. But in most of the country there is no core. And, like I said, the more you drive the more you pay.

Your decision on where to live was altered as a result of government spending, and for many people it’s the direct result of free highways. This helped create the problem of suburbs which seem cheap, because the main costs are spread out. But suburbs have an associated cost like the destruction of good farming land so people could have McMansions. The McMansions were then subsidized (encouraged) through mortgage tax deductions.

Actually, no. My decision about where to live was determined by housing prices. And my commute has varied as I’ve changed offices and jobs.

If you make light rail free (or subsidized) you’d have people alter their behavior towards living close to light rail stations. The money spend on the federal highways system could have been put into all kinds of other projects (like rail) with different inherent costs.

Like I said before, any partisan hack can come up with benefits for government spending, while at the same time bitching about the evils of corporations. The point here is to be able to see the costs of government spending while seeing the benefits of private enterprise.

BART is being extended to San Jose, something which should have been done ages ago, but wasn’t because of the will of the people. It is very expensive, far more than road widening. I’ll be retired before it gets there. I live in somewhat long walking distance from the end of BART now and from an Amtrak station. But any practical light rail extension would make my commute much longer. Not only people have to live on the train, but so do businesses. I might be able to put together a carless way of getting to work, but it would take forever, and cost more in terms of time - and that is true even if gas taxes were increased. It is not true when I go to San Francisco, which has good public transportation. But much as I prefer public transportation, it is not going to work for much of the country.

[emacknight]

@Voyager

First, the important thing is that the investment in the interstate highway system paid off economically.

Again, that is not the point of the thread. Are you able to see that there were costs associated with that specific project? That fact that it paid off economically meant the benefits exceeded the costs, you are acting as if there are no costs at all, only gravy.

@Voyager

What would the benefit be to giving away cars?

Does it matter? The question is about costs, what would the cost be if the government were to provide people with tax funded cars? Would the benefits outweigh the costs? I can come up with as many benefits to the free car program as you’ve listed for the free highway program.

@Voyager

Actually subsidization is the last thing we should do if we want to reduce oil usage.

Why? What is the relationship between subsidizing a product and it’s use? Now go back and consider that the federal highway system creates subsidized driving.

@Voyager

Huh? Smog did not begin with freeways. If the same number of people commuted on back streets, and spent a lot of time waiting for traffic lights, pollution would increase.

I disagree because people’s behaviour would change. They didn’t like trying to drive through congested city streets so we built highways and biways, and massive tunnel systems, making it easier for them to drive, which encourages driving.

In other areas the money was spent differently building subways and elevated trains, and dedicated bus routes. Both of which are government projects, both with entirely different costs and entirely different results.

But more specifically to the point of this thread, where there is increased demand the price goes up. If more people want to drive on a given road, the cost could go up until the number of drivers matches the capacity of the road. The nature of government involvement has been to keep the cost flat by expanding highways.

@Voyager

Many lanes being added are carpool lanes which should decrease the number of cars on the road.

See, now you’re getting it. A lot of the extra lanes I’ve seen built lately have tolls that vary with time of day. Obviously people realized there was a cost associated with having more cars on the road, so they want to encourage carpooling. In this case, those that carpool get to work faster. That is an example of how the cost is directly tied to the use, and people’s behaviour changes as a result.

@Voyager

Pollution is also a function of trip length - if commute time decreases relatively more than the number of cars increases, it is a win for the air.

Okay, you’re back to pollution, so you admit that it’s related to free highways?

@Voyager

And yes, I am in favor of increasing gas taxes to better pay for needed roads and road repair.

That’s certainly refreshing to hear, even though gas taxes are hugely regressive. But the costs associated with the roads go beyond repairs. You’ve already pointed out the problems with pollution. And money spent on roads isn’t spent on things like mass transit, or multi-use pathways. If those costs got added to the gas tax you’d see people rapidly shifting away from driving. In fact, when gas prices spiked back in 2007 there was a 5% drop in driving.

@Voyager

New York does also, in a sense, by having tolls on most of the major ways into Manhattan.

Taking NY as an example, the cost of owning a car their are prohibitively expensive, so people find other means like walking and mass transit. Where you live and where you work is factored into that equation. What would happen if the government started subsidizing parking garages?

@Voyager

Actually, no. My decision about where to live was determined by housing prices.

And what do you think influenced the price of your house if not it’s location?

@Voyager

BART is being extended to San Jose, something which should have been done ages ago, but wasn’t because of the will of the people.

And this is the heart of the issue. The will of the people is a direct result of highway infrastructure and car-first attitude.

@Voyager

It is very expensive, far more than road widening.

So now you see a cost associated with it? But just because it’s more expensive doesn’t mean it’s not the better choice.

@Voyager

Not only people have to live on the train, but so do businesses.

When I was living in Toronto, the rent for an apartment was a direct function of how close it was to a subway station. Likewise, businesses wanted to be close, so retail space cost more. This is an example of behaviour changing in response to the system. People will adapt to their environment.

When asked what are the true costs of the government spending, the example of a subsidized highway system needs to include all the behavioural changes that occurred as a result.