A Case Study of How Government Handouts Undermine Human Decency and Social Capital
April 3, 2012 1 Comment
Why is big government bad for an economy? The easy answer is that big government usually means high tax rates, and this penalizes work, saving, investment, and entrepreneurship. And perhaps some of the spending is financed by borrowing, and this diverts money from private investment.
That's a correct answer, but it's only part of the story. In most cases, there is added damage because politicians spend money in ways that further undermine incentives to produce.