So much for the "risk-free" nature of Treasuries

[Kshartle]

Fist off the government steals from people based on their income which discourages producing and earning...thereby destroying what otherwise would be. Secondly it keeps part of the cash for itself rather than getting a real job and producing something of value, more destruction. Third it hands out the money to it's friends as contracts, overpaying for something peopel might want or buying something they don't want at all, more wasted resources. Fourth it hands it out to it's armies to go around invading and bombing, do I need to point out how destructive this is? Lastly you've got all the welfare checks and unemployment, social security etc, where it's specifically paying people to not work and contribute.

Some of you might refer to the reality as political bias. That's because you are politicaly biased. You believe it's good to have political masters who control society so you can't look objectively at the obvious. Zero wealth creation comes from government. Every dollar they spend as opposed to it's rightful owners makes us all poorer in total.

Put away your political bias and read some Harry Browne, particularly "You can Profit From a Monetary crisis". He explains it all quite clearly.

[Gumby]

Fist off the government steals from people based on their income which discourages producing and earning...thereby destroying what otherwise would be.

Yes, taxes remove savings from the private sector. We all know that. However, in the case of the Erie Canal, the state government (a currency user, mind you) issued bonds and paid out $7 million (and some whisky) to mostly Irish workers who spent that money on more whisky and some potatoes. The government then charged a toll on its canal locks and quickly earned enough to pay back the bonds. Within a few years, the investment in the canal created more wealth than the State could have ever possibly imagined. It ended up being one the most significant creators of wealth for New York City and the Midwestern US, ever — and the private sector was unwilling to step forward to do it.

Secondly it keeps part of the cash for itself rather than getting a real job and producing something of value, more destruction.

Not entirely sure what you mean there. The US doesn't maintain a surplus. It spends every nickel it finds. Government workers typically have low savings rates and spend their salaries on private sector goods and services — not unlike those Irish canal diggers.

Third it hands out the money to it's friends as contracts, overpaying for something peopel might want or buying something they don't want at all, more wasted resources.

You are talking about corruption — as if corruption is something only limited to governments. But, yes, governments are corrupt. You haven't taught us anything new.

Fourth it hands it out to it's armies to go around invading and bombing, do I need to point out how destructive this is?

More obvious observations. Yes. We know. But, we are talking about if governments can also create wealth — despite all their obvious shortcomings.

Lastly you've got all the welfare checks and unemployment, social security etc, where it's specifically paying people to not work and contribute.

Some people legitimately can't contribute, but I guess you couldn't give a sh*t.

Some of you might refer to the reality as political bias.

We were talking about the Erie Canal as being an example of a government creating wealth. We weren't talking about the obvious negatives of government. Try to stay on topic.

You believe it's good to have political masters who control society so you can't look objectively at the obvious.

I'm objective enough to realize that the Erie Canal created an enormous amount of wealth in this country. That's all I've said. Please don't put any other words in my mouth.

Zero wealth creation comes from government. Every dollar they spend as opposed to it's rightful owners makes us all poorer in total.

Please explain how a state government — a currency user — creating the Erie Canal by issuing bonds, and paying them back with excess profit and enabling New York City to become the greatest shipping hub of America, while opening up the Midwest for investment and settlement causes us to be poorer. To me that sounds like a huge creation of wealth.

[Kshartle]

The challenge in good economics is always to see what is invisible. Everyone can look at the bonds the government sold (not issued), see that they used the proceeds to build the canal, and paid off the bondholders with the proceeds from the tolls charged to happy merchants. You can see that and conclude that here is genuine wealth creation. The government did it, therefore the government had to do it, private enterprise wasn't going to to do it, we are wealthier because the government took action. Bam! Case closed. 

This is bad economics. This is flase. There is a huge part of the story missing.

There are so many missing peices it's hard to know where to begin.

The government's taxing of income (which destroys income) is a primary reason wealthy investors flock to munis (these were muni revenue bonds right?). This lowers the borrowing cost to the government against private enterprise. This is NOT NOT NOT a real advantage gained by the government legitimately due to it's skill in the endevour. It is STRICTLY a punishment to it's competitors.

