Posts Tagged ‘Government spending’

Financing Good Deeds

Wednesday, May 8th, 2013

Here is the question. How can we as a society in the United States maximize the good things we are able to do with our wealth? One of course starts to think about the efficiency of public vs. private support of good deeds, but let’s set the efficiency issue aside for now and just deal with the main question: how can we maximize good deed creation? That is, how many good deeds can we afford?

I would propose that somewhere there is a mathematical response to this question. That is, I believe if we all create wealth without regard to worthy causes, that would not maximize the good things we are able to do. But the converse is also true – i.e., if we use all our wealth to do good deeds we will soon find we have no wealth, and realize that investment of our wealth is necessary to further grow this wealth and thus our ability to do more good things. The optimum point lies somewhere in the middle.

This presupposes a graph, a curve, with wealth creation on the x axis and good deeds on the y axis.

Forgive the standard bell-type curve. We don’t really know what the curve would look like, because no one has yet done the work. But isn’t this what our present day political discussion is all about? Some people think a lot more wealth can be taken out of the economy and used for purposes that do not create further wealth. Others think we are near that inflection point where taking more dollars out of investment and using them for consumption – i.e., doing good deeds – will push us over the top, like a roller coaster, and start us on the downward path toward less wealth and thus less ability to do good things.

In our society today it is unfashionable to do math. But maybe we need to do these calculations.

Government Spending

Sunday, May 20th, 2012

Federal government spending is of necessity limited by the amount of economic growth in the country.

A FORMULA FOR GOVERNMENT SPENDING

Saturday, March 20th, 2010

Some bright economist ought to give us a formula with which to analyze how much wealth and income can be taken out of the productive economy and used to deal with non-economic needs in a society. It seems obvious that any country has enough wealth to do a bit of non-economic investing, such as defense, justice systems, and welfare. The issue is to define the “sweet spot”.

While any country can do a bit of investing to satisfy other needs, it also seems logical that for each country there is a point at which such investing takes enough resources away from the productive economy that not only will the productive economy decline, but with this decline the availability of monies to do those unproductive but necessary things will shut down as well. This is what I call the “sweet spot”.

It is a complicated and, for that reason, a fun problem. For one, you could not create this formula with an analysis fixed in time, as governments seem to be good at borrowing against the future. So you would have to consider the cumulative effects over time, and the sweet spot would be defined not only as a per cent of GDP and a per cent of accumulated wealth, but also as a place in time in the future.

A second interesting consideration is how much of the non-economic funding is to be done by government vs. by the productive (i.e., private) sector. This would involve a whole sub-formula, it would seem, and a “loop” that analyzes whether to maximize the public or private sector funding of these needs first, using the other source as an alternative once the primary source stops growing.

But what a great tool it would be! We could see when things are projected to shut down per the formula, and then just argue about the assumptions shaping the inputs. I see that as a lot more clarity of discussion than we have now in our society. And that would be good!

Jim Hirshfield