Gadianton wrote:Analytics,
You cannot have this discussion with Droopy and BC at all. But if you're going to have it with someone who understands basic econ as it's taught in school...
Which probably means you should now bow out of the discussion as befitting one not competent to judge and analyze the subject matter of the thread in an intellectually substantive manner. Paul Krugman himself is a product of the modern, formal economics education classroom.
a) Can the government 'create wealth' by making a profit?
"The government" per se cannot, no.
If a), the answer should be trivially, "yes". Maybe the most ignorant conservatives don't believe this. If the USPS has ever made a profit, then the government has "created wealth". But who cares?
It rarely has, but that's beside the point I suppose. The question is really whether or not the USPS ever created new, net wealth that did not exist before its own activities were engaged. The USPS receives massive government subsidies, just not in the traditional transferred tax fund sense (it doesn't at the moment, receive operating funds directly from the general treasury). In any case, if the USPS isn't really a government agency in the normative sense, is the question here really relevant? Could the EEOC make a profit? The DOT? EPA? HUD? Do they provide a service or create goods or products that they could sell in a free, uncoerced market in an economically viable way?
If b), then the basic choices are that the government is smarter than the market, which the ignorant liberal counterparts of the ignorant conservatives might believe or perhaps extreme leftists, or more usually, the government can step in where there are market failures. As a position, this covers everything from Keynesian economics to universal health care, and the question then becomes whether or not a market failure really does exist.
But Keynsianism is a long discredited academic superstition, and free market dynamics within American medicine have never "failed" (do you actually believe this stuff, Gad?) It is preciely government meddling within the creation and delivery of medical services, beginning in the mid-sixties, that has driven us to the present crisis of healthcare costs.
Droopy isn't covered by this though because he has admitted to belief in not only market failures, but he says roads, postal service, and some other things are best provided by government. Not only does this explicitly admit to Government creating wealth by b), but he's even more optimistic about government than many staunch mainstream conservatives, as Milton Friedman, who condemned the USPS.
NO! Utterly and megalithically wrong. Roads, bridges, dams, sewer, EMS, police protection, fire etc. are all best handled by the state but
do not represent the creation of wealth. Sowell has been hammering away at this for years on end in an attempt to cut through the gooey, tar-like slime of Keynesianism and class ressentiment that has polluted public discourse and corroded clear thinking on economic issues for generations in this country to the point of abject stupefaction.
A bridge, overpass, road, dam, levy, sewer system, sea wall etc. no matter how necessary and useful it may be, is not created wealth, it is
shifted, transferred, reallocated, redistributed wealth, and represents wealth that manifests itself in one place (as a bridge) which would have manifested itself as some finished product or body of products in the private sector in another place had the state not commandeered the materials and labor that would have been used in the private sector and used it in the public sector to create something else.
The sloppy and ambiguous use of the term "create" here is always a problem, because the term "create" can carry both the sense of something that creates net expansion as well as something that generates an artifact constructed from constituent parts and materials allocated from preexisting wealth but that represents only a
circulation or alternate allocation by the state of existing wealth, not a
net increase.