Brilliant post, A. Really gets to the heart of the matter.
The problem with giving government money to spend is that, in a democracy, and because it's not their "own" money, everybody regards them as a soft touch. And they're right. It is in their interest to be a soft touch because that’s how it makes its money.
You gave a great example; got some crap that no sensible person will buy? No worries, sell it to the government. Just let us have a few thousand more civil servants to administer it all.
Or need a few extra million quid to help fund the wife's Range Rover jones? We'll invent a "War on Terror" for you! That'll cost a fortune, you say? Who cares; it's not ours anyway. Except for the trifling billions we'll all skim off the top that is, of course.
If I asked you for billions of pounds, out of your own pocket, to invade somewhere with, you'd rightly tell me where to go. And even if you had flipped your lid and somehow agreed to it, you would make damn sure that every single penny of it was as well spent as it could be.
But government cannot do this because the people can always vote themselves free stuff. And the people doing the hardest voting will, of course, be the government itself. Which means people like me. And everybody else too. Especially those who are least in need of help from government.
The issue is not that there are people cheating the system; it is that now there is nobody who isn’t. In fact, the system itself is one gigantic cheat and we all have to be in on it in order to get anywhere in life.
I suppose we all must decide for ourselves whether government is better qualified to waste our money than we ourselves are.