Conservative News & Commentary

Nov 21, 2015 — by: A. Smith
Categories: Economics, Government

Money_falling_from_skyWhat if one day $10,000,000.00 fell from the sky and appeared on Main Street between the Court House and Government Building? Immediately the police are called in, surrounding the large bundle of cash,... waiting for the County Commissioners and City Council to decide how best to utilize this gift from heaven for the local community.

One choice would be to allocate the money to City and County Government. Some of the money could go towards budget-starved agencies to help with any revenue shortfalls. Some of the money could be used for economic development (promoting tourism, attracting businesses to move to the area) and community efforts such as better parks, better streets, a few more police officers and emergency personnel. Also the money could be used to solarize certain government buildings, helping our city and county move towards a sustainable green zone.

The other choice would be to divide the money up among the citizens of Klamath County and let them determine how best it should be used.

Which way is best? Which way would help us grow our local economic pie? Which way would be better for economic growth and stability of our community? Which way will deliver money in the most efficient manner to the goods and services that the citizens of Klamath County value most?

In this scenario the fundamental question is which group knows best how to invest and grow wealth: the government sector or the private sector? If you are a socialist the answer is easy, government. The socialist believes central planning and elite government thinking always know what is best for the “people they serve.” However, contrary to this university theory, reality has shown us that time and time again it is the private sector which grows wealth. Matter of fact, the government sector can not grow wealth (or does it very poorly/inefficiently). Instead government’s nature is to consume wealth not grow it. That is why government continues to return to its citizens asking for more of its money. If government knew how to grow wealth on its own, it would have no need to ever bother its citizens for more money. But we all know, from personal experience, that certainly is not the case.

While some in the private sector might foolishly spend all of their new money in quick order, many would not. Those who were wise would invest it in their business, some other business, the stock market, gold, etc. Some would save while others would pay down debt. There are millions of ways the money would be used by the private sector that an elite group of government officials could never imagine or execute. Through these millions of ways, the private sector will grow the economy. The pie will get bigger. Why? Because the private sector is far more careful with its own money, than the government sector is with our money. The private sector is also far, far, far more efficient in how, when and where it invests and spends its limited resources, than government who expects to get more and more each year.

In government if a department head does not spend their entire budget each year, are they rewarded for being efficient and saving the tax-payers money? Absolutely not. Instead the department budget is cut the following year because, in government thinking, the department was given too much money and that is why there is some left over at the end of the year. This government-think promotes waste and inefficient spending, not efficiency or wealth creation. Even so, we do not want a government that has extra left over in order to invest, because more often than not government officials rise to their positions not based on merit but based on seniority. Their skills in investment are never as good as those in the private sector. And in the investment game, when you remove the ability to fail (meaning you will be fired if your investment plan does not return the yield promised), then rarely are wise decisions made with that investment.

So back to the question: Which way is best? Which way is the best way to take a gift of $10,000,000.00 and make sure the needs of the community are best met and that the economic pie can grow? Answer: give it all to the private sector.

While this illustration may have seemed silly, the bottom line is if we desire a better Klamath County — a better economy, a better way of life, a better community — then giving government any more of our tax dollars is clearly the wrong way to achieve such goals. In other words, government has enough.

3 Comments

  1. Ryan L. Miller ~ Nov. 21, 2015 @ 2:09 pm

    I don't think the answer is one or the other. If the private sector had a monopoly on proper investing, we would never see a business close or a business owner lose their shirt. Individuals are always adept making bad financial choices, both in the public and private sectors. I would have the money placed in trust to earn interest then, on a case-by-case basis, both private and public entities could apply to a board of trustees to fund specific projects. Then it would be a matter of funding ideas that would help the community, not entrusting the entire sum to one sector or another. #
  2. E. Werner Reschke ~ Nov. 21, 2015 @ 9:51 pm

    Ryan, I think you misunderstood the scenario. The author did not say that Klamath County ONLY had $10 million, but that it received an ADDITIONAL $10 million. Even if it the scenario was what to do with ONLY $10 million the split should be 90% private sector, 10% government. The founders believed that the government that governs best, governs least. But that wasn't the scenario, it was an additional $10 million and to think that government is not big enough or could do anything better for all the community with even $1 more is an idea I strongly oppose. The author is correct when he asserts that government has enough. Our problems in Klamath County are not that government is too small. Rather the problem is that government is too big, too intrusive and has gone way beyond the scope the founders ever dreamed. Giving government more money only exacerbates the problem, it does not solve it. #
  3. Craig ~ Nov. 22, 2015 @ 10:55 am

    Ryan and Werner, the article doesn't touch on the real problem which is the cost and overhead of the public sector. The private sector economy can't expect improvements to itself, while also funding the public sectors efforts to do the same. This is like putting money on Red and Black at the same roll of the Roulette wheel. All public money comes first from private sources - ALL. (Actually, not all but only what's left after paying any public sector facilities charges, operational and administrative costs, salaries, benefits, and retirement costs. By the way, PERS is 8% annually, so you can see there is not much left over to actually "invest". Additionally, all technological and institutional knowledge also comes straight from the private sector. The only native attribute that belongs to government is regulatory power. It can only regulate what exists, or prevent something from existing (whether good or bad). This means that what the public sector brings to the equation is coercive power or force. By some "law" or ordinance, some crony will receive the contract for doing "good economic things." Think here of Solyndra and the $850M dollars of good that was never accomplished. My question would be, "Why not let the private sector freely choose the good things that they desired?" Kudos to the original author! #

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— Samuel Adams, letter to James Warren, 1775

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