It doesn't have to make sound economic sense; it just has to work within the context of our game.
Your argument seems based more on sound economic sense than it is on the context of the game.
The 'why' question seems to have been answered already, although in some of those cases a 'money' resource is not the only answer. The ones I've read so far:
- Fleet maintenance requires X amount of cash per turn, depending on the size of your fleet. Similar in some ways to MOO2 and MOO3; the Total War engine does this, as do EU2 and Victoria.
- Buy things from another Empire (although this could be done in any number of ways; it's more of a 'trade X for Y' where X and Y could just as easily be ships, technology, or stockpiled resources)
- Pay salaries of 'leaders' or some other type of character involved in the game;
- (Buildings? Special projects? Wonders?)
PPs were never explicitly meant to be 'cash spent on government and military projects.' They weren't meant to be otherwise, either, so I agree that this is a viable solution; I'm just not convinced that it's the most viable, because we've really set up PPs as your industrial capacity in the sense that 'you need X industrial capacity to build Y. Or, if you build nothing for a few turns, you can stockpile your industrial capacity and ... bribe somebody?' That's the disconnect, for me; I get that PP has more to do with cash than, say, RP or food, but I don't get that PP /is/ cash.
However, more convincing on your side for me is to simply remove the whole idea of cash; maintain fleets with your industrial capacity and then never do anything with it that really sets it up as 'money.'