Think Freely Media presents Common Sense with Paul Jacob

Cargo Cult Auction in Progress

State and local governments are lurching into insolvency because of their previous profligate spending. In the current economic downturn they are now turning to lobbyists, to beg money from Washington. Money they should be spending on services they now spend in a sort of cargo-cult frenzy, hoping against hope for a bailout.

Funny thing is, they may actually spend more on lobbyists than they will get, in total, from the central government.

That’s what happens when the government gives away HUD grants, for instance. Cities around the nation spend more money preparing grant applications than they actually get in federal money. It would be better had HUD never existed. But, once in play, most cities cannot stop themselves from bidding for HUD’s handouts.

Yes, I said the word “bid.” From an economic point of view, that’s what the grant-writing and lobbying businesses are: bidding auctions in that most peculiar market for “free money.” Economist Gordon Tullock showed why this kind of auction is so different from trade auctions. There’s no theoretical upper limit. It’s crazy.

And it’s how federal government handouts work in our society.

How much better to not bid in such auctions at all. How much better if the federal government were prevented from giving away taxpayer funds to state and local governments entirely . . . better simply to follow the limits in the Constitution.

This is Common Sense. I’m Paul Jacob.

By: Redactor


  1. James says:

    repeal the sixteenth ammendment
    congress can do this
    and let cun in to give the people the power to use of the tax money.
    your.s to mogify

  2. Mel Pinney says:

    I always enjoy receiving Paul Jacob’s Common Sense email, but I wish that you would use an easier to read font (like you do on this column’s website) rather than Times Roman (which is well-suited for print but isn’t a good choice for reading on a computer monitor).

    Keep up the great work!

  3. Joel Glasser says:

    There shoudl also br limits on how the money is spent, if cannot end the farce.

    As an example, around 17 or 20 years ago, the City of Miami (FL) won a grant for HUD money, to help impovished/low income areas. (I am going from memeory, do not have the articles to be more exact)-
    the money went to the owners of LUXURY CAR DEALERSHIPS, (who also had financial interests worth millions in other businesses including professioanl sports team/s) to upgrade their repair facilities. So, low income and middle income people subsidized a dealer in BMW’s, Mercedes Benz, etc. so their cars could be repaired and maintained in more efficiient, more state of the art ( at that tiem) facilities.

    Makes sense?

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