Thursday, April 05, 2012

Someone Else's Money on A Service for Someone Else

Milton Friedman famously noted that we should think about care in spending cash as a two-by-two box (all important theories are two-by-two boxes, in fact, so why would this be different?)

Here is my version of Uncle Milty's theory:


So, if you spend your money on yourself, you will spend what you think it is worth, but check to see if you get high quality.

If you spend someone else's money on yourself, you don't care much about price, but you will check to make sure the quality is good.

If you spend your money on someone else (not a family member, someone you don't know and will never meet, call them a "welfare recipient") you will underpay and care little about quality, so the service will be terrible.

Finally, if you spend someone else's money on a service for someone else, you will pay more than $700 million in unauthorized overtime for crappy, abusive service.

EVERYTHING the state does, by definition, is spending someone else's money on a service for someone you don't care about. What could possibly go wrong with THAT brilliant scheme?

2 comments:

Pelsmin said...

P.J. O'Rourke put it best in "All the Trouble in the World":

1. You spend your money on yourself. You're motivated to get the thing you want most at the best price. This is the way middle-aged men haggle with Porsche dealers.

2. You spend your money on other people. You still want a bargain, but you're less interested in pleasing the recipient of your largesse. This is why children get underwear at Christmas.

3. You spend other people's money on yourself. You get what you want but price no longer matters. The second wives who ride around with the middle-aged men in the Porsches do this kind of spending at Neiman Marcus.

4. You spend other people's money on other people. And in this case, who gives a shit?"

Doc Merlin said...

"EVERYTHING the state does, by definition, is spending someone else's money on a service for someone you don't care about. What could possibly go wrong with THAT brilliant scheme?"

Yes, the state doesn't supply public goods,
Instead, the state turns everything into a public goods problem.