Why Big Government Doesn't Save. They Steal!

At least 280,000 people showed up to protest big government on April 15^th. The progressive left lashed out against the movement in a knee-jerk defense of their favorite President. However, no matter how much you want to believe or hope, the truth is this: big government does not work. You can call government spending “investing” as much as you want, but it is private entrepreneurship that has made this country great and big government had nothing to do with it.

Let’s look at the example of the House’s leading spender, none other than progressive John Murtha. In a recent article the Washington Post took a closer look at one of his most favorite pet projects is the John Murtha Airport. Thanks to tax payer money, this airport is state of the art. It has top notch security (six guards) to watch the 15 people per day that use the airport. The center is truly impressive as far as size and capability including a high-tech radar that rivals international airports. That radar is unmanned. $800,000 of the stimulus was diverted to repave a backup runway.

Can you remember Obama defending the stimulus spending? Government spending is “what…stimulus is.” Sure people received jobs, but where is the sustainability? Certainly, this airport would not exist without tax payer support. What will happen if John Murtha is unable to secure continued funding or John Murtha leaves office? The money used becomes even more of a complete waste and people are laid off.

It would seem the only purpose for the airport is for the personal use of John Murtha himself, who readily uses the airport (most flights are to DC). This isn’t really anything new. There are several New York State legislators who want to connect Buffalo, Rochester, Syracuse and Albany with a high speed rail (using stimulus money). I’m all for rail (mostly for shipping though). However, no one but state politicians are going to use this as passenger travel.

Being an economist, I love to look at the world through graphs. For all you who disagree with me, here is the official economics graph that depicts government spending and government waste in a best case scenario (please excuse the “loaves” reference on the graph. It was the first picture of the graph I came across).

For those not used to reading graphs here is the explanation. Efficiency occurs when marginal social benefit and marginal social cost are furthest apart. This is denoted by the “}” section labeled TSB-TSC. This is the most efficient possibility since you are getting the highest social benefit for the lowest social cost. It also happens to be where private enterprise naturally operates. However, government never operates at this point. It operates where the TSC (total social cost) and TSB (total social benefit) lines intersect. The bubble created by the lines TSC and TSB and their intersection represents government waste for the area inside the bubble to the right of the perpendicular TSB-TSC line.

As I pointed out, this graph is a best case scenario. It has a few assumptions such as the idea that government is actually rating and enacting programs for the highest social benefit for the lowest cost. It also, assumes to some degree that the government is fiscally responsible and is not running a deficit. This can be inferred by the fact that if you are running a deficit, then there is no true incentive to ensure that total cost does not exceed total benefit. It also does not account for corruption. This means that politicians are not spending dollars on their own pet projects and are picking the issues that really do bring about the highest total benefit. So for this graph to work the John Murtha Airport scenario would need to be impossible. In 2004, I gave a presentation at the NYS Economics Association regarding the factors holding back developing nations. Out of the largest factors we found corruption was very significant.

Progressives love to argue that the rich derive their wealth from the exploitation of the working class. Though this is not true in the private market place, it does ring true between the government and free markets. Every dollar wasted in government programs is capital that could be used efficiently. John Murtha’s airport is supporting dozens of jobs that would have otherwise have been possible. However, that capital in the free market place would likely have created thousands of sustainable jobs instead. What do think would occur on an even larger scale? We are worried over 8.5% unemployment in this economic downturn. In Europe, big government has created persistent 10% unemployment rates.

So what’s the alternative? We can and should unshackle the economy and let capitalism loose. Time and time again, those with the freedom to use their capital as they seem fit have found the most efficient ways to do so. It is private entrepreneurs that brought about the industrial revolution, the automobile, electricity, and the medical wonders that have doubled our life expectancy. Our government cannot boast of these achievements and they never will.