Why Giving Money Away Costs More Than You Think

Tyler Durden's picture

As the government continues its ongoing scheme of handouts for everyone, it is worth perhaps reflecting on this behavior as non-optimal. Of course, printing money and handing it out for various grants, subsidies, and handouts was really wealth creating, the rent-seeking behavior would continue forever and everyone would be rich. However, as Professor Michael Munger points out, sometimes more money will be spent in total trying to compete for a grant or handout than the amount of money being given away. These costs are rarely considered in policymaking, but perhaps they should be. Of course, what really happens is the government awards money to organizations with the best lobbyists - not necessarily those that need it most or offer the best services. Perhaps its time for all of us to learn that you can't just (costlessly) keep giving money away.


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Groundhog Day's picture

Buy stocks now cuz its the only circus in town

bobthehorse's picture

I hate it when the poor get demonized.

This global depression was started by the richest capitalists in the world.

They've gotten their handouts.

Now their blaming welfare witches and foodstamp zombies to deflect the blame.



Overfed's picture

You would do well to learn the difference between capitalism and fascism. Personally, I'll take free-market economics.

trav777's picture


You people cling to this idiocy like Santa fucking Claus.  There's never been a free market, ever.

r3phl0x's picture

Free markets will exist as soon as men stop seeking power & competing for women.

i.e. Never.

EnslavethechildrenforBen's picture

You can't just keep giving money away to the Military Banking Complex

Thomas's picture

Munger is my man! Free market economist in academia. Yowser. Hey Mike. I know you're reading this. Cheers from Dave in Ithaca.

TraderTimm's picture

Much like there's never been a non-racist trav777, ever.

SunRise's picture

There seems to be a Free Market here at ZeroHedge - in speech!  After all, we FREELY trade our time to read and write here.

Thomas's picture

But it is culturally and educationally enriching. Zero Hedge is the best.

Shevva's picture

Free markets are money without debt. ie buy/invest what you can afford and nothing else, as soon as debt is invovled free markets go out the window becuase it's the one that can borrow the most not who can afford it.

tango's picture

If folks only bought what they could afford we'd be living in tents and riding on ponies down muddy roads.  There is a huge difference among capital expenditures (schools, bridge, raods, clinics, etc), life expenditures (house, office, fridge, etc) and a new smart phone, set of Nikes, 70 inch plasma or river gambling with savings. Responsible debt is vital to any society.  (Note I said responsible - the government never meant to pay back its own debt)

e-recep's picture

free-market is utopia, it's a fairy tale.

SunRise's picture

This is not heaven and Free-Markets are not assured.

Politicians are often Free-Market Foxes.

flacon's picture

"Capitalists"? LOL! What the fuck is your definition of "capitalism"?

e-recep's picture

do whatever it takes to make a profit. and wall street has exactly done that.

francis_sawyer's picture

We're all Diocletian now...

Shell Game's picture

Companion video, Why Voting Politicians Into Office May Cost You More Than You Think.

Sun and Moon's picture

Anything that the government does costs more than you think. "Let''s see, thats ten for us and one for you. And don't forget to pay taxes on that..."

smlbizman's picture

how many times have we seen especially pelosi , stand there and tell the world..."everybody knows that for every dollar of food stamps or unemployment it generates and returns a $1.42"...........and you know what, she honestly thinks this is true....so like always it gets my acid test......  if we put  everybody on food stamps will we all get rich, nope....or minimum wage...if 7.50 is good ( which is equal to  a  '64 dime and 1 "64 quarter and  that takes about 7.50 to purchase today...or .35c in 64)...than 50.00 per hr min wage has to be better, nope.....than to seal the deal...today i watch andy harris and brad sherman....and sherman says...." we do not have to start addressing the deficts until the end of the decade"...so forget all their other skills (being pieces of shit)....and understand that they do possess  a streak of honesty.....and it lies within their incompetency. where they believe the above to be true...... so seeing how much financial distress the rest of the countrys are suffering due to our monetery policys, ....i see these countrys as a lit fuse that leads back to the  usa, the stick of dynamite....and it seems to me that the fuse is getting very short, very quickly.....i liquidated all my iras and such, paid the exit fees...and became my own central bank. i started the process in '10 than again in '11 and the final withdrawl in '12... shermans words were the final piece to my puzzle,  and validated what i did as the right move........i would recommend you consider these same moves,... shake all the buy and hold brainwashing, and protect yourself properly....before its to late.....than again i could be wrong....

Getting Old Sucks's picture

I'm a politician and if you give me nine million dollars, I'll secure a grant of ten million dollars for you.  That's a nice return on your investment.

Why didn't he just use the actual example of how it works?


