Economist and historian Robert Higgs, who is well-known for his work on political economy, has noted that economic indicators such as GDP can occasionally overlook important facets of a nation's economic health. He makes the point that private businesses' efforts do not support the expansion of the country's economy as indicated by GDP when they invest significant sums of money in paying staff members but are unable to generate anything worthwhile or marketable.

Regardless of its efficacy or whether it yields observable benefits, government spending is always factored into these calculations. Because not all government spending always results in positive social outcomes, this can create a distorted impression of the state of the economy.

Consider a traditional baking contest in which a competitor spends hours creating the ideal cake, only to produce a burnt mess that nobody wants to consume. The same amount of time and ingredients are used by another contestant, but instead of baking a cake, they spend their time organizing the bake sale space or cleaning out the kitchen. Only the first attempt in this case makes a significant contribution to the competition's objectives, despite the fact that both efforts require a significant investment of time and resources.

In a similar vein, Higgs contends that although governments can undoubtedly carry out programs and projects that advance society, it is dangerous to assume that all government expenditures inevitably contribute to economic expansion. This viewpoint questions conventional wisdom about how to gauge economic success and emphasizes the significance of taking into account the efficacy and efficiency of both public spending and private enterprise.