What kind of spending is best in the economy? Government or Private?
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Does government spending like the stimulus bill help the economy or does private spending on the biggest sailboat (made out of carbon fiber) help the economy? http://en.wikipedia.org/wiki/The_Maltese_Falcon_(yacht)
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Answer:
Both. If you have only government spending, you have an extreme form of socialism, which only the Shakers have embraced. If you have only private spending, you have no public goods (no military, no justice system, no roads, no GPS system, etc.) and far too little of goods with high positive externalities (far too little education, too little public transit, etc.) That is why no developed economy goes to either extreme, and why the countries with the highest standard of living, the best economies, etc. are all between 40-60% government spending. (This does NOT include in the U.S. It's percentage is lower http://anepigone.blogspot.com/2008/03/government-spending-as-percentage-of.html just as its standard of living is lower, it education level is lower, etc. http://www.prosperity.com/ http://streetlightblog.blogspot.com/2011/05/were-number-two.html http://yglesias.thinkprogress.org/2011/04/americas-human-capital-slowdown http://dsp-psd.pwgsc.gc.ca/collection_2009/fin/F21-8-2003-11E.pdf http://innovationandgrowth.wordpress.com/2010/12/14/our-aging-capital-stock http://www.asce.org/reportcard/ If you are asking about which is better at stimulating the economy when the economy is depressed as it is in the U.S. now, then either would be fine, but since the private sector isn't spending, the government should do it. (In general, cutting taxes by X billion does not stimulate the economy as much as much as spending that same X billion by the government, if only because much of the tax cut money just isn't spent by the private sector.) http://www.nytimes.com/2008/12/01/business/economy/01stimulus.html http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_whats_a_dollar_o.html
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