Wednesday, July 14, 2010

Wasting Resources 101

Jeffrey Miron reports:

Government stimulus spending is a contentious issue right now in Washington. But the $7.2 billion in the last stimulus package for extending high-speed Internet access is just beginning to be spent, and the beneficiaries could not be happier.
Of course the beneficiaries are happy; they are getting a gift from the rest of the country. But why is such a gift appropriate? The fact that private internet providers have not extended their networks to these areas means the benefits – the amount consumers would pay for the service – do not exceed the costs.

How, then, does it stimulate the economy for the government to waste resources?


  1. Don't these liberals realize that by making living out in the boonies cheaper than is should be that they are subsidizing sprawl and GLOBAL WARMING??

    Oh my.

  2. Typo -- That should have read:

    "cheaper than IT should be".

  3. Unfortunately, things like this give people like Paul Krugman hope and ammunition in their arguing. He can easily point to this and say "This is why the stimulus efforts have failed! It's not enough and it's being spent on the wrong stuff!"

    Nevermind that as a Keynesian, PK just wants to target aggregate spending so it technically shouldn't matter to him what the money gets spent on.

    Meanwhile, the James Galbraith-wing of the Keynesian school will hear this and say, "Say what you will, but those are people who didn't have internet before and now they do-- that's progress!" and then Bob Higgs-type people might point out that it is, in fact, wasteful in economic terms and so the JG-types would say, "Not everything is measured in economic terms! There is social value, too."

    And on and on it goes. No way to reason with these folks.