ISLANDPACKET.COM – A reader recently wrote that my desire to cap state-government spending betrays ignorance of the role government plays in the economy. “When the state spends money, that money goes into the economy to pay salaries, purchase goods, pay for services, etc.,” he says. “It is the same as when I spend money.”
Of course government spending affects the economy. And when the government spends taxpayers’ money on the essential things only government can do, the effect is positive. But when government decides, as it always does, to do more, it is a mistake to assume public and private spending are the same.