Spending other people's money

It's always very simple to spend other people's money. And as Milton Friedman pointed out it usually ends up being spent very badly:

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. And that’s close to 40% of our national income.

Now that refers, of course, to our owwn government spending the tax money they extort from us. If we take it up another level, to the money that the European Union spends....

A European package of spending increases and tax cuts said to be worth €200bn (£170bn), or 1.5% of the European Union's gross domestic product, was unveiled yesterday as the EU's answer to the swelling financial and economic crisis.

The important point here isn't the amount of money nor whatever minor fiscal stimulus it will bring. Rather, it's where the money is coming from.

The commission's two-year plan is aimed at restoring consumer and business confidence, shoring up employment, getting the banks lending again, and promoting green technologies. It reshuffles EU spending schedules and increases loans from the European Investment Bank (EIB), but leaves the bulk of the extra spending and fiscal stimuli to the 27 member states.

The 27 countries would provide €170bn of the €200bn - or 1.2% of European GDP - while the other €30bn would come from Brussels' coffers in the form of EIB loans, and accelerating payments from the cohesion and structural funds, which go mainly to the new members in central Europe.

So they're not announcing that the EU is going to be spending the money the EU already has. Rather, they're announcing that the EU is going to spend money which the national government's have to find from the pockets of the taxpayers. That is, an unelected body is telling elected bodies how they should gouge the citizenry.

So, to go back to the four ways to spend money. The fourth method provides the very worst result....and this announcement is of the fourth way squared. Without even the limitations placed by the ballot box upon how the money is splurged.

Given that it's very difficult indeed to believe that this money will be anything other than entirely wasted....if not spent on things which make matters actively worse.