Farmer subsidies have bothered me for a while. They exist because farmers are well organized and highly interested in their existence. Those who have opposing interests aren't well organized, and don't stand to gain much from their elimination. In New Zealand, a while back, the government ended subsidies, and the results have been quite positive.1
Labor unions also make me sad. Just like farmers, union workers are well organized and highly interested in their cause. In essence, union workers are subsidized just like farmers, though not explicitly.
The final inefficiency is much closer to home for me. It is the BYUSA, which stands for the Brigham Young University Student Association. The principle governing the existence of farmer subsidies and labor unions applies here. BYUSA is well organized and highly interested in the existence of a BYUSA budget. The budget, which is purportedly about 250,000 dollars, when divided by the number of students in the leadership is probably a decent amount of money. When divided by the 35,000 BYU students, it's about 7 dollars. So everybody pays tuition that is 7 dollars higher than if BYUSA had no budget, which seems trivial.
BYUSA exists ostensibly to serve, so I could imagine the use of 250,000 dollars to improve the school. What does BYUSA do with the budget? They serve me a boiled hot dog for "free" once a semester. They also have leadership retreats and get scholarships.
I think that I could get more than one hot dog for 7 bucks, and it wouldn't even be boiled. I could be first in line to get the hot dogs that I made. I'd probably have enough money left over for a fun dip. Maybe you're indignant at this point, thinking "Hey! BYUSA also uses the money for activities." The idea here is that if there were an activity worth the money, people would pay to get in. Instead, we have our money taken involuntarily and used for an activity that is called free. Those who bear the actual costs of the activity should be the ones to decide what it should be, and if it should exist at all.
Let's compare the costs/benefits of the president of BYUSA with me:
Me: Benefit of ending BYUSA=roughly 7 dollars
Pres: Benefit of keeping BYUSA=roughly 5000 dollars (two semesters of full tuition?)
So he/she is likely to be more interested in keeping BYUSA than I am in getting rid of it. The same principle applies to farmers, and labor unions, which is very likely the reason they all exist even though they are obviously inefficient in the abstract.
Notes:
Wow, Julie, my roommate, and I were just talking about BYUSA the other day. We came up with pretty much the same conclusion as you did, only without economic terms.
ReplyDeleteI imagine BYUSA is the target of much criticism similar to this, just like farmer subsidies and labor unions. It's interesting to me that believing it to be unfair is not enough to make it worth changing. The satisfaction of fairness + 7 bucks < 5000 dollars. This is true for me, since I have done nothing about BYUSA.
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