Government spending via redistribution is absolutely zero sum.
Every dollar spent by the government into the economy is one dollar taxed out of the economy. Money that is given to some has to necessarily come from others. Just because the benefits are concentrated and the harm is spread out doesn't change the fact that you've only taken money from A and given to B. No additional wealth or prosperity is being created in that transaction.
Now, it may be the case that once B has the money, he spends or invests it more efficiently (in new skills, new assets or what have you) than A would have. But such a multiplier effect, if it happens, is happening in spite of, not because of, government redistribution.
> Hopefully, at every step of the redistribution, at every split, some wealth was generated
The key word is "Hopefully." It is highly unlikely that a government bureaucracy will distribute money such that it is spent more efficiently and productively than an individual taxpayer would if he still had the money to spend himself.
Yes, the economy creates wealth, but only when productivity increases. Redistribution does not create any wealth, only "spreads it around," except for the rare cases when someone in the bureaucracy makes a better decision with the money than the people who paid it in taxes. But I can't really think of a time that has been the case...
This talking point does not hold up to scrutiny.
There are plenty of examples where individuals fail to build infrastructure that, if built, would help everyone much more than the cumulative cost to build the infrastructure. The same goes for research and technology development.
Basically, the talking point assumes that individuals are rational economic actors in a rational market, and this is just not true. Additionally, even if the individuals were rational and fully informed, there will be highly suboptimal Nash equilibria.
But you are mistakenly assuming that all government spending is redistributive, as if the only thing the government did was transfer payments. Government also provides services (sometimes by contracting out to the private sector) and invests in physical capital (likewise).
Yes, a dollar taken from someone and given to another is a net null. But when we consider scale and efficacy of large organizational actors, perhaps we notice the potential of these tax dollars. It's not just the individual line A to B that must be considered. It's A to Gov to B.
I can't fund high-capacity battery research the same way the government can. I'd need to find, say, 10,000 other folks to throw $100 into a pool that we could give to a researcher to fund her experiments. She hires help, does work, maybe something comes from it. But,
How do we know she's using our money as intended? How do we know she's producing results, and the quality of those? How do we select her from all the other applicants?
Well, let's hire an auditor to check that the money is being used appropriately. Then, we need other folks in her field to confirm for us that her research is productive. We'd also need those experts (or others) to help in the technical review of her proposal against other proposals to select the most beneficial one.
Interestingly, it all starts to look like a bureaucracy. Because that's ultimately what a government, in all its spite, ends up providing -- a shared set of resources through which a society can effect greater change as a whole on itself than it could individually.
I'm sorry that your experiences and epistemology lead you toward contempt for such an apparatus, but please recognize the benefits and net-positive effect, particularly to science and engineering, such an organization has demonstrably provided.
To a country with little established science, this can be a gigantic booster shot to their domestic science abilities both through funding and in the case of space programs, inspiring youth.
As we awknowledge that a healthy scientific community is an economic boon, one could say that money is taken from A, redistributed to B by the government, and in the process creating industry C which will hugely benefit the country in the future.
A modest, very simple example is the US National Park Service. It runs a profit! Government dollars create the Parks, and obviously they are a good that is worth more to the public than the taxes it cost to make them. But that generally would not happen without Government intervention.
Not at all, most governments print their country's currency.
Well, at the level of the currency issuer (of which India is one), Government spending is money creation, and not redistribution.
Sounds like you want an effective political system to oversee that distribution. Me too.
Government spending must be essentially zero sum, since it almost exclusively must spend within a closed system (it'd be a bit silly for it to primarily spend on some other country's, after all). But to say that government spending can't be as productive as individual taxpayer spending is sort of misunderstanding scope. The typical person can't be bothered to deal with the coordination of funding all the things they'd like; the number of services that gently affect our lives is staggering. To suggest the individual administrate such spending is like suggesting we generate a line item for everything the government provides and be able to select what we personally want from it; there's a utopia to be had there, but holy mackerel the logistical coordination and administrative overhead for such a system would be mind-bogglingly complex and large, or the life simple, dull, and risky. I bet there's a Murphy's Law corollary somewhere that suggests such a fair replacement is at least as dysfunctional as the current system (heck, I'll just invoke the central theorem of Systemantics [1]).
Anyhow, the win here is that governments can concentrate money to generate a kind of critical mass, It can create opportunities that otherwise couldn't germinate (and, well, often don't). Some accomplishments require ridiculous amounts of money - more than a person could ever hope to have. Until very recently (say last ten years?), it hasn't been possible for extremely large groups of people to coordinate resources for extremely large technologically and logistically complex projects without also having a very direct, obvious, and positive feedback mechanism (read: short-term profit); crowd sourcing may actually be a fantastic replacement economically for government's deep pockets, but we're absolutely not there yet. And without that insane access to enormous capital, we simply can't bootstrap many of these industries. There are notable exceptions, but they're notable because of how uncommon and unlikely they are; legends arise from powerful individuals building massive industry sectors, but rarely without extensive help from the government (obligatory references to Standard Oil and SpaceX).
