out of what? Hazlitt states this is what happens when government increases spending out of new money. (164) This is when the government spends newly created additions to the money supply. According to Buechner this point depends on recognizing that the government is essentially a consumer. (Recording) Now this is a very controversial point in economics today economists almost like a plague will deny this. For the purposes of the is paper I’m going to insist on it and I’m not going to try and persuade anybody because I think it’s really pretty obvious unless your totally committed to a statist point of view. The government is a consumer there is very little that the government does that can be interpreted as adding to the economies productive capacity. Sometimes the government does build a bridge or a highway, and that is an addition to productive capacity kind of, but your stuck with this problem when the government does it-it costs five times as much, and takes ten times as long as it would have done if done by a private profit making business. So how do you interpret that? Is that really an addition to capacity? I mean I find that very puzzling. In any case it’s marginal. According to Buechner ninety five percent of what the government does is consumption. (Recording) Well that’s one way to redirect productive capacity away from producing capacity to producing consumer goods. Here is another method, phantom goods. Anything that can be done to require and, or generate the production demand for phantom goods. According to Buechner the definition of a phantom good: is a good that makes no objective contribution to human life but is required by law. (Recording) For example: Suppose the census every 10 years required you fill out forms of an approximate book length. Suppose that in the process you were required to make complex calculations required in differential calculus. Suppose you had to assemble and rea...
