Radiofree West Hartford -- GOVERNMENT SPENDING IS NOT THE SAME AS PEOPLE SPENDING by Ben Cerruti

GOVERNMENT SPENDING IS NOT THE SAME AS PEOPLE SPENDING

By Ben Cerruti

October 07, 2002

There are those who believe that to stimulate the economy it doesn't matter whether it is the government or the people who spend for goods and services as long as the spending occurs. However, it does matter if one desires to stimulate the economy in a way that at least maintains the nation's standard of living. Reason provides this conclusion.

People anywhere primarily use physical and financial resources to fulfill their basic needs for food, clothing and shelter. After fulfilling these needs people usually use remaining resources to meet their personal desires to enhance their way of life. The degree to which they can fulfill their needs and desires determines their standard of living. Thus it is reasonable to say that the income and wealth that a person accumulates over and above that which is required to meet their basic needs can determine the level of their standard of living.

There is no doubt that different people take different views as to what constitutes a certain standard of living. Material wealth is not necessarily always viewed as a primary factor. For instance, the ability to meet health care can become a more important factor. But, in any event, the financial ability to meet the demand created by the desires of individuals is a major factor in determining their standard of living.

To meet one's personal view of what should constitute a standard of living he or she must make the decision to act according to this view. Some might act in making a material purchase such as an expensive automobile, home in an upscale neighborhood or piece of art. Others by using fund for recreation or travel. Still others are attracted to new high tech products. The point being that they individually make their own decisions on how they spend their money. Their desires are reflected in demand in the market place that is fulfilled by suppliers of goods and services that provide employment. The result is the development of new types of products that create new companies and a growing economy.

When the government, whose complete support is derived from taxes, takes this revenue from the people it substitutes its legislated ideas of how it is to be spent. Since the spending is done in a regulated and not free market fashion it does not reflect the true nature of the demand that would have come from the taxpayers if they had to power to spend the tax revenue at their discretion. As has been proven in all societies where taxation of the people is high and government spends for goods and services as it sees fit, entrepreneurship and development of innovative products is limited. Thus the ability to create new jobs is restricted. In addition, the growth of productivity that creates more goods per unit time allowing for increase income per worker is stunted. Economic growth that leads to an improved standard of living is thus hampered.

There should be no doubt that people can spend their money more wisely than the government. One only needs to look at what is happening economically in the rest of the civilized world to view the evidence of this conclusion. It is hard to believe that those in government cannot see this as well. However, it must be acknowledged that those that follow a socialistic ideology are not really interested in allowing the individual the opportunity to better their way of life. Rather they believe that government can better plan for everyone even though the result is a lower nominal standard of living.

So the question becomes. Do you want to spend your own money and have the chance of raising your standard of living - or - do you want the government to spend it for you and suffer the attendant economically negative results that are so well demonstrated in other countries relying on government fiat based on socialistic principles.