Making Work

Milton Friedman once visited a developing country where they were building a canal. He remarked to his host how surprised he was that the workers only had shovels. For a large excavation project, heavy earth-moving equipment would be typical.

“You don’t understand,” his host noted. “This is a jobs program.”

“If it’s a jobs program,” Dr. Freidman replied, “why don’t they use spoons?”

The illogic of being deliberately inefficient is clear when it’s as egregious as digging a canal with a shovel. The wasted time, manpower, and money could be better used elsewhere. The entire society is impoverished when resources are wasted.

We have all sorts of “jobs” programs here in the U.S. In New Jersey gas sold on the Turnpike has to be pumped by attendants. In Illinois all cash-payment toll booths are staffed. They don’t use automated machines. Across the country inefficient processes produce protected jobs and economic waste.

What we have is an issue of the seen and unseen. We can see the jobs inefficiency creates, but we can’t see the hidden costs: wasted time, wasted labor, and wasted money.

If our fiscal crisis forces us to do away with make-work inefficiency, it may be an ill wind that blows some good.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By |2014-09-11T09:31:08+00:00October 10th, 2011|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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