I came across this post today on Facebook:
I’d like to applaud Bernie for this moment of economic clarity (at least in the first sentence; I object to the idea that allowing an organization to keep more of its earned money is a cost, but that’s a discussion for another time). What he is discussing here is a concept known as “opportunity cost” in economics. Opportunity cost is exactly what is listed here: every time you spend a resource or cash, it means there are now fewer resources/cash to spend elsewhere.
Governments, like individuals, firms, and other organizations, face the problem of scarce resources. In other words, there simply are not enough resources to satisfy all demands. If a government spends resources on war, it means there are fewer resources to spend on education or the judicial system. If a government spends resources on health care, it means there are fewer resources to spend on roads and bridges. If a government spends resources on green energy, it means there are fewer to spend on law enforcement.
Government’s ability to raise funds via taxation is limited (Tax receipts as a percentage of GDP remain remarkably sable: around 19%, see Table 1.3). When someone running for office (or currently holding office) makes a promise that the government should provide something, remember to ask the important question: “where are the resources coming from?”