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Sure. Let me first start with this: There are four classifications to spending money (in this context): 1) spending your own money on yourself - this yields the

Sure. Let me first start with this: There are four classifications to spending money (in this context): 1) spending your own money on yourself - this yields the most appropriate level of thriftiness and the most appropriate level of focus on the individual's needs. 2) spending your own money on others - this yields an appropriate level of thriftiness (I can only spend so much on Jane's birthday gift), but your ability to best predict the recipient's needs is lower than the individual. i.e. Jane would never spend this much money on a coffee maker, so I will. 3) spending other people's money on yourself - this yields a poor level of thriftiness (Its not my money!!!), but it does get spent on things the individual wants (although a bit more recklessly). 4) spending other people's money on other people - this yields a poor level of thriftiness and a poor level of focus on the individual's needs and wants. With this groundwork laid, now I can answer your question. Companies spend their own money to deliver a product or service to market because of the profit associated with the effort. At some point, that effort isn't worth it, and the participation in the race to the bottom ends. Hence, companies that can profit at the end of the race win, and consumers win because the goods or services are much lower priced. However, governments don't follow the same thought process. When the profit of participating in a market (attracting businesses) disappears or never appears, they don't experience the negative response and therefore don't make the same decisions as companies would. They may stay in this particular market longer than they should and their drive to participate in the market may not be measured in profits. However, somebody is paying for this endeavor. Taxpayers don't get a choice to "opt-out" of these decisions. Further, a fraction of the tax base may want to spend other people's money attracting businesses (via taxes) however very rarely will write a check to do so, indicating it's only worth it if its with other people's money (see #3). I hope that helps.

refurb 11y ago
Thanks for explaining it. I guess my comment back would be it appears that this is an issue with governments, not with competition. I would hope that the government has some incentive to spend tax payers' money wisely (re-election would probably be the only one). Ignoring the whole "lets give tax breaks to businesses that move here" issue, I think we'd all be better off if there was a strong incentive for the appropriate spending of tax payer money. I mean Singapore seems to do it reasonably well, why can't we. And yes, I know a little about how Singapore trainings and attracts top talent to government.
- georgemcbay 11y ago
  "re-election would probably be the only one" Unfortunately (in the USA) due to our current campaign financing situation, lobbying and media outlet consolidation the elected representatives voting to write big government checks are far more beholden to the corporations than to the people, which explains the crazy boondoggles like the TSA and congress buying military hardware the military doesn't even want (causing it to be regifted to local police, causing all sorts of carry-on negative impact). And then those same corporations/wealthy individuals that profit from this system point to it as an example of how the government can't be trusted with our money and thus shouldn't be allowed to regulate anything they do. The entire system is just ridiculous at this point and possibly unfixable (without some kind of huge society-shifting event).
skybrian 11y ago
Companies don't spend their own money. The people who work for a company spend their investors' money, and their interests are only partially aligned. People spending company money are sometimes far less thrifty than either people spending their own money or government employees, so I don't think you can rank them based on thriftiness. Nor do established companies necessarily provide better service than government organizations. These things depend more on the particular organization's culture and governance, not on whether it's a business or a government.

refurb 11y ago

Thanks for explaining it. I guess my comment back would be it appears that this is an issue with governments, not with competition. I would hope that the government has some incentive to spend tax payers' money wisely (re-election would probably be the only one). Ignoring the whole "lets give tax breaks to businesses that move here" issue, I think we'd all be better off if there was a strong incentive for the appropriate spending of tax payer money. I mean Singapore seems to do it reasonably well, why can't we. And yes, I know a little about how Singapore trainings and attracts top talent to government.

georgemcbay 11y ago
"re-election would probably be the only one" Unfortunately (in the USA) due to our current campaign financing situation, lobbying and media outlet consolidation the elected representatives voting to write big government checks are far more beholden to the corporations than to the people, which explains the crazy boondoggles like the TSA and congress buying military hardware the military doesn't even want (causing it to be regifted to local police, causing all sorts of carry-on negative impact). And then those same corporations/wealthy individuals that profit from this system point to it as an example of how the government can't be trusted with our money and thus shouldn't be allowed to regulate anything they do. The entire system is just ridiculous at this point and possibly unfixable (without some kind of huge society-shifting event).

skybrian 11y ago

Companies don't spend their own money. The people who work for a company spend their investors' money, and their interests are only partially aligned. People spending company money are sometimes far less thrifty than either people spending their own money or government employees, so I don't think you can rank them based on thriftiness. Nor do established companies necessarily provide better service than government organizations. These things depend more on the particular organization's culture and governance, not on whether it's a business or a government.