Here's the problem: you're asking governments to have first dibs over the actual owners of the capital. The whole reason that companies are doing buybacks is that they cannot turn all of their money from $1 into $1.05 anymore, and they give it back to shareholders to go figure out how to get returns. When the government uses it, they turn $1 into somewhere between -$0.20 (wars) and 0.10 (infrastructure with myriad bribes/kickbacks along the way). I don't think it's a good idea to encourage the later over having people who stand to experience the consequences of making bad investments (the rightful owners of the money) make investing decisions.
That money doesn’t just disappear, right? It gets spent to private contractors on all too often outrageous terms but it goes back into the economy, too.
The velocity of MZM sits at around 1.3 right now, so it goes back after almost a year of being wasted. But who it goes to after that year matters as well. I would prefer Larry Page get the money because he will be able to intelligently allocate it. Or a productive poorer citizen get it to consume wisely. The myriad rent seeking morally defunct (and likely intellectually defunct) people who receive the government kickbacks are a bad set of people to end up with the money after a year. They invest poorly and spend frivolously. But sure, after several years, the money that didn't end up in the China's and the Cartels' pockets will probably back in circulation among the intelligent members of the economy.
