Sunday, November 20, 2011

Understanding Ron Paul: Government Spending Vs. Private Spending

By Dan Beaulieu

 "I am an imperfect messenger, but the message is perfect"  –  Ron Paul

One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.

For this reason I present to you my series:  

Understanding Ron Paul

Government Spending

We hear about government spending daily, we hear it from radio hosts, TV pundits, from President Obama and we hear it countless times in the GOP debates. However, the government must spend some money, so what is good spending and what is bad spending? I honestly don’t believe that any other political figure understands this better than Ron Paul.

Essentially, when our government spends money, say, to create a jobs for instance. They go about it differently than the private sector would. As the private sector creates a job purely out of demand, the government creates a job simply to create work. This is counterproductive and actually creates job-loss in the private sector. To understand this notion thoroughly I offer a short chapter from a book written by Henry Hazlitt titled “Economics in One Lesson”.


(more chapters on youtube)

As Mr. Hazlitt illustrates, government cannot create a job without first taking one from the private sector. This simple notion can be easily proven through elementary mathematics, the government cannot magically create jobs. If the government takes money, for any purpose whether it be for foreign aid & war or be it research & development it is always at the peril of the tax payer and private sector jobs.

To reiterate, when the government takes money from the taxpayers pocket, it results in less money that can be spent as a consumer in the private sector. If your buying power is diminished then fewer products are sold and there is less demand for production. When production falls, layoffs ensue shortly after. Unemployment rises.

Ron Paul would decrease this by doing away with 5 extremely wasteful bureaucracies. Departments that when scrutinized are obvious failures and ultimately job destroyers.

Back to Understanding Ron Paul Index



  1. Milton Friedman has a great description of the four ways to spend money:

    1 You spend your own money on yourself.
    2 You spend other people's money on yourself.
    3 You spend other's money on yourself.
    4 You spend other's money on other people.

    1 gets you the absolute best value.
    4 gets you the worst value.

    Government is all about #4

    2.5 minutes that is well worth it.

  2. nick,

    liked the video. Short and to the point.