Pennsylvania School Bus Waste Story Nothing New

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Another day, another story of government waste.

Each year, Watchdog.org reports, Pennsylvania school districts spend over $54 million of taxpayer money on transportation services provided by contractors who do not have to compete for exclusive contracts with the state and local education agencies. Due to the state’s lack of rules regarding competitive bids, many are calling for an audit and a change of rules.

But would opening up the districts to a competitive bidding process alone do the trick?

According to late free market economist Milton Friedman, there are at least 4 ways money can be spent. “You can spend your own money” on things and services you consider important to yourself, trying to “get the most for your money.” You may also spend your money on somebody else, forcing yourself to look for something that will be meaningful or useful to the recipient while remaining mindful “about the cost.” Or you can either spend somebody else’s money on yourself or others.

According to Friedman, when you spend money earned by somebody else on other people, you’re not “concerned about how much it is,” and that, he concluded, is what government does.

While the waste promoted by Pennsylvania school districts is nothing unheard of, media outlets seldom discuss the lack of incentives in keeping a budget among government officials, whether they are local, state, or federal employees.

If bureaucrats are not concerned about the source of resources, they won’t be concerned with how much they spend. Opening the state’s districts to a competitive process might be of help, but it still won’t solve the government’s money spending problem.

In an article for the Mises Institute, Ryan McMaken makes the case that government is never able to allocate tax money efficiently.

He justifies his argument by claiming that once money is taken from an owner through taxation, the coercive nature of the transaction keeps those allocating it from learning just how valuable roads, law enforcement, and even public education truly are to those paying for them. He also argues that, when government spending is not limited by tax revenues alone, government officials have an endless source of revenue, either in the form of cheap money coming from a central bank or a federal government grant. And that alone is enough incentive to keep government employees from acting responsibly.

Without a free and unrestricted market in business transactions between service providers and consumers, transactions are imposed by the government, not sought after by the individual. Therefore, government cannot assess just how much those services are worth if they do not have a way to gauge demand.

If lawmakers and officials want what’s best for Pennsylvania’s children and their taxpaying parents, the only way to give them what they need—and want—is to remove perverse incentives from the equation, allowing parents to act on their ability to choose what’s best, and most valuable, to their children.