Re: Pinching Pennies in a Spending Spree

Commentary Magazine ^ | July 30th, 2009 | John Steele Gordon

[Jbny]

Like Jennifer, I too found the Wall Street Journal’s story on latter-day federal penny-pinching fascinating. I have two comments:

1) Here is the perfect example of why the government should never run anything it doesn’t absolutely have to. Because corporations are wealth-creation machines and Benjamin Franklin was right (”A penny saved is a penny earned”), corporate management spends much of its time looking for ways to save money.

The most famous example of this cost-scavenging attitude, perhaps, is the story of John D. Rockefeller and the drops of solder. He was at a Standard Oil factory where kerosene was being put in five-gallon cans sealed with solder. He asked the manager how many drops of solder were being used. The answer was 40. “Try 38,” Rockefeller said. A few of the cans leaked, so they tried 39. No leaks. The yearly savings — which went, of course, directly into the pockets of Standard Oil shareholders — were over $100,000. No wonder Rockefeller created the greatest fortune of his age.

[all the best]

Bureaucrat: How many drops of solder are you using?
Answer: 40
Bureaucrat: Better try 50 and no need to work so quickly.
Government is a destroyer of wealth.

[RobbyS]

I once taught for the overseas schools of the Department of Defense. At the end of each fiscal year, administrators were told to get out their wish list and to spent any remaining funds in their budget. Much useful but also much useless stuff was then ordered. The rationale was that if the money were not all used up then the heads of the agency could not ask Congress for an increase in spending for the following year. This is the way that bureaucrats think.

[Sursam Abordine]

If you didn't use it all then you didn't need it all in the first place, so you get less next fiscal year. (Or so the thinking goes) I Went thru the same thing every year (22 times) while I was USN.

[ASOC]

Ditto for the USAF

I was lucky once and able to order a new shops worth of test equipment and put it on memo due out (on order if I could find the money)

Last day of the fiscal year we got a paniced call - our host unit had millions they could not spend - could we ‘help’?

It was like Christmas for the next five months as brand new HP equipment arrived almost weekly.

Lest you think it wasteful, the gear was ‘authorized’ but never funded. We got lucky.