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The Stimulus Error

This post by Arnold Kling is the most compact and powerful thing I've read recently.

I remain resolutely opposed to all government bailouts and to any "stimulus" package that increases government spending. The economy is already reeling from the credit crunch. The last thing it needs is for government to crowd out productive activity by squandering resources on alleged public goods.

Arnold guesses that about 500 people would have significant influence on how a stimulus would be spent:

The arithmetic is mind-boggling. If 500 people have meaningful input, and the stimulus is almost $800 billion, then on average each person is responsible for taking more than $1.5 billion of our money and trying to spend it more wisely than we would spend it ourselves. I can imagine a wise technocrat taking $100,000 or perhaps even $1 million from American households and spending it more wisely than they would. But $1.5 billion? I do not believe that any human being knows so much that he or she can quickly and wisely allocate $1.5 billion.

He is much too generous. I cannot imagine a wise technocrat taking even $1 of mine and spending it more wisely than I would. The technocrat does not know me, my situation, my goals, my desires. Only I do. It's a certainty that if my dollar is taken and spent by the government, I'll get less value than if I had spent it myself. The same is true for you.

I'm surprised that Arnold cast the hypothetical in the way he did. I cannot even conceive what it means, except in a comic-book-like way, to spend someone's money better than they would spend it themselves. Better by what standard? It's enormously arrogant to claim that the technocrat's goals are superior in any objective sense to the taxpayer's.

There are no collective goals. There are only the goals of individuals.

Tiny Island