Thursday, February 05, 2009

Giving away money with no spending instructions is not wise

I have read a lot of stories recently about cancelled junkets to Los Vegas and elsewhere. The cancellers are recipients of government bail outs and the public, rightfully outraged about the need for and/or usefulness of the bailouts, made a fuss about the lavish plans.

Our political class, which gave away the money with no restrictions that I am aware of, suddenly becomes outraged. Righteous indignation abounds.

Who doesn't know that if you give someone a bag of money with no instructions on how it is to be spent it may not be spent the way you might have hoped. Blame the givers, not the givees.

I would suggest that we all take a step back and ask ourselves what difference it makes how the money is spent. The point is, it has to be spent. Spending a few million in a Las Vega resort is a far better and more direct stimulus than keeping it in the bank's vault.

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