So we rely on the government to do such things as bootstrap super-capital intensive stuff. The sort of things that require billions to begin and decades to mature. And 50 years later, it's clearly paying off! What once required tens of billions to do once now can be done for tens of millions! And it's gotten so mature, the private sector is finally starting to compete with the government... here.
I'm not going to argue the value of a space program. It's so deeply integral to the magic of modern life it's dizzyingly complex to even contemplate listing. Like trying to figure out if it was worth Bell Labs allowing the transistor to be invented.
India's got a helluva scrappy space program. It manages to do a lot of things right, and as noted elsewhere by 'tn13 [2], it may even be profitable! (I have no idea how to figure out if that's actually true - it's tricky to figure out if individual sections of a plant are stand-alone profitable, let alone a complex government entity!)
[0] http://www.goodreads.com/quotes/104873-there-are-10-11-stars... [1] http://en.wikipedia.org/wiki/Systemantics#Premise [2] https://news.ycombinator.com/item?id=8364632
Moreover, 'zizee is talking about something even more powerful. Space programs can act as huge multipliers on an economy. A country's economy is sort of a closed system, but that doesn't mean it can't undergo a multitude of phase changes that free up resources after spending money (even waste fully). Astonishing amounts of infrastructure is needed to support a space program, and a lot of it translates to other industries well. Just as a plant opening in a town may only directly employ a few hundred people, the support infrastructure - from welding shops to hardware suppliers to diners - is huge. Many thousands will be affected by those few hundred workers.
A US example: a plant engineer goes out to lunch. Their salary has already been taxed through withheld federal payroll taxes. At the diner, a 10 buck blue plate special is ordered, and a tip left. The town has a tax on prepared dishes, which is added, and the wait staff will have their wages (and possibly tips) taxed - a wage which some portion of which is was from the lunch. That lunch also goes to support a local farmers group and a national cattle company. And so on; the piece gets smaller and smaller as it splits and redistributes through the local and national economy (and these days likely global). At some point, that money is spent.
But there's no zero sum here. Hopefully, at every step of the redistribution, at every split, some wealth was generated. A service was performed where it wouldn't have without some money. Some taxes were collected and put back into infrastructure which added a new light to the two-lane Main Street making it safer and faster for trucks to go through, a state grant to the local colleges, and a federal appropriation bill that supports local green farmer groups. The light makes more business possible on the far end of town, and drives down the plant's shipping costs a little, leading to a buck fifty more on the quarterly bonus the laborer a got later that year. And I'm leaving the other two alone, as this gets out of hand fast. At some positive, non-zero rate, the economy very slightly accelerated.
A decade later, two more plants from other industries are opening. The town is small, but has been friendly to industry. The first plant has some skilled labor that is sorely needed for these plants, and a few leave for slightly higher wages. The old plant has an established reputation in the town, and eagerly hires some replacement twenty-something's, both for their cheaper cost to stay competitive and to train fresh minds (to correct what they learned from the first ten years of mistakes).
Those skilled workers who got hired for a little more money, just for their exposure to the industry and a few skills picked up applicable to the new plants? They are going to get a blue plate special, but this time with pie. That could yield an extra buck or two to the diner - a buck or two that would never have been bought if the workers didn't get the raise from the minor skills gained from the plant that hired a couple hundred people ten years ago.
Space is like that, but with the accelerator to the floor. Technology from space programs infuse industry across the board, and require skilled labor from every level: from rocket scientist engineers to the guy painstakingly polishing the special steel alloys in a clean room. And they're all becoming slowly more valuable as a result, and they'll earn higher wages, eventually. And that money, gained from that wealth in knowledge and skill, generates more wealth - and eventually money.
Keep that up for long enough, and you've got enough skilled people to keep an economy running indefinitely. Which I suppose detracts from my initial statement: it sorta is a perpetual motion machine. Bootstrap it well, and the system will, in fact, continue to grow. Economies are big, governments are big, and they're only closed systems if you insist on zooming in and putting dotted lines around only money flow.
Amendment: contrast this perhaps with the Superconducting Super Collider. A boondoggle of there ever was one, many thousands were hired for no appreciable result, many hundreds of millions of dollars were literally sunk into a super high tech [partial] ring in the ground, and millions in equipment was manufactured and purchased. And yet, foolish as it turned out to be, it still payed many thousands a wage for a few years, fueling nearby industries with displaced highly skilled laborers now without a job, and apparently local wineries can make use of the stupefyingly expensive tunnels. All the while, the boondoggle pumped money into the hands of people who spent it, who then went on to spend what they received, all of which is getting taxed over and over. Some of that money absolutely had to end back up with the government, just as some of the air you breath was likely also breathed by any arbitrary other human. Even wasteful, such an endeavor was at least useful for it's multiplier effect. (Personally I would have loved to work on the SSC and think it was a shame to kill it, but holy geez it cost a lot - but at least can learn from a cool tech who tested components in an EM anechoic chamber, which inspired a trick I've used to help make windows slightly more reliably energy efficient. Side effects.)