If Mises, Hazlitt and the contemporary Austrian school are to be believed, all government spending ultimately can be attributed to some form of theft – outright theft via taxation or gunpoint, or theft of the more subtle type via inflation. The logic for this is simple – all consumed resources must come from somewhere. They cannot be conjured out of nothingness.
But does this always hold? Let’s look at an extreme example of a society in which 50% of all productive wealth belongs to the government. If for a moment we consider only the status quo – i.e. we do not consider HOW the government acquired title to those 50%, then I propose that this classical Austrian formulation does NOT in fact hold. On the contrary, we have an entirely different problem: who is going to get to enjoy the fruits of those 50%?