When it's not a revenue-bond muni and the government is again borrowing to fund it's schemes it is backing the project with the ability to tax the dog snot out of everyone or simply print money to pay the bond off. These magical abilities of the government DO NOT HELP US. They provide NO benefit because they are gained by destruction of we want free and voluntarily.

A private competitor couldn't possibly build a competing canal or out-bid the government for these resources because they can't use violence to back up their bids. Again, there is no benefit to use because the violence is destructive already. There aren't enough resources and money available for a competitor and the free and voluntary activity is crowded-out by the government monopoly.

You have to look beyond the obvious and understand a lot more economic principles at work. There are plenty more I didn't mention but the ones above are a good start. I don't have the patience to turn this into an entire econ lesson.

You have to see what is unseen. When you do that you start to understand economics and what is going on. This isn't directed at anyone in particular. Many of you get this stuff, maybe everyone here gets it but boy then it sure is ingnored constatnly.

[Gumby]

The challenge in good economics is always to see what is invisible.

Well, you do like to see things that aren't really there.

So, you've sort of explained that the government possibly raised $7 million in an unfair fashion. But, you haven't explained how this evil $7 million investment in the canal supposedly made our society poorer. You said...

Zero wealth creation comes from government. Every dollar they spend as opposed to it's rightful owners makes us all poorer in total.

So, according to your math, the government made us poorer by digging a $7 million ditch, but you seem to forget that the ditch lowered shipping costs to the Midwest by 90% and was responsible for hundreds of billions of dollars in wealth creation as it opened up a link between the Midwest and New York City. It was one of the greatest creators of wealth, ever. It made New York City into the financial capital of the world.

Clearly governments are capable of creating wealth — as the Erie canal proves. That's all I was trying to show. All this "invisible" stuff you mention is just political rhetoric and nitpicking that can't erase the hundreds of billions of dollars in wealth creation afforded by the ditch canal.

Yes, governments have a LOT of flaws, but they are clearly capable of wealth creation. That's all I was trying to say.

[Kshartle]

All this "invisible" stuff you mention is just political rhetoric and nitpicking that can't erase the hundreds of billions of dollars in wealth creation afforded by the ditch canal.

Political rhetoric and nitpicking. Cleary that's what it is.

[Pointedstick]

Kshartle, it's like you're trying to ignore the canal's benefits because you don't like the entity that organized the construction and how they paid for it. Aren't those separate issues from any economic benefits provided by the canal's creation? Can't you at least acknowledge the benefits while saying you don't like how it was done?

[Kshartle]

Kshartle, it's like you're trying to ignore the canal's benefits because you don't like the entity that organized the construction and how they paid for it. Aren't those separate issues from any economic benefits provided by the canal's creation? Can't you at least acknowledge the benefits while saying you don't like how it was done?

Don't like the entity?

If the mob robbed you and set up a lemonade stand would you pretend it created a wealth-generating business?

You can't separate the end product from the means used to secure the funding. It's not about not liking anything. It's about a rationale examination of the desructive effects of this entity. It's not just another economic player. It's not another corporate form. Ignoring the effects of the violence needed to lower the funding requirements or drive up the cost to competitors is to miss the reality of what's occuring.

You think government is responsible for the canal? It ROBBED everyone to make it. By ROBBING people and handing the spoils to it's friends via contracts, it cuts out competition, points to it's ill-gotten gains and says "look what I did for you", vote for me, love me, support me yada yada.

The canal is nice.

How many other canals and innovations and enterprises were crushed because the taxes were too high or the government crowded out their funding by using violence to lower it's borrowing costs AT THE EXPENSE of free and voluntary people?

You need to understand the economic principles and the effects of the violence. If you just get wowed by a canal and point to the government stamp on the side you don't even know what is happening. You don't understand how ridiculously expensive the canal is how much richer everyone would be if the government hadn't been there to build it.

Is it better to have the canal than welfare payments? Yeah. But that doesn't mean the government hasn't destroyed wealth in the process or made us all poorer. The way it goes about securing it's funding and allocating resources inefficiently is completely and utterly destructive, canal included.

How can you only look at 50% of the canal's creation and think the case is closed? Look at the other 50%. Look a little deeper.

The government never, ever creates wealth. At best it redistributes and only destroys a portion. At best there is at least something of use left over and not just political consumption handouts. We're still poorer afterwards though.

