Other People's Money

     A news letter I received stated that there are only four
ways to spend money.  The letter attributed this wisdom to
Milton Friedman.

     "You can spend your own money on yourself.  When you
do that why then you really watch out what you are doing, and
try to get the most for your money.  Then you can spend your
own money on somebody else.  For example, I buy a birthday
present for someone else. Well, then I'm not so careful about the
content of the present, but I'm very careful about the cost.

     "Then I can spend somebody else's money on myself. 
And if I spend somebody else's money on myself, then I'm sure
going to have a good lunch!  Finally, I can spend somebody
else's money on somebody else.  And if I spend somebody else's
money on somebody else, I'm not concerned about how much it
is, and I'm not concerned about what I get.  And that is
government."

     The quote contains some serious truths.  It also overlooks
other truths.  It may have hit the nail on the head, but it was
only a glancing blow.

     Everyone is always concerned about what they get when
they spend.  When anyone spends he expects to gain satisfaction
by doing it, even if he is spending other people's money.  Even
spending money takes effort.  While spending we can't do
something else.  By spending we lose some other opportunity.  If
the spender didn't expect to benefit, he would leave the money
unspent, no matter whose money it was.

     We buy presents because we expect to get more
satisfaction from buying and giving the present than from any
other use of the time and money.  When buying a present with
someone else's money we still expect to gain satisfaction in
some way.

     The politician may use other people's money to buy food
for the hungry because he hates to think of hungry people.  Or,
he may "give" the food to buy votes.  There are, no doubt,
thousands of ways politicians and bureaucrats expect to increase
their satisfaction by spending other people's money.  Pursuit of
that satisfaction is the reason they spend, no mater whose money
they spend.

     Those politicians and bureaucrats may not care about the
impact on the people they take the money from, or about the
benefits to those upon whom they lavish the spending.  Then,
maybe they do care.

     Many people, even politicians, gain satisfaction from the
satisfaction of others.  Such people will care about how they
spend and what the money buys for others.

     The problem with government spending is that politicians
give little consideration to the satisfaction lost by those other
people who have their money seized.  When those who spend
other people's money can gain one unit of satisfaction they will
do it, even if it cost those who lost the money 1,000 units of
satisfaction.

     If the politician has the option of buying two units of
satisfaction, rather than one, he will do it.  He is concerned
about what he gets for other people's money.  His lack of
concern is for what others lose.

     The evil of government is that politicians and bureaucrats
get to spend other people's money for the benefit of the
politicians and bureaucrats.  The people in government gain
satisfaction, the taxpayers lose.  Sure, politicians try to dole out
some satisfaction to buy votes.  The politicians find those votes
very satisfying.

     Government is like a lottery.  It doesn't pay out more
than half of the satisfaction it takes.  Government gets away with
it because, as with the lottery, many people are convinced that
they will be among the winners.  Government is a shell game
where most voters wrongly believe they can guess which shell
holds the pea.

aldmccallum@gmail.com
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Copyright 2012
Albert D. McCallum
18440 29-1/2 Mile Road
Springport, Michigan 49284