Here is a question from Quora I have slightly changed which I leave for you to work out for yourself:
A thief walks into a store and steals $350. The thief then buys $350 worth of goods at the store. In the end, did the store lose any money and if so, how much?
To help you along, let me add in this quote from John Stuart Mill’s 1844 Essay, “Of the Influence of Production on Consumption”.
“The man who steals money out of a shop, provided he expends it all again at the same shop, is a benefactor to the tradesman whom he robs, and that the same operation, repeated sufficiently often, would make the tradesman’s fortune.”
I need hardly add that Mill thought he was being fantastically ironic. But there is then this, the third iteration.
A government who taxes you to the hilt but then spends the money it took from you on whatever the government chooses to buy, provides a benefit to you and everyone else since it adds to the level of demand and therefore helps maintain full employment.
This is modern economic theory and practice to the back teeth. In looking at this third iteration, bear in mind the money spent on school halls, pink batts and the NBN, along with all of the other stimulus spending, following the GFC.
[My thanks to Tony for bringing this Quora question to my attention.]