This is like a guy coming over with a sledgehammer and the intent of destroying your house. One of his swings takes out a wall you wanted down anyway and you say "gee thanks for that".

Does anyone else here get this?

[Gumby]

If the mob robbed you and set up a lemonade stand would you pretend it created a wealth-generating business?

No. But, if a mob robbed me and made a business that created the world's largest shipping hub and expanded the navigable Western US, I'd have no choice but to admit that they created a LOT of wealth.

It's not about not liking anything. It's about a rationale examination of the desructive effects of this entity. It's not just another economic player. It's not another corporate form. Ignoring the effects of the violence needed to lower the funding requirements or drive up the cost to competitors is to miss the reality of what's occuring.

Your arguments don't hold water (bad canal joke). The private sector wanted nothing to do with the canal. The government literally built a wealth-creation ditch that the private sector had no intention of building.

You think government is responsible for the canal? It ROBBED everyone to make it. By ROBBING people and handing the spoils to it's friends via contracts, it cuts out competition, points to it's ill-gotten gains and says "look what I did for you", vote for me, love me, support me yada yada.

What competitors? The private sector didn't want to build the canal. They to tried raise the money and failed!

The canal is nice. How many other canals and innovations and enterprises were crushed because the taxes were too high or the government crowded out their funding by using violence to lower it's borrowing costs AT THE EXPENSE of free and voluntary people?

How many other canals or other enterprises? Again, the private sector didn't have any interest in building a link to the midwest. The private sector entirely abandoned the idea.

You need to understand the economic principles and the effects of the violence. If you just get wowed by a canal and point to the government stamp on the side you don't even know what is happening. You don't understand how ridiculously expensive the canal is how much richer everyone would be if the government hadn't been there to build it.

Sorry, but exactly "how expensive" was the canal was for our society? The canal cost $7 million — potentially crowded out hypothetical canal competitors who went on to build successful railroads anyway — and the canal created hundreds of billions of dollars in wealth for New York State and the Midwest. Unless you can prove that the canal cost our society hundreds of billions of dollars and made New York City "poorer" you are just making a very weak argument with nothing to back it up.

Is it better to have the canal than welfare payments? Yeah. But that doesn't mean the government hasn't destroyed wealth in the process or made us all poorer.

Well, you certainly haven't proven that the Erie Canal made us "poorer". And I don't know how you can. The Erie Canal may have been the greatest wealth-bulding accomplishment of the 19th century — and its effects are still felt today as New York City is now the financial capital of the world.

How can you only look at 50% of the canal's creation and think the case is closed? Look at the other 50%. Look a little deeper.

Because the creation of the canal opened the Midwest for settlement and made New York City into the world's financial capital. It's a very big deal.

The government never, ever creates wealth. At best it redistributes and only destroys a portion.

Except when it creates a canal that creates hundreds of billions of dollars in wealth.

This is like a guy coming over with a sledgehammer and the intent of destroying your house. One of his swings takes out a wall you wanted down anyway and you say "gee thanks for that".

If he knocked down my house and built an empire, I'd have no choice but to admit that he created wealth.

[fnord123]

I am a pretty strong supporter of free markets and generally think government screws up much more often than it helps. That being said, assuming the Erie Canal bonds were paid by tolls on the canal itself, it seems to me Gumby has made a pretty strong case for it being an example of government providing a net benefit without the tax drawbacks that Kshartle seems to rest most of the argument on.

Arguing that the government never helps reminds me of myself 25 years ago

[Gumby]

an other great "hit and a miss" VS "miss and a hit" argument between gumby and kshartle.

government can create wealth ...eventually... but the ripple in a pond effect of using coercion and force to do so, spread negative effects far further and delay that wealth creation far far longer than the government optimists seem willing to consider.. as i said at the top of the page "adequate at best" seems to be the very best it can do..

it didn't happen this way here, but knowing the nature of government.. it is easy to imagine that in the alternate universe where the canal wasn't dug by government and ... when the market did finally demand it (however long that took) and it got built by people that wanted and needed it, that it worked out better payed for itself/created wealth sooner, caused less political corruption and in general was better than the "maybe adequate" version we got {forced on us}.

Not sure what you mean. The canal was an instant success the day it opened. There was no delay in wealth creation. It immediately reduced travel time and lowered the cost of shipping by 90%. The private sector was unwilling/unable to attempt such a project. If your argument is that it could have been better, you could say that about anything.

