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Not as a rational cost-benefit thing, but I think a government subsidy could plausibly manipulate significant numbers into taking advantage of the opportunity, due to the human tendency to not want to "miss out" on a free lunch. Think of all the people who stuff themselves at buffets on free snacks they'd never touch if they had to pay for them, even for cheap. If people were told "you have [X] thousand dollars in the bank, they're yours, but they'll revert to the government unless you spend them on one of gym, hair-dyes, plastic surgery, etc." I think that would in fact increase demand for each of those items as people rush to get what's 'theirs'.
And I don't think it's fair to call my proposed policy "nonsensical" even as you grant that it might be net-positive and that you might like to take advantage of it yourself if it was on the table! Unorthodox, yes; implausible in the short term; but hardly nonsensical.
Well, the point I was making was that I think a positive side effect of such a policy might be that it encourages more people to become fit and healthy, which would pay down dividends in terms of public health expenditure and improved fertility rates. A policy which enables mentally ill people to chop perfectly healthy tissue and organs off of themselves at the taxpayers' expense (and then attempt to reverse the damage as much as possible several years down the line, likewise at the taxpayers' expense) does strike me as nonsensical, even if such a policy was sufficiently broadly-worded as to also include paying for members of the public to become more fit and healthy.
Put simply: would I support a policy of publicly subsidised gender-affirming care and detransition procedures at the taxpayers' expense (option 1)? No, I think that's silly and dumb, in much the same way as publicly subsidised boob jobs and lip fillers would be (in fact, much of the time we would be talking about literally the same procedures). Would I support such a policy if it also included publicly subsidised gym memberships (option 2)? Again, no, but it would be silly not to take advantage of it if it was already in place. Would I support a policy of publicly subsidised gym membership (perhaps under the use-it-or-lose-it model you describe)? Yes, I could be persuaded that such a policy passes a cost-benefit analysis, in a way I simply couldn't with option 1.
"The government will pay for you to chop off pieces of your own body, and will then pay for you to restore them years later after you've decided it was a bad idea" sounds like a conservative parody of wasteful public expenditure, analogous to a self-licking ice cream cone or paying people to dig holes in the ground then fill them up again. It would be exactly as nonsensical as paying people to get fit and healthy and also paying for them to sit on their couches eating ice cream.
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