Thursday, February 3, 2011

Rent Dissipation, Lobbying, and Zerobased Budgeting

State Rep. Barry Loudermilk, in an op-ed-- that surely made Free Market anti government interventionist Friedrich Hayek roll over in his grave--argued that Georgia needs to proactively step up the productivity of our states high-tech sector.  I'd have to agree with Rep. Loudermilk.  This is just one example of why the wasting of resources via inefficient implementation of zerobased budgeting hurts out economy at large and not just in the budget process itself.
For the most part I have been attacking the legislation for costing more in resources than it will ever find in waste.  Its the very reason that Ronald Reagan nixed zerobased budgeting at the federal level--the benifit didn't justify the cost.
But there is aspect of the states economy as a whole that must be brought up in this discussion.  By implementing zerobased budgeting you are going to increase the lobbying efforts by entities that want to protect the programs and money that go into things they like. 
The concept is called rent dissipation (I believe) and basically the point is that when firms spend money hiring lobbyists, lawyers, and such in order to show up at the Capitol to poke, prod, and pull at legislators coat tails to protect their funds/programs you end up shifting workers that could be better harnessed productively in other endeavors. 
Maybe that lobbyist would be off inventing some new product, or becoming a teacher, or a zillion other things that would be a net benefit to our economy.  Instead because there is an increase in money to be made via businesses paying lobbyist to protect programs in the budget that they like the state of Georgia has a net loss in productivity.
Loudermilk wants to see Georgia become more cutting edge in the high tech sector and so do I.  If zero based budgeting passes this session as it is currently written (every four years) not only will it be a drain on revenue/resources that could go other places in the budget during this budget crisis; but it will also increase the tide of lobbying, shifting productive workers away from other jobs-- such as the high tech sector--and into trying to wine and dine elected officials.
Zerobased budgeting is sounds good, feels good policy.  The reality is most of the supporters of zerobased budgeting aren't actually willing to find ways to increase the revenue needed to make up for the extra time/effort that zerobased approach would require. Our budget and the states economy as a whole will be worse off because we are chasing our tail to eradicate a wasteful manner.
This is pushing the revenue/resource question to the marginal level I know, but our states finances are so that that every dollar wasted has a very real impact on the quality of life of citizens across this state.

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