Who would you rather have another $100 million dollars - the US government or Bill Gates? One has a track record of creating incredible products, the other is a literal dumpster fire, blowing $100bil ain’t nothing to the government.
I don't really subscribe to this idea that the US Government burns money as a rule. I'm sure there's many places that could be streamlined or made more efficient. But to blanket state that the US government as a whole is wasteful garbage seems naive, considering the immense scale and breadth of functions they carry out. The US Government employs 2.5 million people (3.8 million if you include the US Army, for which spending actually represents 61% [!] of the current US Budget) – the scale is personally hard for me to grok, at least. One thing that changed my mind about government spending is to look at the budget of a government program or facet of a program you're personally familiar with, and at least in my experience, it blows my mind what they can accomplish with what they're allocated.
For example, the entire yearly operating budget of Big Bend, a national park bigger than the state of Rhode Island, is only $7 million, including employee salaries, maintenance and restoration, emergency services, special programming, on-site research, and educational outreach – and it brought in around more than $27 million in visitor spending last year. From a money-making standpoint (which I don't think is the purpose of a government so much as to serve the public interest), that represents an extremely good return on investment – not to mention all the positive externalities of such a venture.
I believe you are incorrect about the US Army’s percent of the federal budget. Total defense spending (all branches) represents around 15% of the budget.
Ah, great catch! I’m admittedly nowhere near an expert in this regard. I was looking at the US Discretionary spending budget, and mistakenly thought that was representative of the total budget
You make some good points, but there are areas where costs are outrageous... namely healthcare, education, pensions, and the military.
Our pension system in the US is not funded in a way that is sustainable for the long term. Obviously, it was started by FDR on the assumption that we could just fund existing retirees who hadn't paid in because there's always more young people than old people. But that assumption is no longer true. And the federal level is where things are actually looking quite rosy. State and municipal pension systems are, in some areas, on the brink of insolvency. I expect some states, in the coming years, to ask the feds for a bailout.
Most huge military technology purchases seem to have little justification at this moment... the F-22 and the Joint Strike Fighter are obvious examples. The number of military bases is astounding, but the return on investment for those isn't clear... particularly in regions where there are literally dozens of them. Huge stockpiles of nuclear weapons that can destroy the world multiple times over, which after some point doesn't seem to add any deterrent effect.
Healthcare spending, even just from government programs alone, is high relative to other nations, and yet we don't even have universal health coverage. Very little is spent on useful preventative medicine, and enormous amounts are spent on last minute emergency procedures and end-of-life care. When we are able to make a difference, we don't, and precisely when little or nothing can be done, then we take out all stops and try our best to do something. Italy has the 2nd-longest lived population in the world, despite spending far less on healthcare. They aren't known for having a world-class healthcare system, because the truth is that they don't. What they have is world-class healthy lifestyle.
Education spending, empirically speaking, seems to have little correlation with outcomes. Since 1970, adjusted for inflation per-student spending has roughly tripled, with some variation from state-to-state. But despite the overall large increases in funding, there are constant cries that not enough is being spent. But if we compare to world-class nations like Finland, who spend very little, we are left with a puzzle. If they are able to provide better education for cheaper, then obviously funding is not the deciding factor.
Parks are trivial and have a great cost-benefit ratio compared to those big 4 areas of waste.
The notion that the government wastes more money than the private sector is a persistent myth with little evidence to back it up. Private capital wastes enormous amounts of money on failed ventures, inflated salaries, and profit-taking, and is every bit as wasteful as any over-budget government project.
My favorite argument in defense of billionaires is space. Governments made basically no progress in outer space, and then a few billionaires decide they want to go the stars, and suddenly everything happens again. And those billionaires did it with a fraction of the funds that the government could marshal - they have private sector acumen.
You let the billionaires have their money because letting free people control that much capital is far superior to the government.
And those billionaires did it with a fraction of the funds that the government could marshal...
