April 15 is behind us, and that gives a feeling of relief to those Americans who labored and toiled in 2015 to provide for themselves and their families while seeing billions of dollars confiscated from their earnings. (And, now they must keep records for years just in case they are later audited by the IRS.)
Ryan McMaken, editor of Mises Daily and The Austrian, says that it is not government taxing that that is the greater evil but what government does with the money once it has it, distorting the markets and causing misallocation of funds.
In “Four Reasons Why Government Spending Is Even Worse Than Taxes,” McMaken points out that once money is extracted from an owner in the form of taxes, the money leaves the realm of the marketplace and of market prices; and, it is placed at the whim of politicians who distribute goods and services according to the political power of interest groups.
He further condemns central banking as a great evil, noting that when central banks are present, there is essentially no practical limit on the amount of government spending that can take place. Central banks simply create money “out of thin air,” which results in inflation that destroys the purchasing power of savings, life insurance policies, CDs and other fixed-dollar investments. Inflation (and the fear of inflation) is the primary reason people buy gold and silver.
In reason #3, McMaken notes that government spending consumes scarce resources and distorts the economy. In short, when government gets involved in buying resources for make-work projects and other political schemes, it uses up and drives up the prices of valuable resources. A perfect example is light rail projects that costs billions of dollars but move only a tiny fraction of the people.
Reason 4, although not often discussed because of political correctness, is as insideous as any of the other three: government spending creates political dependency, which, in turn, strengthens the state as the spending creates vast coalitions of voters and interest groups that oppose cuts to governments programs. According to some estimates, 20 million Americans have free government cell phones. Try cutting that program!
Read McMaken’s piece here. It’s a short read and well worth the time.