Excellent, thanks Paul. I will update the post when my computer stops whining 😉

I think this stems from viewing government as a sector – rather than as a influence on sectors. I do not trust the government to appropriately alter sectors relative to the market price – but that is why we have deadweight loss 😉 .

“That leaves us with, in normalized form, the possibility of lowering government purchases of goods that are over-utilized during a recession, government trying to twist the distribution of elasticities such that they are better formed after the government intrusion than before.”

So are you stating that the government may keep spending in areas after a recession, rather than reverting to their previous spending/taxing plans. That is indeed a risk – something we would need political scientists to help us solve 😉

What I conjectured above would be the theoretical deadweight loss, the mis-pricing because he government has longer equilibrium times.

Government inefficiency would be found in idleness, because the change in the surplus of government goods would be a change from our long or medium term expectations, and those expectations already include government inefficiency.

f then becomes the distribution of government purchases, in fraction form, integrated over the distribution of the value of goods.

That leaves us with, in normalized form, the possibility of lowering government purchases of goods that are over-utilized during a recession, government trying to twist the distribution of elasticities such that they are better formed after the government intrusion than before.

Ok,ok, I will watch the video.