Where’s the Outrage on Government Spending?

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It seems that everyone has had a good vent about politicians’ entitlements. I agree that taxpayers’ money, otherwise known as our money, should be treated with the utmost respect. I find it as infuriating as anyone when politicians treat public funds with all the propriety of a thief driving a stolen vehicle.

But if we think this kind of thing is confined to politicians, we are kidding ourselves. As Milton Friedman once explained, it’s an entirely predictable phenomenon. People care much less about how they spend Other People’s Money (OPM) than how they spend their own. I’ve given a speech about this that you can find here on YouTube. Below is an excerpt from that speech.

When you spend your own money on yourself there’s a strong incentive to spend it wisely. Nobody spends money more carefully than its owner. This is why it is more efficient as well as right for people to be allowed to keep their own money.

When you spend your own money on someone else you will still be motivated to economise but somewhat less likely to satisfy the needs of the other person… Even with the best of intentions spending your money on someone else doesn’t always work out for the best.

When you spend other people’s money on yourself you have no strong incentive to keep down the cost but at least you have a strong desire to fulfil your own needs.

But there is an even more wasteful type of spending. This is spending other people’s money on other people. In this scenario you care little about other people’s money and for meeting the needs of the people on whom you spend the money. Spending other people’s money on other people is what we do here. It is the worst kind of expenditure and it explains why so much public money is wasted.

… Politicians are addicted to OPM [Other People’s Money] because they use it to expand their influence, reward their cronies and keep their constituents dependant on them.

…What right do we have to be so cavalier?

And the odd thing about all this is that in the scheme of things, the cost of keeping us political fat cats housed, fed and transported is somewhat insignificant compared to the cost of the decisions we make.

While social media was still lighting up about Bronwyn Bishop’s helicopter hijinks, the Government generously declared that it would donate $40 billion of your money towards ship builders in South Australia.

Forty billion dollars is about twice NASA’s annual budget, so never mind about helicopters. With that kind of money we could probably put Bronwyn on the moon. Here’s another excerpt from the speech I gave.

If I were to tell you that the reason for taking your money is because I know better than you what you should do with it, I would expect there would be some resentment. And what’s more, if I explained to you that if you refused to give me the money you could go to jail I expect there might even be some anger. Now imagine that I decided the large pile of cash you give me was not nearly enough. So I went out and borrowed more with the cost of the interest to come out of your pile. And the debt left hanging over you and your children. Then imagine that I started spending it foolishly on things you don’t want. It would be natural to feel outraged.

Everybody knows the money has been allocated because the Coalition is worried about losing seats in South Australia. We know this because there can be no other good explanation. We could easily buy the ships from people who are experts at building ships for much, much less.

The cost is more than $1700 for every man, woman and child in Australia, and by the time the inevitable budget blowouts occur, you can bet it will be around $2000. Adding insult to injury, it’s money the government will need to borrow and pay interest on. And still to come is how much of your money they are going to spend on building submarines in Australia.

If somebody turns up at your place, asks how many people live there, and demands $2000 from each of you so that we could build ships in South Australia and improve the election chances of a handful of politicians, you would be outraged.

But as it stands, while nobody will turn up at your door, the money will nonetheless disappear from your pay. And this kind of decision passes through Parliament all the time, with barely a tweet.

Where’s the outrage about that?

Regards,

David Leyonhjelm,

Contributor, The Daily Reckoning

Ed Note: David Leyonhjelm is a regular Daily Reckoning contributor. He has worked in agribusiness for 30 years and is a NSW federal senator — and somewhat of a controversial figure. David represents the Liberal Democratic Party in the Senate. The LDP is a libertarian party which advocates personal freedom and choice, and limited government.

David Leyonhjelm

David Leyonhjelm

David Leyonhjelm is a regularDaily Reckoning contributor. He has worked in agribusiness for 30 years and is a NSW federal senator — and somewhat of a controversial figure. David represents the Liberal Democratic Party in the Senate. The LDP is a libertarian party which advocates personal freedom and choice, and limited government.
David Leyonhjelm

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christopher
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You correctly identify yourself and other politicians as “Fat Cats”, well Im paying your salary David as a taxpayer, would you be happy to take a pay cut, receive nil travel subsidies? We can all dream of how we as individuals think it should be, but try to convince voters of an alternative to defending ourselves? as a pacifist I dont think there should be any armed forces or warfare, but I bet if you or I had vested interest in this project being funded (like the libs and labor), we would be crying fowl at the thought of alternatives,… Read more »
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