Anyway, all I was trying to show is that governments can indeed create wealth. I never said it was the best creator of wealth.

[Kshartle]

Gumby has made a pretty strong case for it being an example of government providing a net benefit without the tax drawbacks that Kshartle seems to rest most of the argument on.

What tax drawbacks are those?

You understand when non-government individuals and organizations try to borrow money they have to pay interest rates 30+% higher than the government because the people getting the interest get taxed on it? The bulk of the people buying the bonds are in the highest tax brackets and state taxes can push this even higher. The government also employs and army of tax collectors so it can secure it's bonds and get lower rates, not based on actual competence but based on the fact it can rob people to make good on it's bonds.

The government didn't build the canal. Do you think the government supplied all the food, raw materials, labor etc. If they purchased it from non-government sources you can't ignore how they got funding. If the original plans and survey and all the rest were done by government officials who was paying their way the enitre time? If a legitmate business or group of business do all this they have to cover expenses themselves. Nothing is free. There is no free lunch. Where do you think the government gets the money to sit around and think up schemes? From taxes. From stealing.

Anything the government does that looks like something halfway useful (which is rare) still requires all kinds of destructive acts just to start the funding. It costs the entire population and society far more due to their persasive actions up front than you're ever going to get out of the project. They are spending other people's money in a way those people don't want. This is the very definition of wealth destruction. Money and resources are squandered on things not desired enough to pay the price for the end product.

There is no free lunch. Government officials are less competent than business men, except when it comes to theft and force. They do not have the same profit motivation so they will be more wasteful of resources. The things they do they do not becauase the market demands it. The market demand and resulting profit is what demostrates the value. When something is done with stolen money because a few people who are not paying for it think it up it wastes wealth.

If some project is going to benefit people and be profitable then absent the group of coercive individuals humans will do it, it will be superior and will use fewer resources and be funded voluntarily and not with the destructive force of violence.

It's difficult to understand this stuff until you really think about it. 13 years of training in government schools and non-stop propaganda have made taxes and government intrusion and force in our lives something that we don't even notice. You almost have to imagine a world without it, where everyone is doing things voluntarily and then you show up and try to convince them how much better they'll be off with this organization in place. Try to convince them that you're going to empower a small group of people to take their property at will for the greater good and spend it on what they think is best. You would be looked at as insane. That's where we're at. It's the statrix.

Nevermind. Government creates wealth. I can't understand why the Soviet Union was so poor with all that government spending.

[Kshartle]

If the government taxing removes enough money and resources so that McDonalds is not created but they spend it on making What-a-burger would you guys say government created wealth? This is the best they can do. Take the resources away from something and produce something much less.

[Gumby]

You understand when non-government individuals and organizations try to borrow money they have to pay interest rates 30+% higher than the government because the people getting the interest get taxed on it? The bulk of the people buying the bonds are in the highest tax brackets and state taxes can push this even higher.

A good portion of the Erie bonds were sold to British financiers, overseas, who were already excited about Canal Mania. Hard to worry about those non-citizens hypothetically getting taxed very much on private bonds, if they were taxed at all.

The government also employs and army of tax collectors so it can secure it's bonds and get lower rates, not based on actual competence but based on the fact it can rob people to make good on it's bonds.

The Erie bonds paid ~5% - 6% interest and were very popular since the government was behind the project. It implies that people didn't have faith in private firms to accomplish the monumental task. No private firm had ever accomplished something of that magnitude at the time.

The government didn't build the canal. Do you think the government supplied all the food, raw materials, labor etc. If they purchased it from non-government sources you can't ignore how they got funding. If the original plans and survey and all the rest were done by government officials who was paying their way the enitre time? If a legitmate business or group of business do all this they have to cover expenses themselves. Nothing is free. There is no free lunch. Where do you think the government gets the money to sit around and think up schemes? From taxes. From stealing.

At most, the government "stole" a few million dollars (you've barely proven that it stole even that much). The canal reaped wealth for the nation beyond anyone's wildest dreams — hundreds of billions of dollars. Sounds like a pretty amazing lunch.

