Obama and Infrastructure

The President is continuing his push for the federal government to go deeper into debt in order to fund infrastructure projects. While nobody disputes that the country has infrastructure needs, the precarious nature of federal and state finances indicate that policymakers need to starting thinking outside the box. Specifically, policymakers should be looking to make it easier for the private sector to fund and operate infrastructure projects.

As my colleagues Chris Edwards and Peter Van Doren have explained, the main problem with government infrastructure spending is the lack of efficiency:

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Government Efficiency

I recently criticized the idea that policymakers should focus their attention on making government more “efficient.” Instead, I argued that policymakers should focus their reform efforts on reducing government’s size.

Government efficiency proponents make the mistake of viewing the cost of government in the same light as the cost of operating a private business. However, government cannot operate like a business because it isn’t a business.

Private businesses obtain their revenue through voluntary exchange: consumers willingly give a business their money in return for a product. Businesses must control the cost of providing a product in order to maximize profits. A business that does not adequately control its costs can find itself undercut by a competitor offering a like product at a lower price. In the private sector, the market sets the price of a product through the interaction of supply and demand.

Government is unconcerned with “profit.” The “cost” of government is equal to the taxes extracted from the private sector to pay for government activities, plus the economic damage caused by extracting resources from the private sector. Taxes are involuntarily obtained through compulsion and force. Regardless of the value a citizen assigns to the services provided by government, a citizen must pay for those services, and at a price set by government. The price one pays for government is primarily a function of political factors, which are only indirectly influenced by economic considerations.

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Ron Paul on Federal Stimulus spending

Is federal government stimulus the answer to our declining economy?  Texas Congressman Ron Paul discusses why government spending can’t reverse our anemic economy.  Government does not create wealth or create value, this is done in the private sector by companies and individuals who take raw materials then assemble a product to create something more valuable…

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Colossal Ignorance

This post is inspired by the continual misunderstanding of the “General Welfare” clause of the U.S. Constitution.  This is one of the most misunderstood parts of the Constitution. Most statists think this phrase gives the Federal Government carte blanche to spend money on anything that may be good for anyone in the U.S.  Stating it…

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California Dreamin’ (on someone else’s dime)

This past Friday, California Governor Arnold Schwarzenegger called for the federal government to bail out the taxpayers of his state to the tune of some $6.9 billion. The request comes amid efforts to close a $19.9 billion gap in his proposed $82.9 billion 2010-2011 fiscal budget. We hear daily news stories of governors all over…

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Constitution be damned?

That’s just the political reality we face today, writes John Tamny: Throughout this decade, under Presidents Bush and Obama, economic “stimulus” packages have similarly been foisted on the U.S. economy by a federal government possessing nothing not already taxed or borrowed from the private sector. Nothing in the Constitution mentions “economic growth” as one of…

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