3.2.3 The Economic Role of Government Spend
The economic role of government spend is to meet people’s needs and support economic growth; it is tax-funded, so it is contentious
A government’s primary objective in spending money should be to serve the people. The cost of maintaining law and order is directly related to its legal powers, as described in chapter 5; defence spending is also discussed later (7.4.6.3); but a government can also choose to make other benefits, services and facilities available. All these categories of spend compete for a share of national wealth, which the government funds through taxation – as described in the next section (3.2.4).
Levels of spending are decided by politicians, as described later (6.7.1), but the following sub-sections examine the economic role of government spend:
● Apart from defence and law and order, a government can choose to fund some other public services for people’s benefit (3.2.3.1). These can include health and education, for example, which it can fund in a variety of ways.
● It can make investments in infrastructure and in research, to help all sectors of the economy to function better (3.2.3.2).
● It can make benefit payments to people, to protect them from economic hardship (3.2.3.3).
● Some government spend can be seen as displacing private enterprise and reducing its competitiveness (3.2.3.4).
● The scope of government spend is contentious, as compared to letting people making their own choices about how to spend their money (3.2.3.5).
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