Ron Paul on the Morning Joe

RE: If government could create wealth, they would be self-funded

Do charities and not-for-profit educational organizations create real wealth and value in the world? Of course they do. Are they self funded? No, of course not. The fact that the benifit is not retained by the organization itself, but goes to others, does not mean it isn't creating wealth.

When the goverment, though taxation, redirects society's resources away from, well, whatever, and applies those resources towards educating our children, does it not create wealth and opportunity for all? Or do you think we would be a wealther people if we were ignorant?

The argument Ron Pual is using is one sided and tendentious. What he is pointing out is that economic decisions made by the government incur an opportunity cost: If government directs resources toward one enterprise or use, they must come at the expense of some other enterprise or use. The other uses are known as the "opportunity loss".
However, each and every economic decision, regardless of who is making it, represents an "opportunity loss." This applies to private economic decisions as well as governmental intervention. Ignoring the fact that the same holds true for privately made economic decisions is NOT an honest presentation of the actual economic dynamics.

To make the case that the government cannot possibly create wealth, one would have to maintain that the opportunity losses incurred by each and every government economic decision are always and without exception greater than the value obtained that decision. This case has not been made, and I doubt that it can be. And even if it is suspected that this is the net effect over all, there will always be specific cases where it will be reasonable to suspect that it isn't so.

Let's look at the specific case of unemployment: "any unemployment they "solve" can only be accomplished by reducing employment in another sector". This is simply not true. Some economic activities are more labor-intensive than others, and it is not hard to identify those that are. By redirecting economic activity towards labor intensive investments and away from those that are less so, jobs, if not wealth, can indeed be created. In fact, when politicians promise to create jobs, they are speaking about jobs for Americans, not global jobs. Jobs created by government spending always end up in some Congressman's district - not in China - and specifically benefit American job seekers, while private sector expansion does not necessarily do so. Public sector direction of investment intended to create American jobs at the expense of private sector investment in foreign economies is almost guaranteed to what it promises.

Ron Paul was not speaking Greek or French or Chinese, so what was so difficult for the 5 questioners to comprehend? His answers were straight forward and concise. I sense hostility. They know he is right, but they don't want to admit how the government is run by complete idiots they helped put there.

The concept of getting out of this recession and avoiding a depression is not rocket science. However, we are bound and determine to have history repeat itself because think outside the box.