Don't forget about opportunity cost
By Scott Sumner
This story in the usually reliable FT caught my eye:
It is central London’s first new moated building since the medieval era. The new US embassy in Nine Elms is a paradox, a heavily defended delicate glass box. Its architect calls it a “crystalline radiant beacon”; in fact, it resembles a corporate cube.
It is also one of the world’s most expensive embassies, costing a cool $1bn. Remarkably, not a cent of US taxpayer money has been spent. Speaking at the press launch on Wednesday, Ambassador William Moser, principal deputy director of the Bureau of US Overseas Buildings Operations, confirmed that the new building “was entirely funded from the proceeds of real estate sales”.
That real estate consisted of two US-owned properties on London’s Grosvenor Square, including the former US Embassy, sold to developers Qatari Diar to become a five-star hotel.
A classic case of wasting taxpayer money. And yes, the proceeds from government real estate sales most definitely are taxpayer money. Remember this story the next time a progressive tells you that cuts in government spending will take food away from homeless people.
PS. In a recent post I compared Switzerland and Venezuela. Some commenters objected that it’s possible to have a relatively successful welfare state. That’s obvious (as I pointed out in my post, citing France and Sweden) and completely misses the point. The point was that there is very little evidence that welfare states make people better off, whereas there is overwhelming evidence that neoliberalism makes people better off.
There may or may not be good arguments that governments can make people better off by spending 30% of GDP, but there is virtually no evidence that bumping that number up to 40%, 50% or 60% will improve on the results from 30% of GDP.