Tuesday, August 24, 2010

In what case government benefits more: when buying goods from other countries or via private businesses?

...via private businesses that import stuff into the country? they have to pay a tariff... but what about if the government buys goods ?In what case government benefits more: when buying goods from other countries or via private businesses?
The government is always better off going through private business. If nothing else, the owners/managers of the business they go through will be grateful for windfall profits and be happy to bribe the government officials, make campaign donations, etc.





Whether the country is better off is a completely different question. Here it is a question of beliefs and values as much as it is about facts.





Some argue on principle that the government shouldn't do anything itself that can be done by private enterprise.





Some argue the private enterprise can always do it better than the government (though Medicare gets better prices from the drug companies than do even the big insurance companies, and we all know about how effective private enterprise has been in reconstructing Iraq, etc.)





Others argue that the government should do it itself to save money.





Tariffs are a red herring. If the government imposes the tariffs, they get the proceeds from the tariffs. It is the other costs that matter more.

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