Anything the government does that looks like something halfway useful (which is rare) still requires all kinds of destructive acts just to start the funding. It costs the entire population and society far more due to their persasive actions up front than you're ever going to get out of the project.

If this is the crux of your argument, you would need to show that the "cost" on society is greater than the hundreds of billions of dollars in wealth created by the project (i.e. making New York City a financial capital and opening up the midwest for settlement).

They are spending other people's money in a way those people don't want.

How so? The Erie Bond holders were very excited about the project. The Erie bonds were very popular speculative investments likely because people lacked faith that a private firm was capable of such a monumental project at the time.

This is the very definition of wealth destruction. Money and resources are squandered on things not desired enough to pay the price for the end product.

Again, you're making up history. The Erie Bonds were extremely popular and the buyers were cheering on the project. It was an offshoot of Britain's speculative "Canal Mania" at the time.

It's difficult to understand this stuff until you really think about it.

It's also easy to get caught up in anti-government punditry if you don't open your eyes and recognize that occasionally the government can accomplish something. I never said the government is awesome or amazing at creating wealth. I simply was trying to point out that the statement of the government never creating wealth is obviously incorrect. Obviously if the private sector is willing and capable, it would probably do a better job.

If the government taxing removes enough money and resources so that McDonalds is not created but they spend it on making What-a-burger would you guys say government created wealth? This is the best they can do. Take the resources away from something and produce something much less.

So, it sounds like you've changed your argument from "governments never create wealth" to "governments create less wealth than the private sector would". I suppose that's a better sound bite because now you are dealing with a hypothetical that can never be proven or disproven. Of course, that's a logical fallacy (pick one):

http://en.wikipedia.org/wiki/Counterfactual_conditional
http://en.wikipedia.org/wiki/Appeal_to_probability

[Pointedstick]

I recognize this discussion. It's a classic example of what happens when a deeply-held ideology crashes headfirst into a piece of reality that doesn't support it.

Look, Kshartle. We're not trying to say that the government is wonderful or perfect or is always a boon to society or always creates wealth. Nobody's arguing for a centrally-planned Soviet-style bureaucracy. But the Eerie Canal looks like about as good an example as you can possibly find for the government not doing any of the things you decry:

• Construction was financed through voluntary bond sales, not taxation
• Construction itself was done by private-sector companies
• The bond yields were in line with normal interest rates of the era, not wildly depressed
• The bond payments and principal were all paid off with toll revenue collected from users, not taxation
• The net result was an explosion of private-sector economic activity

You say they coercively steal people's money? In this case, they raised it through voluntary bond sales. You say government borrowing never produces a profit and so the bonds need to be paid off through taxation? Not in this case, where voluntary user payments beyond cost (i.e. profit) were sufficient and no taxes had to be raised. You say they had to point guns at people to get them to accept the bonds? It certainly doesn't appear that way since the bonds were popular and competitive with other offerings. You say they always destroy wealth? In this case, they created a piece of infrastructure that seems to have been the backbone for a lot of privately-created wealth.

Now, government messes up most of the time. It usually destroys wealth. It coercively takes people's money and destroys their stuff. But that's not what it did in this case. And to deny that is just trying to make reality fit into your ideology. You can acknowledge this one specific example without your entire belief system falling to pieces.

[Lowe]

Couldn't one make the argument that everything destroys value compares to a hypothetical superior alternative?

It sounds silly, right, but I think it’s true.  Value that could have been but was not, is value that is lost.  That is where we get the notion of opportunity cost.

Using force to divert capital implies a degree of certainty that one’s actions will have a good result over the alternative.  As a rule that certainty is greater than the certainty one needs to act oneself, without coercing others.  I think this degree of certainty is always unfounded.  There were projects like the Canal, planned by the Soviets and built by collective labor.  Some created valued products.  How has history favored the certainty of Soviet planners?

The question wasn't whether the government was a superior creator of wealth. The question was whether the government could create wealth or not.

I agree that public works projects generally create value in the absolute sense.  No one would push for them, if that weren’t true.  H/e that is not a meaningful question.  The question of whether the state creates value is subtler, even in the example of the Canal.  The alternative to a state-funded canal, whatever that might have been, could only have existed if the incentives were different.  What were some of the incentives to a businessperson considering a canal?  If we understand that, maybe we’ll understand why these people did not invest in private canal.

