Competition For Government Contracts Isn't Competition

Someone of the liberal persuasion (I really dislike the fact that, in the U.S., those who advocate Big Government are called "liberals") made a fallacious argument on this blog that "demand" from the state is equal to consumer demand. In reply, I made the point that $1 in government spending has a lesser "net value" than $1 in consumer spending because, in order for the state to spend a Dollar, it has to pay someone to seize it from the taxpayer, pay someone to circulate it through the bureaucracy, pay someone to track it as it circulates through the bureaucracy, pay someone to decide how to spend it, pay someone to place an order, and so on. A friend of mine added that the process of government price discovery is inefficient because the state doesn't necessarily have an incentive to make wise procurement decisions.

Expanding on my buddy's point, John Aziz of Azizonomics makes the case that competition for government contracts isn't competition at all. Says John:

Under a model where private contractors compete for government cash, this (competition) is impossible because contractors are essentially bidding for a state-backed monopoly. State bureaucrats determining which contractor will get the money is not competition; there is no market mechanism, there are no consumer preferences. Contractors are just bidding for handouts from the taxpayers’ purse based on the preferences of economic planners. Consumers cannot take their custom elsewhere, because the custom is involuntarily coming out of their taxation.

Case in point: SC taxpayers were billed an additional several million for the construction of the James Island Connector to have the 3 mile-long concrete bridge painted. Painting the bridge provided no engineering or aesthetic value (it actually provided negative aesthetic value, as you can clearly see in the photo I posted), but the state, representing the taxpayers of SC, agreed to pay a contractor to have it done.

Consumer spending involves the market forces of competition and supply and demand. Government spending does not.