Milton Friedman described 4 classes of spending
1. You spend money on yourself. You care about price, but also about value.
2. You spend money on a present for someone else. You care about price, but not so much about value.
3. You spend money on yourself, from an expense account. You really care a lot about value, but not so much about price.
4. You spend government money on someone else. You don't care about value, and don't care about price either.
Moral: If you get "market failure" with type 1 spending, you can only fail more spectacularly with type 2,3 or 4 spending.
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1 comment:
Congratulations on the new blog, it seems to be improving daily :D
This argument seems to follow only insofar as people are not altruistic. i.e. do not value others as themselves. Indeed if the public treat government money as their own and insist it be spend with at least a worry over value if not price *and the politicians listen to them* then it needn't be significantly weaker a link to value.
Just food for thought and an excuse for a first blog comment :)
Ben
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