Was it possible that provincial and municipal gov’ts might toll a canal, even if the private sector built it?  That doesn’t sound farfetched, and court cases are expensive and stressful.  Court cases in themselves may be in part why private plans for a waterway had been less ambitious than the final plan, and had made greater use of rivers.  I bet building a canal is a great way to get sued, unless you’re the state.

If the provincial gov’t does have the power to build a canal, then why should an investor do it himself, anyway?  Instead of paying for it by his own means, he can lobby for it.  He gets what he wanted, subsidized by other taxpayers, and the governor looks like a genius.  From the little I read on Wikipedia, it sounds like this happened virtually from the beginning.  Private financing not being taken seriously, would not be a surprise.  Successful businesspeople rarely get that way by acting like the state doesn’t exist.

All-or-none statements like that are easily disproven when you look at the Erie Canal. Sure, there can always be something better, but at the time, private funding didn't materialize for a shipping link to the West — despite the fact that many tried. Anyway, you have to have some pretty deep political biases to look at the Erie Canal and claim that the government can't create wealth.

I don’t agree with Robert’s statement that gov’t bonds can’t be compared with private bonds.  I don’t see a reason they can’t be.  The bonds just have different risks.  However, examples like roads or the Erie Canal are not rebuttals to Robert’s claim that the state doesn’t create value.  Value creation is an optimization process by which, hopefully, we find the best among a set of alternatives.

A free market does this through an ecosystem of private interests competing peacefully.  A mixed economy does it through an ecosystem of private and public interests competing sometimes peacefully, sometimes violently.  The question of whether the state creates value is the question of whether the mixed economy does better than a free market.

[Gumby]

However, examples like roads or the Erie Canal are not rebuttals to Robert’s claim that the state doesn’t create value.  Value creation is an optimization process by which, hopefully, we find the best among a set of alternatives.

I agree with much of what you said, except this. Maybe I'm not understanding you, but what about the regional shipping process wasn't optimized in terms of value? It seems like almost everything was optimized. Shipping/traveling costs were reduced by 90% and it greatly facilitated the building of the American empire.

[Kshartle]

In this case, they raised it through voluntary bond sales. You say government borrowing never produces a profit and so the bonds need to be paid off through taxation? Not in this case, where voluntary user payments beyond cost (i.e. profit) were sufficient and no taxes had to be raised. You say they had to point guns at people to get them to accept the bonds? It certainly doesn't appear that way since the bonds were popular and competitive with other offerings.

I've already explained how the government is able to lower it's borrowing costs making it's borrowing for an effort cheaper than it appears to be. The costs are borne by others and you're not counting them.

If they tax legitimate business non-government bonds then the borrowers have to offer rates 30-50% higher. It makes it a lot harder to fund a program.

If they secure their debt with the taxpayers then they have lowered their costs not due to an assement of the competence of the program managers or the potential of the project but instead on their ability to steal. I mean right now they borrow at 2.5% to send out welfare checks. You think that's based on some type of legitimate business reason?

I'm not an expert on the canal nor do I care to be. None of you are either. You guys know probably a drop about it and aren't in a position to claim it created wealth. You see only a fraction of the picture. You don't even take into account the funding beyond a bond for sale and purchased and paid on. 

It's fine. Even if by some miracle the government accidently caused wealth creation with the canal it would be like saying Buffalos are white because 1 in ten million are white. Jesus who gives a rip.

Try to look beyond the surface of everything is my only plea. Sluffing off the recognition of indirect costs and all the other effects of violence as some political stance is just putting your heads in the sand.

I don't say government and violence are bad for us because I despise it, I despise it because it's bad for us. Understand what it is and what it does and what it costs us in standard of living and you'll agree.

Not trying to be too ranty guys. It's frustrating to explain the hidden costs (or at least a portion of them) and have them ignored in repeated posts like they don't exist. They're hidden so you have to look for them, think about them, and understand the principles at work to know they exist. The mafia relies on you not seeing them to keep it going.

I mean next I'm gonna hear that slavery increases wealth. Anyone wanna take up that? Many of the same principles at work.

