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  • March 2013
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It’s not that hard…

There are three parts of GDP, consumer spending, investment (business spending) and government spending. Consumer spending is good because people are getting stuff they want. Investment is good because it grows the pie; investments will, on average in a free economy, return more than what gets put in. Government spending is good when it protects and enables these other categories of GDP. Roads, courts, police, institutions in general, military power and secure borders. Maybe education, if we ever figure out how to deliver a decent education. These are moral uses of economic resources. Not much else. The more government spends, the more it takes capital away from the other two categories, i.e. it takes away from 1) what people want and need  2) investment aimed at getting people more of the stuff they want or need. Every rent-taking bureaucrat, every Parkinson’s Law contractor, every unnecessary ditch and road is immoral.

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