Two on Inefficiency and Waste

The first reminds of the classic “If You’re Paying, I’ll Have Top Sirloin.”

How Valuable Is a Federal Grant? – The Beacon: “But what if the project’s organizers had decided that accepting the grant would have imposed costs of only $400,000 on them? They would take the $500,000, which would have only been worth a net of $100,000 when accounting for all the costs and benefits. In this hypothetical case, the federal government would have taken $500,000 in tax revenues and produced a net value of $100,000 with it.”

Think of the warped incentives here.

Obama Just Found a Way to Make College Even More Expensive – Reason: “The main difference is that unlike them, it’ll explicitly rate colleges by their “accessibility and affordability” and, if Congress agrees, tie federal aid to the score they get. Colleges that admit more Pell grant students will get a higher ranking and therefore more aid. This sounds great, but in reality it means that existing federal aid will beget more federal aid. It gets worse. One of the most under-reported aspects of administration’s scorecard is its loan forgiveness provision.

Setting aside the fiscal insanity of expanding an entitlement at a time when the country is already groaning under debts and deficits, what incentive would students have to be careful shoppers if they know that Uncle Sam will eventually write off all their debts?”