I pretended to toss a ball into Henry’s outstretched hands. As Henry pretended to catch it, I said, “Let’s look at a situation that businessmen face every day. Let’s say we have to decide between putting some capital resources into use for production or putting them into use in an investment of equal risk but greater return. It’s a fact that this kind of decision is one of the most basic, but also the most far-reaching kind a businessman can make. It’s also a fact that all decisions of this kind are based on intangible factors—things a businessman can’t actually see. At best, he has to use his imagination—along with factual information, of course.”
Henry nodded, but remained silent.
I went on, “I wonder what would have happened if the ‘private capital’ you were talking about had stayed ‘private.’ Wait a minute! The bottom line here is that all capital starts out as ‘private capital.’ To become government capital, the government has to take it out of private hands.”
A big smile, more silence...and another nod from Henry.
“This is very hard thinking, Henry”, I said. “I don’t know how people are going to get the picture you are describing. As you said before, it takes a special skill.”
Henry responded, agreeing with me, “Again we must make an effort of the imagination to see the private power plants, the private homes, the typewriters and radios that were never allowed to come into existence because of the money that was taken from people all over the country to build the photogenic Norris Dam.”
This time, it was I who did the nodding, as I interjected, “Well, these aren’t be the only examples, maybe the most visible.”
Henry went on, “I have deliberately chosen the most favorable examples of public spending schemes—that is, those that are most frequently and fervently urged by the government spenders and most highly regarded by the public. I have not spoken of the hundreds of boondoggling projects that are invariably embarked upon the moment the main object is to ‘give jobs’ and ‘to put people to work.’ For them the usefulness of the project itself, as we have seen, inevitably becomes a subordinate consideration.”
“Hundreds is more than likely an understatement;” said I, “it is probably thousands, maybe hundreds of thousands of ‘make work’ projects. The whole system of spending you are describing is a fertile breeding ground for political corruption and almost unmeasurable waste.”
Henry chimed in with, “Moreover, the more wasteful the work, the more costly in manpower, the better it becomes for the purpose of providing more employment. Under such circumstances it is highly improbable that the projects thought up by the bureaucrats will provide the same net addition to wealth and welfare, per dollar expended, as would have been provided by the taxpayers themselves, if they had been individually permitted to buy or have made what they themselves wanted, instead of being forced to surrender part of their earnings to the state.”
I thought to myself, “I have to admit it. Henry is starting to make real sense.”
Henry nodded, but remained silent.
I went on, “I wonder what would have happened if the ‘private capital’ you were talking about had stayed ‘private.’ Wait a minute! The bottom line here is that all capital starts out as ‘private capital.’ To become government capital, the government has to take it out of private hands.”
A big smile, more silence...and another nod from Henry.
“This is very hard thinking, Henry”, I said. “I don’t know how people are going to get the picture you are describing. As you said before, it takes a special skill.”
Henry responded, agreeing with me, “Again we must make an effort of the imagination to see the private power plants, the private homes, the typewriters and radios that were never allowed to come into existence because of the money that was taken from people all over the country to build the photogenic Norris Dam.”
This time, it was I who did the nodding, as I interjected, “Well, these aren’t be the only examples, maybe the most visible.”
Henry went on, “I have deliberately chosen the most favorable examples of public spending schemes—that is, those that are most frequently and fervently urged by the government spenders and most highly regarded by the public. I have not spoken of the hundreds of boondoggling projects that are invariably embarked upon the moment the main object is to ‘give jobs’ and ‘to put people to work.’ For them the usefulness of the project itself, as we have seen, inevitably becomes a subordinate consideration.”
“Hundreds is more than likely an understatement;” said I, “it is probably thousands, maybe hundreds of thousands of ‘make work’ projects. The whole system of spending you are describing is a fertile breeding ground for political corruption and almost unmeasurable waste.”
Henry chimed in with, “Moreover, the more wasteful the work, the more costly in manpower, the better it becomes for the purpose of providing more employment. Under such circumstances it is highly improbable that the projects thought up by the bureaucrats will provide the same net addition to wealth and welfare, per dollar expended, as would have been provided by the taxpayers themselves, if they had been individually permitted to buy or have made what they themselves wanted, instead of being forced to surrender part of their earnings to the state.”
I thought to myself, “I have to admit it. Henry is starting to make real sense.”
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