[Kshartle]

government can create wealth ...eventually... but the  ripple in a pond effect of using coercion and force to do so, spread negative effects far further and delay that wealth creation far far longer than the government optimists seem willing to consider.. as i said at the top of the page  "adequate at best" seems to be the very best it can do.. 

it didn't happen this way here, but knowing the nature of government.. it is easy to imagine that in the alternate universe where the canal wasn't dug by government and ...  when the market did finally demand it (however long that took) and it got built by people that wanted and needed it, that it worked out better payed for itself/created wealth sooner, caused less political corruption and in general was better than the "maybe adequate" version we got {forced on us}.

Not sure what you mean. The canal was an instant success the day it opened. There was no delay in wealth creation. It immediately reduced travel time and lowered the cost of shipping by 90%. The private sector was unwilling/unable to attempt such a project. If your argument is that it could have been better, you could say that about anything.

Anyway, all I was trying to show is that governments can indeed create wealth. I never said it was the best creator of wealth.

most of your wealth creation is the counting of the straight dollars/bonds in and out, and using only that measure the pay back on the government project sounds quick,  to me it seems like looking at a row of dominoes being knocked down and only counting how long it took for the first three to get set back up,  i don't know the actual historical repercussions of the canal, but what i am hinting at is all the other dominoes that follow, whose cronies got the the contract ? whose union gained political power and in financed an election with the money from the job?, were the people this job consolidated power into the hands of corrupt? what other government boondoggles did those people engage in that didn't pay back or benefit anybody? etc etc etc. 
if the use of force creates corruption, misallocation, the consolidation of power in the hands of the corrupt, and promotes the future additional use of force by the same sort of men for less worthy causes then yes the pay back will or did still happen, but the unmeasured toll is much higher than the dollars out dollars in math would show

By God I didn't even start to get into all these costs. There is no free lunch. There is a cost to the violence. It's a much bigger bill than anyone ever sees or can measure. You have to understand real economic principles and not just count up dollars like an accountant to understand why government is always a destroyer and never a creator.

[moda0306]

Is the private sector a creator? 

It destroys nature and replaces it with one person's preferred condition, to the detriment of the ecosystem and other people who may use that land in a more balanced fashion.

I mean we can play this game all day long. Not just with government, but anyone trying to rape the world around them for profit.

[Pointedstick]

Ultimately, all acts of creation are born from destruction. Destruction of the raw materials, destruction of alternative possibilities, destruction of other people's claim on the created thing or its constituent parts. I think Doodle is right that basically all life activities are somehow destructive. I mean, to even live, we have to constantly destroy plant and/or animal life. Trying to avoid destructiveness is basically impossible.

[moda0306]

Ultimately, all acts of creation are born from destruction. Destruction of the raw materials, destruction of alternative possibilities, destruction of other people's claim on the created thing or its constituent parts. I think Doodle is right that basically all life activities are somehow destructive. I mean, to even live, we have to constantly destroy plant and/or animal life. Trying to avoid destructiveness is basically impossible.

Exactly.  "This violence can't go on forever!!"

Or can it?

[Pointedstick]

Ultimately, all acts of creation are born from destruction. Destruction of the raw materials, destruction of alternative possibilities, destruction of other people's claim on the created thing or its constituent parts. I think Doodle is right that basically all life activities are somehow destructive. I mean, to even live, we have to constantly destroy plant and/or animal life. Trying to avoid destructiveness is basically impossible.

Exactly.  "This violence can't go on forever!!"

Or can it?

The reason why I love this line of reasoning is because it makes everyone uncomfortable. Libertarians don't like the implication that violence is eternal. Liberals don't like the implication that we can never actually escape from "might makes right". Conservatives… well, I don't know. Maybe conservatives are okay with it.

[Kshartle]

Browne, page 33 from "You can Profit From a Monetary Crisis":

In many ways, the government's promise to increase the general welfare always results in decreased welfare. There's no way the government can create something out of nothing any more than an individual can. There are only so many resources available at any given time; the government can't create them by legislation.

The government's actions increase the wealth of some people at the expense of others. By using the government's coercion to force others to support them, some can thereby acheive prosperity they wouldn't achieve in the marketplace. And that, of course, can't be labled "general welfare."

Of course, the government's activities are so extensive that virtually everyone receives some subsidies from the government. And those freebies may make him feel he's benefiting from the arrangement.

