May 06, 2007
Sunday
Out of the mouths of babes
My 10-year-old daughter explained something to me a few days ago. It went something like this:
"When I was on holiday with mummy in Spain, when mummy was paying I didn't mind what I bought! But then she gave me 50 euros of my own to spend and then I didn't buy things in case, later on, I found something I liked better."
This is the short course in why capitalism works and socialism doesn't. It is a short course in why public services tend to be wasteful (ministers and the rest are spending other people's money).
When it is your own money, you don't waste it.
Posted by James Bartholomew • Indexed in General
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In his economics text 'Eat The Rich', P.J. O'Rourke distinguishes between the four different ways you can spend money.
1) you spend your own money on yourself. You look for quality and value.
2) you spend your own money on other people. You still look for value, but quality's not so important.
3) you spend other people's money on yourself. Quality - and don't worry about the cost.
4) you spend other people's money on other people. Any old thing will do - and who cares what it costs.
O'Rourke remarks "Unfortunately, most government spending falls into this last category. This is how the grateful citizens of the Soviet Union got Chernobyl."
Posted by: Laban Tall at May 6, 2007 08:13 PM