Spending other people’s money on other people

by Russ Roberts on August 21, 2011

in Curious Task, Politics

Milton Friedman wisely observed that we spend our own money on ourselves very carefully. We spend other people’s money on ourselves less carefully. But the least carefully spent money is other people’s money on other people. Aid to Colombia would seem to fall into the latter category. The Washington Post reports:

The Obama administration often cites Colombia’s thriving democracy as proof that U.S. assistance, know-how and commitment can turn around a potentially failed state under terrorist siege.

The country’s U.S.-funded counterinsurgency campaign against a Marxist rebel group — and the civilian and military coordination behind it — are viewed as so successful that it has become a model for strategy in Afghanistan.

But new revelations in long-running political scandals under former president Alvaro Uribe, a close U.S. ally throughout his eight-year tenure, have implicated American aid, and possibly U.S. officials, in egregious abuses of power and illegal actions by the Colombian government under the guise of fighting terrorism and drug smuggling.

American cash, equipment and training, supplied to elite units of the Colombian intelligence service over the past decade to help smash cocaine-trafficking rings, were used to carry out spying operations and smear campaigns against Supreme Court justices, Uribe’s political opponents and civil society groups, according to law enforcement documents obtained by The Washington Post and interviews with prosecutors and former Colombian intelligence officials.

The revelations are part of a widening investigation by the Colombian attorney general’s office against the Department of Administrative Security, or DAS. Six former high-ranking intelligence officials have confessed to crimes, and more than a dozen other agency operatives are on trial. Several of Uribe’s closest aides have come under scrutiny, and Uribe is under investigation by a special legislative commission.

U.S. officials have denied knowledge of or involvement in illegal acts committed by the DAS, and Colombian prosecutors have not alleged any American collaboration. But the story of what the DAS did with much of the U.S. aid it received is a cautionary tale of unintended consequences. Just as in Afghanistan and other countries where the United States is intensely focused on winning counterterrorism allies, some recipients of aid to Colombia clearly diverted it to their own political agendas.

Wow. Who would have ever guessed that Colombian politicians spending my money might spend it on stuff that benefits themselves? I guess the word “some” in that last sentence is the silver lining. I wonder what the proportion is.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” F.A. Hayek

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{ 21 comments }

Invisible Backhand August 21, 2011 at 3:04 pm

Sniping is good for harassing the enemy but it doesn’t win wars. I’ve been reading here about 4 weeks but I’ve never once heard you or Don say what austrians/hayekians/monetarists would *do* to solve the USA’s economic problems.

HaywoodU August 21, 2011 at 3:45 pm

Then you have a reading comprehension problem.

Your commentary is Tired.

Fred August 21, 2011 at 4:27 pm

What austrians/hayekians/monetarists would *do* is remove barriers to economic liberty and allow the ingenuity of millions of individuals to solve the USA’s economic problems.

SweetLiberty August 21, 2011 at 4:59 pm

To be honest, I too would like to read the broad strokes of Don and Russ’s actual policy prescriptions by category.

Perhaps someone could point me and others to some white papers which detail what we SHOULD do, versus what we SHOULDN’T in the areas of entitlements, government reduction (which specific programs would the cut), Military spending, Fed restructuring (or abolition), etc.

HaywoodU August 21, 2011 at 6:05 pm

If you do some research in the archives I am sure you could find what you are looking for. It will take a bit of reading, though.

And it bears repeating that our hosts and many of this blog’s readers believe that no one person knows the details of what we should and shouldn’t do as to the running of a society.

vikingvista August 21, 2011 at 9:47 pm

I would support one policy–the identification and aggressive dismantling of policies.

vidyohs August 21, 2011 at 7:05 pm

When a person is looney enough to believe that beating a team of dead horses is more productive than beating one dead horse, he will most likely have trouble comprehending ma…….most things.

Richard Stands August 22, 2011 at 12:07 am

When the federal government distorts the economy with grand plans, and these plans invariably result in detrimental and unintended consequences, asking for an “alternative plan” that would be more successful is missing the point.

I cannot speak for Profs Roberts and Boudreaux, but my answer would be: stop trying to run the economy. Prosecute theft and fraud, respond to crimes after they’re committed rather than presuming guilt via regulation (and thereby slowing growth and encouraging offshoring), protect private property, enforce contracts rather than abrogating them (GM), remove unconstitutional agencies and departments, keep taxes as low as possible (only enough to support that much more limited, and constitutional, charter), and allow failed business to fail.

Bottom line, get out of the way.

