Consider the allocation of a nation's resources between additional public-sector spending versus additional private spending. John Kenneth Galbraith argued that
◦ public sector spending is always subject to corruption and is therefore not as valuable as private spending.
◦ compared to private spending, public spending leads to more sustained long-run economic growth.
◦ the marginal utility of an additional dollar's worth of spending on public goods is higher than an additional dollar's worth of spending on private goods.
◦ the value of the marginal dollar spent by government is less than the value of that dollar left in the hands of households or firms.
◦ compared to public spending, private spending leads to more sustained long-run economic growth.
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