That much I knew. But my thinking was that the amount spent and how was a better indicator. If they bring in $5000 in revenue and buy $5000 in golden toilet seats, it's not being spent well.
But if that $5000 is going to needed books for schools, it's good.
It's only good if the books are genuinely worth $5000. That was one of the interesting things that came up with Feynman's time vetting school books in California:
At first we weren't supposed to talk about the cost of the books. We were told how many books we could choose, so we designed a program which used a lot of supplementary books, because all the new textbooks had failures of one kind or another.
[...]
[During my time on the commission,] there were two books that we were unable to come to a decision about after much discussion; they were extremely close. So we left it open to the Board of Education to decide. Since the board was now taking the cost into consideration, and since the two books were so evenly matched, the board decided to open the bids and take the lower one.
Mr. Norris, the Pasadena lawyer on the board, asked the guy from the other publisher, "And how much would it cost for us to get your books at the earlier date?"
And he gave a number: It was less!
The first guy got up: "If he changes his bid, I have the right to change my bid!" -- and his bid is still less!
Norris asked, "Well how is that -- we get the books earlier and it's cheaper?"
"Yes," one guy says. "We can use a special offset method we wouldn't normally use . . ." -- some excuse why it came out cheaper. The other guy agreed: "When you do it quicker, it costs less!"
That was really a shock. It ended up two million dollars cheaper. Norris was really incensed by this sudden change.
Agreed. But given that 49 out of 50 states were struggling to fall under budget this past year, we can safely say they're cutting the useful stuff now.
Great anecdote from NY State on a recent episode of This American Life ("Social Contract"): Arizona sold their state capitol to cover costs, and now pays rent to use the building.
I don't think I'm being as clear as I should be. I'll see if I can rephrase it tomorrow. Trying to think economics at this time of night often proves hazardous for me. :)