Oh, and get out of the expensive “World Police” business.

But it’s a bit like a Zen koan. What should they *do* to solve the USA’s economic problems? They should *stop* doing harm.

Ken August 22, 2011 at 12:26 am

” I’ve never once heard you or Don say what austrians/hayekians/monetarists would *do* to solve the USA’s economic problems.”

That’s your problem.

First and foremost you think the economy is something to be “solved” like a simple math problem. It’s classic pretense of knowledge.

Second, libertarians KNOW that the government cannot DO anything to “solve” economic problems. People know what’s best for their lives FAR better than any bureaucrat in DC.

Taking and spending other people’s money and pretending to “do” something about “problems” are what politicians specialize in. After thousands of years of government destruction, amazingly people like you still turn to government like some lost child thinking politicians can *do* anything to solve your problem. Then as if this idiocy isn’t enough, actually think politicians care about anything except getting reelected.

Regards,
Ken

SaulOhio August 22, 2011 at 11:17 am

Actually, the Austrian, Hayekian, Donian or Russian prescription is not about what should be done, but about who should do it, and who should decide what should be done. Some businesses need to lay off workers. Others need to hire those workers. Some workers need to stay in the jobs they have. Others need to change careers. Some people need to sell of their assets. Others should buy them up. Some people need to pay off their debts. Others might have to borrow more.

The point is that all sorts of people have to do a lot of different things to get the economy back to health, and all that the government is doing keeps them from doing it. The government is unable to figure out who is supposed to do what. All it can do is encourage certain kinds of behaviors at the expense of others, distorting the markets further.

Chucklehead August 21, 2011 at 3:13 pm

At least Columbia isn’t selling the equipment to FARC in order to perpetuate the conflict and aid, as they are in Afganistan. It could be worse.

Greg Webb August 21, 2011 at 4:21 pm

Yes, and how many of these best-laid plans of the political elite have gone askew leaving only grief and pain in their wake.

Craig August 21, 2011 at 8:45 pm

Is all this aid possibly to make up for Obama’s failure to sign the Colombian Free Trade Agreement?

JCE August 22, 2011 at 12:57 am

I’m from Colombia, and I can tell you that the Post article is completely accurate. In that particular case, money from the US was used for serious criminal activities and even humans rights violations
of course, that is only the latest case. american politicians have been squandering american taxpayer’s money in my country for many years now.
the ridiculous ‘war on drugs’ destroyed my country

SaulOhio August 22, 2011 at 11:21 am

If I had not been opposed to thie war on drugs my entire adult life, I would apologize. I am still tempted to apologize for the sake of my country. I just hope we can some how put an end to this stupid “war on drugs” as soon as possible.

John Kannarr August 22, 2011 at 1:09 pm

>> I guess the word “some” in that last sentence is the silver lining.

I missed something, since I don’t find the word “some” in the quote. Perhaps it should have read “Colombia clearly diverted some of it to their own political agendas.”

John Kannarr August 22, 2011 at 1:13 pm

Well, scratch my comment. How many times did I read it over and still miss that it said “some recipients of aid to Colombia…”

Oh, well.

Jake W. August 22, 2011 at 2:46 pm

I haven’t ever come across someone who didn’t agree that the least thought and care went into spending other people’s money on other people. It’s been the most potent anti-government-spending argument I’ve been able to explain to people and have them easily understand.

Luke August 22, 2011 at 6:35 pm

Milton F.’s quote is probably mostly true only when we do not know the person whose money we are spending.

If I go to the hardware store to buy a tool with my own money, I might just grab the cheapest one or the or made from a brand I recognize.

If my father-in-law gives me money to go the hardware store to buy a tool for him, I will certainly take more time deciding which tool to buy.

Why? Because sometimes we actually do care for other people’s property (like money) better than we do our own.

The difference is that I have a better incentives to be careful with my father-in-law’s money than the government does, and I have a feedback mechanism that the government does not: sitting at the kids’ table for Thanksgiving.

JC August 22, 2011 at 7:31 pm

The unintended effects are not only the expected ones on politicians, this paper
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1542699

shows how the behaviour of the military on human rights, and is not a pretty one.

US Office on Colombia August 23, 2011 at 5:15 pm

Check out this 2010 report outlining the scope of the DAS wiretapping scandal.
English: http://bit.ly/ntnkQX
Spanish: http://bit.ly/qojpek

For more information visit http://www.usofficeoncolombia.org. Don’t hesitate to follow us on Twitter @USOCHumanRights, or to find us on Facebook.

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