Naked Economics: Undressing the Dismal Science pdfdrive com

Government has the potential to enhance the productive capacity of the
economy and make us much better off as a result. Government creates and
sustains the legal framework that makes markets possible; it raises our utility by
providing public goods that we are unable to purchase for ourselves; it fixes the
rough edges of capitalism by correcting externalities, particularly in the
environmental realm. Thus, the notion that smaller government is always better
government is simply wrong.
That said, reasonable people can agree with everything above and still
disagree over whether the U.S. government should be bigger or smaller. It is one
thing to believe, in theory, that government has the capacity to spend resources

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in ways that will make us better off; it is another to believe that the fallible
politicians who make up Congress are going to choose to spend money that way.
Is a German-Russian museum in Lawrence Welk’s birthplace of Strasburg,
North Dakota, really a public good? Congress allocated $500,000 for the
museum in 1990 (and then withdrew it in 1991 when there was a public outcry).
How about a $100 million appropriation to search for extraterrestrial life?
Searching for ET meets the definition of a public good, since it would be
impractical for each of us to mount his or her own individual search for life in
outer space. Still, I suspect that many Americans would prefer to see their
money spent elsewhere.
If I were to poll one hundred economists, nearly every one of them would tell
me that significantly improving primary and secondary education in this country
would lead to large economic gains. But the same group would be divided over
whether or not we should spend more money on public education. Why?
Because they would disagree sharply over whether pouring more money into the
existing system would improve student outcomes.