Browse Archives

By Category

By Date

About Amit Varma

Amit Varma is a writer based in Mumbai. He worked in journalism for over a decade, and won the Bastiat Prize for Journalism in 2007. His bestselling novel, My Friend Sancho, was published in 2009. He is best known for his blog, India Uncut. His current project is a non-fiction book about the lack of personal and economic freedoms in post-Independence India.




Bastiat Prize 2007 Winner

Recent entries

The New World Upon Us

This is the 45th installment of Lighthouse, my monthly column for BLink, a supplement of the Hindu Business Line. Alpha…

Facts. Don’t. Matter

This op-ed of mine was published in the Hindu today. Politicians like Trump and Modi play to our worst impulses…

Neech Whataboutery

This is the 61st installment of Rhyme and Reason, my weekly set of limericks for the Sunday Times of India…

Hadiya and Ivanka

This is the 60th installment of Rhyme and Reason, my weekly set of limericks for the Sunday Times of India…

A Few Thoughts on Match Poker (and the Match IPL)

A couple of weeks ago, I took part in the Match IPL, playing for Goa Kings. The IPL here stands…

18 April, 2008

What Smith Spends

Don Boudreaux writes:

If Mr Obama truly seeks to rein in institutions that systematically reward bad behavior, he should scale back government and forget about intruding into the private sector.  In private markets, Smith spends only Smith’s money.  Smith profits or loses depending on the prudence of his choices.  This tight connection between each person’s actions and the consequences that he or she bears provides remarkably effective carrots and sticks encouraging private persons to behave responsibly.  In the so-called “public sector,” in contrast, Smith spends Jones’s money.  Smith profits or loses depending on how effectively he uses Jones’s money to buy votes from Jackson, Johnson, Williams and other persons who are assured by Smith of their moral right to free-ride on Jones’s resources.  Surely, there is no surer recipe than this for rewarding bad behavior.

This reminds of what Milton Friedman once said:

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.

Posted by Amit Varma in Economics | Politics

Copyright (C) India Uncut - http://indiauncut.com
All rights reserved. Do not reproduce without permission. Email: amitblogs@gmail.com
This article is permanently archived at:
http://indiauncut.com/iublog/article/what-smith-spends/

Commenting is not available in this weblog entry.