Milton Friedman divides spending in four categories. You can spend your money on yourself, you can spend your money on others, you can spend other people's money (OPM) on yourself, or you can spend OPM on other people. "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."

I think he would argue this is because I pay a fairly small share of it, my vote on whether or not to spend it is unlikely to be decisive, but investing resources in it is.

I suspect this might explain why no bigger hullabaloo is made over the item Lileks has found in the Minneapolis budget. That Mayor R.T. Rybak thinks it should be using OPM on making loans that banks could easily make (a violation of the yellow pages test) is bad enough. I might understand the desire to use money to take property owned by the city and make loans to help get it rehabilitated and back in use productively. Maybe. But the thought that the City of Minneapolis should offer itself as an alternative to Islamic banking boggles the mind. I fail to see how any court would uphold a unit of government in the United States making any loan to an entity on the basis of a religious test as passing muster of the separation of church and state, and that Rybak could not even SEE this as a problem is utterly amazing.

There are private market alternatives already in place for this, so even if you restricted your search of the yellow pages to interest-free loans, you have choices.

Labels: economics, Minneapolis