When a government spends money, there are only three places that money
could have come from:
- Taxation -- by taking the money away from someone.
- Borrowing -- by temporarily taking the money away from someone, with a promise of returning it at a higher value.
- Inflating -- by printing money, which reduces the value of all the other money that people hold.
Of these, the last is the most regressive and pernicious. Not only does it
reduce the savings of the middle class, but it also causes people to think
they have more money than they really have.
Which one, do you suppose, do politicians choose most often? Right:
inflating and borrowing. That's because taxpayers feel the pain of
taxation most directly.
Seems like every handful of years, somebody starts yammering about
how much money candidates spend to get elected. About how that spending
is going up and up and up. And they claim that that's a sure sign of
Not likely. Look instead at the ratio of federal spending versus
spending by presidential candidates over several decades:
See how the ratio varies between
1 and 20.5 and 2.5? That's because candidates
spend in proportion to the power they'll have. If you want them to spend
less, expect them to do less and spend less of your own money.
UPDATE 2/8/2010: Sam Nelson of clevernamehere.com fame (which would let you guess his email address) noticed that I was plotting the wrong column from the DebtArticle.csv dataset. I've re-generated the plot, and included 2008 spending (which is for a partial year, so in your head, move the rightmost point lower). The graph is a little more noisy, but still serves to make my point.
Data sources: Federal spending and Presidential campaign spending.
Haha! xkcd notes that some problems are simply hard to solve. That
attempting to impose a solution is not necessarily an improvement. That
sometimes it makes the situation much, much worse."