Monday, June 28, 2010

All waste benefits someone

There was a deceivingly simply quote on the Aid Watch blog last week:

"Every inefficiency is someone’s income."
As I've written before, inefficiency creates jobs - bad jobs that need to go away, but jobs all the same. Whenever wasteful spending is cut, someone will lose their paycheck.

I remember a few years ago a caller to an NPR program talked about money being misspent in New Orleans after Hurricane Katrina was wasteful, but at least it stimulated the economy. The host was clearly not a Henry Hazlitt reader and agreed.

Whenever there is talk about cutting health care costs, it is glossed over that the medical profession will lose revenue. It's also assumed by some that the insurance industry is making all the profits, but that's not the case. Whenever waste is trimmed, someone loses a buck, or worse, their job.

But cutting waste frees up resources and allows new jobs to be created. The political trouble here is that the new jobs will appear all over the place. The jobs will certainly happen, but the nature and location of these new jobs is unpredictable - and the people who will eventually get the jobs don't know that they stand to benefit. Meanwhile the holders of wasteful jobs know who they are and will resist efforts to destroy their profession.

In the political battle, the visible and organized have a huge advantage over the invisible and scattered. The people holding wasteful jobs participate much more in the debate than the clueless people who will benefit when those jobs are destroyed.

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