But the great majority of people, even those receiving subsidies, pay far more in taxes than they receive in subsidies. The difference pays for the huge, expensive machinery of government. If the consumers could have their taxes back, they could easily purchase any desired service the government had provided and have a great deal of money left over with which to buy other things.

In addidition, they lose more than they'll ever know when the government prevents them from utilizing attractive alternatives the marketplace could have offered-lower prices, non-monoploy choices, foreign products, etc.

EVERY DOLLAR SPENT BY THE GOVERNMENT LOWERS BY AT LEAST ONE DOLLAR THE GENERAL STANDARD OF LIVING OF THE PEOPLE IN THE MARKET WHERE THE GOVERNMENT OPERATES. That dollar is now unavailable to satisfy a true consumer demand.

[Gumby]

what i am hinting at is all the other dominoes that follow, whose cronies got the the contract ? whose union gained political power and in financed an election with the money from the job?, were the people this job consolidated power into the hands of corrupt? what other government boondoggles did those people engage in that didn't pay back or benefit anybody? etc etc etc.

Ah... So you guys are arguing that governments do not create net wealth. That's very different from arguing that governments never create wealth.

But even that argument is shaky because you are basically blaming every negative aspect of society on a canal. And to suggest that society would have been better without the canal is a logical fallacy:

http://en.wikipedia.org/wiki/Counterfactual_conditional

Nevertheless, you raise some good points, and I'll throw you guys a bone. It turns out that Erie Canal was too successful. It was basically the Amazon.com of canals during Canal Mania. The overwhelming success of the canal — again its success was beyond anyone's wildest imagination — encouraged a few other state governments to try to copy the Erie Canal for public works projects. Many of these copycat canal projects failed. But the failures were not limited to governments — many private canals failed too. Canal Mania was a bust for many who attempted to cash in on the boom. It turns out much like building a successful e-commerce business, canals were also a challenge to build and a challenge to become successful.

The success of the Erie Canal also enabled a new breed of corrupt politicians — an organization known as Tammany Hall — to take over New York City politics for almost 100 years. But, despite the negative aspects of Tammany Hall and the few other failed public projects inspired by the Erie Canal still pale in comparison to the overwhelming success afforded by the Erie Canal. The canal shaped the nation, made NYC a financial capital, and ushered in enormous amounts of wealth. Nobody claims that Tammany Hall prevented New York City from becoming one of the world's most successful cities on the planet. Could New York City have been better without the Erie Canal and Tammany Hall? We don't know. But, again, to claim that our society definitely would have been better is a counterfactual conditional logical fallacy. We just don't know. What we do know is that the Erie Canal is responsible for enormous amounts of wealth — and that's all I was trying to point out.

the unmeasured toll is much higher than the dollars out dollars in math would show

If the toll can't be measured, then how does anyone know? We can't. It's a logical fallacy.

i am not sure kshartle and i are arguing the exact same thing but we may be close... when it comes to the accounting side of things i have to give you credit for being correct about the mechanics (to the best of my ability to get them)
i am not blaming every negative aspect in society on one canal i am saying there are negatives that don't get counted and they add cost, and you started counting them off in the your next statement (Tammany hall etc), did the negatives add up to a net negative .... probably not..... the canal was enough of a success that that it probably did pay back eventually. my point is that eventually came far far later than the time frame counting numbers alone would give you and because of those types of negatives the chances of having a "success" with the "do it by force method" is far slimmer than you might see....
i used the "hypothetical imaginary free-market" example not as proof it would have been better if it had existed but as an example of a different way to the same ends, to point out the costs that were not counted.... not sure that's a fallacy... if it is my bad...

perhaps i wrote this wrong "the unmeasured toll is much higher than the dollars out dollars in math "alone" would show" the other stuff can be measured, or accounted for at least, but they are not easily compressed into neat spreadsheet columns.

[Kshartle]

If the toll can't be measured, then how does anyone know? We can't. It's a logical fallacy.

You have to understand the economic principles. You have to understand that people do voluntarily what they want and not what they don't want. People don't want to pay taxes. You know this because they are forced to pay them. The government's borrowing costs are lowerd and/or others are raised by the borrowing distorting the difference in costs when the government borrows to do something. It makes the costs look smaller unless you understand that everyone else is subsidizing the government because it has a gun to it's head.