Did what? The billionaires haven't even put a single person in orbit yet, something the government did within a few years of starting a space program. The US government went on to put humans on the moon (a feat yet to be equaled even by any other government, much less a billionaire), operate a reusable spacecraft for 30 years, and build an enormous space station in orbit and operate that for 20 years.
Free people do control government capital in a functioning democracy that has not been captured by billionaires.
"Governments made basically no progress in outer space"
Is a completely ridiculous thing to say. Governments explored every planet in the solar system and discovered thousands more in the galaxy, sent humans to the moon, and have kept humans in orbit continuously for 30 years. The US governement is about to send the first helicopter to Mars. Some of their contractors have been doing a good job of innovating lately too, great!
What are you talking about? Space travel is literally the worst possible argument on this front.
>Governments made basically no progress in outer space
Governments made ALL progress in space, ever. Space travel only exists at all because governments poured unbelievable amounts of money, resources, and people into researching and developing it over decades. These billionaires' efforts are starting on top of that. If they had to start from scratch it would be impossible. Government space programs petered out not because of a lack of "acument" or some other nonsense, but because public support for these programs ebbed as the impetus (the Cold War) went away.
You really couldn't think of a worse example that completely undercuts your point.
Sure, but all-things-being-equal -- whatever that means in this scenario -- how long would it take an fictional Elon Musk to get to where the actual Elon Musk is today? Where would you see government propping him up in the process? The only reason government got us to the point it did in space exploration is because, for a brief-brief-brief period of time Elon Musk types were running the government. Now it is sycophantic cronies. It seems like having captial directed towards enlightened visionaries/beneficent dictators is preferable.
The Japanese space agency landed a robot on an asteroid, the European space agency landed a probe on a comet.
Meanwhile people like Elon Musk are mostly interested in vanity and commercial projects. Sure, there are worse ways to spend your money as a billionaire than being a space tourist, but let's not pretend he's bringing much progress.
His venture successfully built reuseable rockets that could lower the cost of spaceflight significantly. This would allow more people to do more things in space. Which could accelerate technological advancement in the space sector.
This is something no one else have been able to do up until recently. I would at least consider that as a notable progress.
EDIT: /s ... if it sonehow wasn't clear. Nonetheless, the fact remains that JFK is the only person whose vision has led us "to the stars", and it was the US government that achieved the vision he put out.
Not products, but his philanthropy is second-to-none. Measuring his investments towards preventing malaria alone he has probably done more to save lives than any other single individual in history. Which sounds silly, but is the reality of the situation.
He's donated 5 percent of his wealth. Him and buffet are top of the billionaire giving pile at 3 and 5 %. that means 95% of their wealth is still tied up in service of further wealth extraction.
Exactly. I'm not about to defend rent-seeking billionaires, but I trust them more than government--the entity which literally kills millions of people. I'd rather economic mass went into making Lambos and penthouses for billionaires than warheads and aircraft carriers to murder more people.
Real-estate speculation is basically rent-seeking, but inheritance is not. If someone amasses a fortune by creating wealth and leaves his assets to his offspring, they are not parasitic even if they never work. What matters is how the wealth was originally accumulated.
Why do you believe that inheritance is not parasitic or rent-seeking behavior? Large fortunes exert a gravitational effect, attracting more money and thus making their owners much more powerful than they would otherwise be.
The way I see it, the unchecked growth of intergenerational wealth is how we end up with aristocracy, and I would rather prevent aristocracy from rising than try to overthrow it once it's entrenched.
Actually, most fortunes go to zero within a few generations. The “1% squared”—the top 0.01%—is not a monolithic group of people. I’d wager that 90% of the 0.01% had grandparents who were not even part of the 1%.
Rent seeking is natural. That's why we get progress.
Nobody would ever invest time and money to a business idea whose profits would get immediately competed away. Everybody would on the other hand invest into a business with guaranteed profits which cannot be competed away - ie. a monopoly.
