Wednesday, April 18, 2012

What goes on in Vegas....

The news has been full of stories about government waste lately. From the lavish Vegas bash thrown by the GSA, to the fabulous Hawaiian vacations enjoyed by GSA's director, Jeffrey Neely, to the $800,000 in travel expenses incurred by the Secretary of Defense for 27 weekend trips home...all courtesy of the taxpayer. None of these stories surprise me. None of these stories anger me. This is exactly the sort of thing I expect of a government as huge and influential as ours. This sort of unaccountable waste is as predictable as the sun rising in the east and setting in the west. It's inevitability stems from this basic fact about human beings, ie..people are much more prudent concerning their own money than they are concerning someone else's money.

Here's a thought experiment. Suppose you were walking down an empty street and stumbled upon a wad of ten one hundred dollar bills. There is no one around to return the money to, no way to determine to whom it belonged, so you realize that it's your lucky day. How do you spend that money? Do you calmly deposit the $1,000 into your savings account and thank God for his rich blessings? Or do you reason that since this is an unexpected windfall, why not treat yourself to a new set of golf clubs, or a weekend at the Spa? My guess is that you would spend this largess in ways that you would never dream of spending your own hard-earned money. This is human nature. It happened to me once. Years ago, I completed my three year study program and finally earned my Chartered Financial Consultant professional designation. The company I was working for at the time gave me an unlimited gift certificate to a high end store that sold business products like fancy briefcases etc. Since the certificate had no limit, I went hog-wild. I bought a beautiful all leather Hartmann case that I still use today. It cost $ 1996!! If I had been spending my own money, my budget would have been 50 bucks. It's always easier spending someone else's money.

This is the intrinsic problem with government. Every nickle that government spends is someone else's money. The larger and more powerful that government is the less connection there is between the sources of the money and the spenders of the money. As budgets get more complex the less accountability there can be. Sure, every now and then something particularly egregious pops up like this GSA party and a Congressional hearing is called where the guilty spendthrifts are slapped on the wrists. But for every story that we know about there are ten that we will never discover.

There is one political party in this country that IS the party of government. The Democratic party believes in the power of government as a driver of social justice. It believes in the righteousness of the collective, in the roll of government as referee, umpire, and inspector.  Democrats are loud and enthusiastic champions of full funding for their vision of this powerful government. Unfortunately, there is no political party with anything approaching influence that champions a dismantling of and downsizing of government. The Republican party talks a better game but when they get in power, the only thing that gets downsized is the rate of growth of government, and then, only if we're lucky.When both major political parties in a country generally agree on an ever expanding roll for government, the result is never ending deficits.

If you are a Democrat, I know what you're thinking. "What, you think government is the only institution that wastes money? Big corporations waste money too!!" Yes, they do. But when a corporation goes on a wild spending spree, then what's left of the free market will punish them for it. Their stock price will suffer, market share will decline, and people will lose their jobs. Unless, of course, you're too big to fail, in which case the government, using someone else's money will bail you out, insulating you from the consequences of your bad decisions. Kinda like welfare. But in government, no matter how wasteful, ineffective, outdated or redundant your agency happens to be, your budget never actually gets cut. Maybe every now and then it's growth rate is slowed, but there's never any cuts to the perpetual motion machine that is big government. So, we better get used to $850,000 dollar parties in Vegas for government bureaucrats.