The latest edition of Max Borders‘ Ideas Matterupdate highlights a video clip of Milton Friedman answering a critic’s three-part question.
Fortunately, you have a man who can answer each part — masterfully. Allow me to riff on a couple of Friedman’s points that are particularly brilliant.
Near the end Friedman points out something we’ve tried more awkwardly to point out on here before (Click on our category Subsidiarity and Federalism): If people simply must express themselves through government, keep it local. When government power flows up to the federal level it becomes more and more costly to leave or to change.
The idea that hiring more government officials so that they’ll go out and spend is fallacious, indeed. But it is exactly what macroeconomic experts continue to prescribe for economic recovery. Not only is the politically expedient in the near term because it supposedly “creates jobs” (Keynes suggested people dig ditches and fill them up), but politicians like this kind of spending because they have a new army of voters beholden to them.
Productivity is such a critical economic measure, but so often it’s overlooked. On the spending side, we have to ask what we’re spending money on — something that tends to be more productive or less productive? When we divert resources from more productive activities (individual consumption, savings and investment) to less productive activities (government boondoggles), we’re making a country poorer.