A Lunatic's picture

"Corruption, like a cancer … eats faster and faster every hour. The revenue creates pensioners, and the pensioners urge for more revenue. The people grow less steady, spirited, and virtuous, the seekers more numerous and more corrupt, and every day increases the circles of their dependents and expectants, until virtue, integrity, public spirit, simplicity, and frugality become the objects of ridicule and scorn, and vanity, luxury, floppery, selfishness, meanness, and downright venality swallow up the whole of society." - President John Adams

Dr. Engali's picture

I agree with the premise of the video, but 90% of the people out there can't grasp the fact that debt is pulling economic activity forward. They sure aren't going to grasp this concept. In their mind they see it as.."but it's free".

Kingkongballs827's picture

PVC Gun Burial Tube. Holds 3 long rifles Ak47, SKS, AR15 plus ammo and gold & silver. Check it out here.




trav777's picture

kind of a stupid fuckin idea...wtf good is a fuckin gun that's buried?

Rogue Trooper's picture

Shit Trav... sometimes you are fuckin thick sometimes.  It's a form of TSHTF insurance. When they come for the BLACK KIDDY KILLIN WHITIE RIFLE. Which they will before it gets real ugly.  What you do is bury one in case you really need it.... if it goes Mad Max and they start the FEMA Camps or the EBT Cards start 'failing'.... then you may have a slim chance of getting thru.  But if you are in the middle of Manhatten then you are fucked anyway as there will be no room on the Chopper(s).

BTW way this is what 70% of the Aussies did when their EVIL semi-autos where ALL bought back by John Howard.... so I hear.

Just sayin...

SunRise's picture

rusted "gun that's buried" . . . fixed it . . . well maybe didn't fix it, but risk-adjusted the concept

disabledvet's picture

debt monetization schemes are illegal for a reason. first off this one is leading to a MASSIVE deflation. second..."why pay your taxes" if crime is all that pays? i mean clearly "going after the ratings Agencies" is about as stupid as an idea to say your home state of (bankrupt) Illinois as is imaginable. Everyone knows when you failed to get that loan a couple days ago that you "sent in you clown lawyer brigade" to "make it all look good." only making it worse. "the Good States" are now reporting HUGE budget surpluses...while the bad ones will have to go belly up and "pay for their sins"...not the least being "money printing only aids the chaste." Love gas rich Pennsylvania here...the irony of course being "bank rich New York could be resource rich New York" as well...but has chosen bankruptcy for a few thousand voters backed in an area the size of a postage stamp.

Manipuflation's picture

OT, of course.  A fellow MN ZHer, whom I do not know personally, had a good post on the Star and Sickle Tribune this morning.  It was concisely written and perfectly edited.  Here follows all that is left of that post:

swmnguyFeb. 3, 13 7:36 PM

Higher education, like the rest of America, has adopted the corporate management model. It's the most inefficient, degrading organizational structure we have. But it's good at amassing money. If that's your purpose, so be it. But if your purpose is to provide education, or health care, or high-quality goods and services, it's a disaster.

146 25

I sure hope that was not censorship because that is not what swmnguy originally wrote.  Today was not a great day for anyone from MN whether they realize it or not.  We are the guinea pigs in this gun control bullshit debate.  Obama is attacking at the state level and not federally just to see what he can get away with.  I hope that, should he read this, swmnguy takes that under consideration for his next post on the star and sickle.  

Molon labe 


reader2010's picture

Money is the modern version of the Middle Age Oxthodox Church, and the personal god to almost everyone.  Giving money away is to take people's studpid belief system away.

Stuck on Zero's picture

A large California city I know of received an estimate on some street work for $380K.  Before letting out the contract they learned that HUD was putting up matching funds.  They decided to get the Federal money and spent $714K to obtain a grant for $1M.  (They hired six people full time to work out all the details.)  They received the money and then were forced to adhere to the stipulations on how it was spent and the quality of the work.  That added about $500K to the job.  In all, the city was out about $1.2M.  No telling what the Federal government spent on their end.  The bureaucrats were happy, the unions were happy (Davis Bacon), and the politicians got bragging rights.  The taxpayer was shafted.


steveo77's picture

These are my home brew 
Fear Factor 
Volatility on Steroids 
Asset Class Total 
Do you think that using the complex ratios and arithmetic makes it harder to the "invisible hand" to hide it's intentions? 

steveo77's picture

These are my home brew 
Fear Factor 
Volatility on Steroids 
Asset Class Total 
Do you think that using the complex ratios and arithmetic makes it harder to the "invisible hand" to hide it's intentions? 

Snoopy the Economist's picture

Free money.

The video never tried to identify from where the 'free money' actually comes. In the end does not all 'free money' originate from tax payers?

Sudden Debt's picture

I don't give away money. It's against my nature.