[ikono]

I don't really think you can evaluate government loans the same way you would as a private investor. The federal government has defacto senior equity in every company that is incorporated and/or operates in the US. As a private investor the only upside you get from a loan is the interest. It's not even entirely fair to use a VC type model here as the government will also reap rewards from companies that indirectly benefit from these investments.

Your points regarding state-owned companies is more a case against equity investment and a defense of the loan model. The US government isn't going to go to extreme measures to recoup a billion dollars and because it doesn't have any additional equity there's no other real incentive to prop up the companies that it has loaned money to. The free market is an extremely powerful system that is capable of remarkable things but it's not perfect and there are problems that the free market won't address on it's own (climate change being a poster boy example).

[temphn]

  I don't really think you can evaluate government loans the 
  same way you would as a private investor. 

So, there are different ways to isolate a core philosophical disagreement but I think this may be one of them. In a different context you will hear people say that "the government is not a household" because the USG can print money. OK, so call that one point of view.

Another point of view looks at the largest and most successful companies (like Apple, Google, et alia) and compares them to the smallest countries (like Iceland). Interestingly, you can do the math to see that Iceland gets about $5.6B of tax revenue with a population of 320,000, while Apple makes $156B with an employee base of about 73,000. This indicates that Apple is about 120X more efficient in terms of dollars generated per person; indeed, significantly more so in that tax payments are more on the involuntary side while Apple purchases are more on the voluntary side.

You can extend the same kind of analysis to Fortune 500 companies and many small countries. This is a very interesting exercise because no one disputes that the Fortune 500 companies can be evaluated by private investors, or that the countries have flags, fiscal policies, and the like. And yet the former outperform the latter by a lot on metrics like this.

So, that's the point of view that says that governments should be evaluated in the same way you'd evaluate companies. One not-so-bad way to think of it is that a citizen is buying a huge package of goods from the government, like cable bundling on steroids, and can only switch service providers by moving.

But, in any case, because we disagree on that point we'll probably also disagree on others. For example, the senior equity thing...are you stating the USG can exercise eminent domain and/or nationalize a company at will? I agree that in practice they have done this, but I at least don't believe this is a good thing.

Anyway, yeah, that's the crux of it: one group does not believe governments should be judged like companies, another group believes they should. Hopefully you can at least see our point of view even if you don't decide to convert :)

[redler]

I'm almost certain you're not arguing that "dollars generated per person" is the only valid measure of the success of a government as compared to the success of a large corporation. So how do you factor in all the other measures of success in such an evaluation?

Trivially, corporations are amoral entities that have the ability, and sometimes the obligation, to jettison lines of business that lose money or simply don't contribute enough profit, whereas governments often have the legal or moral obligation to maintain or expand "lines of business" whose purpose does not coincide with the generation of cash. Civilization necessitates at least some pursuits that will never make a profit, and governments are the major organizational entities (yes, there are some others) that are often left to such pursuits.

[ikono]

I certainly understand where you're coming from but obviously disagree at least partially.

There is a difference between saying that the government should invest in and fund all companies and saying that there are cases where the free market will not act in the national best interest on it's own and the government can. The underlying issue here is that oil is subsidized in the US. It's not just the tax benefits to oil companies, it's all the military spending required to maintain undisrupted oil flow from the most unstable regions in the world. We've gotten to the point where we can't just stop cold turkey; so you've got to invest some money to clean up a mess made in the past. I'd love to get to the point where all our energy choices were on a level playing field so the free market could do the work but that just doesn't seem plausible today.

It's cliche at this point, but the space program and DARPA/ARPA investments led to a lot of the technology that enabled the formation and/or success of companies like Apple and Google.

This is off topic but with regard to your some of your other points, it's completely true that the federal government doesn't have to treat it's debt the same way a household does. That doesn't mean it should spend as much as it wants, but it does mean that it can spend a little more than it brings in forever. By senior equity I meant that the government's claims to profits(taxes) are senior to other equity holders.

[saraid216]

> So, that's the point of view that says that governments should be evaluated in the same way you'd evaluate companies.

If governments should be evaluated in the same way you'd evaluate companies, then companies should be evaluated in the same way you'd evaluate governments. Otherwise you're putting down a double standard.