That's producer's perspective. Consumer would on the other hand rather see competition among producers, because lack of competition leads to overpriced shitty products. However fierce competition leads to shitty and dangerous products too, because of need to cut corners and lack od funding for long term research (eg. current day airline industry).
So there must be a middle ground. Some degree of rents (profit which cannot be competed away) is necessary for progress and product quality.
There are several kinds of rents that I see.
1. Short term innovation monopoly These rents are usually short termed until they get copied by others. These are perceived to be fair and even if not, they have short life span, so who cares. Wait 5-10 years before the market catches up.
2. Rents from natural monopoly. Generally all network infrastructure falls under this because the first mover has great advantage over potential successors eg. by laying railroads, sewers, power grid or network cables in geographically optimal location. Other natural monopolies are eg. law or stuff which might harm you (drugs, pharma) - people prefer goods that everybody else uses and distrust smaller unknown alternatives.
3. Government blessed monopolies. For many industries it is more profitable to strangle competition than to better their products. Eg. patents, Mergers&Acquisitions, price undercutting and especially lobbying of regulations targetted against potential competitors - often in form of 'safety' regulations supposed to protect customers. Pharma industry would be a prime example.
4. Front running is another form of guaranteed income posing as legitimate business.
In finance: you are a banker and your client asks you to buy a stock for him. You buy the stock for yourself, which hikes the price and then you sell it to your customer at higher price.
In housing: you know that there is a massive trend of jobs concentrating in cities. You cheaply buy all land and houses in a prospering city, because you know that it will be needed by future generations. They will pay you huge rents later on. Nobody can stop you because your 'customers' are often not even born yet.
In both cases you seemingly offered your customer a service which they voluntarily paid you for, but something feels fishy about it.
All in all there are good rents and bad rents. How about distinguishing between the two and reversing the weird current tax system, which collects from the good ones (income, corporate and sales taxes) and giving to the bad bad ones (subsidies, redistribution).
Since often the government guarantees some company a monopoly, why shouldn't it pay for that privilege. Monopoly based taxation seems to me like quite a fair tax system.
In a very fundamental way, there is no such thing as "wealth creation", there is only wealth acquisition. Wealth is a zero-sum game.
No business actually makes money (well apart from a government mint:), but they do move it from elsewhere. No VC creates wealth - they get money from other people, perhaps in exchange for goods or services, but at the end of the day the total amount of money hasn't changed.
You have an apple seed. You plant the apple seed. You tend to the growing plant (soon a tree). A few years of work tending to the plant, and you get hundreds of apples every year.
No money is necessary. Wealth is about abundance. Money is just one type of scorecard.
Apologies for the strong tone, but the type of thinking that you just displayed has destroyed civilizations in the past.
You either already own or pay for the seed, the land and the man-hours to tend the tree. This both employs people and brings more abundance into the world.
If I have chickens and get more eggs than I would ever want to eat, each additional egg provides me less and less marginal utility. If you have cows and get more dairy than you would ever want, then each cup of milk provided you less and less marginal utility.
If I trade you a dozen eggs that have near zero marginal utility to me but lots to you, and in return you give me a gallon of milk that has near zero marginal utility to you but lots to me, then we are both enriched by this trade. That enrichment is wealth creation.
Wealth is not money.
If I spend 10 minutes scrubbing, polishing and fixing a rusty piece of whatever I found in the ground, assuming it's useful, I've created wealth, despite no bureaucrat, corporation or money ever being involved.
A tribe of cavemen with some animal skins and spears is more wealthy than a tribe with nothing.
This would be true in a purely deflationary economy with a medieval currency like physical gold (no paper notes on gold either). Saving would be rewarded and investment could typically only be profitable at someone else's expense. For most of history this was the case. But now that money is printed, wealth is positive sum. Everybody can win. The money that a VC makes from a business originally comes from credit, and the VC reinvests that new money to turn it into new credit eventually via central banks, and money is created recursively. It is not intuitive. People seem to assume the simpler gold-based model is how our economy works when it hasn't been the case for a while.
