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Would you prefer a world where we “waste” 10% of our expenditures on administrative costs, or one where we only “waste” 5%? Of course you cannot answer that question without knowing how much we spend. If you get the same product in each case, but total spending in the first is $100 and total spending in the second is $200 … is there any difference?

Keep that in mind when you have someone trying to argue that “Medicare” or single-payer health systems have less “overhead” than private health systems. In future posts, we’ll explore in far more detail whether in fact that accepted wisdom has any merit to it.

One Response to “Wasteful Expenditures”

  1. Harry says:

    I’d bet you that Medicare and single-payer (Europe, Canada) have more overhead for the same reason anything run by the government has more overhead. Hey, government in itself is all overhead.

    Your point, however is an excellent one. Every dime of waste should be eliminated, provided it does not cost eleven cents to save a dime.

    Some time back I managed a project for a company that made metal building products, and the project was successful. I remember giving a tour to my company’s V.P. of operations a few weeks before the project ended, and as I was proudly giving him a tour we walked by a bin of scrap steel, and he asked me with a wry smile, what did we do about scrap?

    I defensively responded by saying that well, er, we didn’t get into that much, because We (I) were concerned about getting the quick-and-dirty savings, which added up to hundreds of thousands of dollars annually, and I quickly got off the subject of whether I had spent any time on that subject before enjoying my weekends of leisure.

    His point was well-taken, though, and later I would wish I had focused more on that bin of metal, which had so much done to it after it was a clump of iron ore. It was refined, turned into steel, transported who knows how many times, PAINTED, moved here and there, and, for this bin, cut off at a shear before it may have become even more valuable as part of a building. I’d say maybe even a government building, but I don’t want to speculate on whether the metal would have been more valuable just going into the scrap pile than, say, over the roof of Charlie Rangel’s rental property.

    One thing is certain: you are never going to get a lot of people in government staying awake at night thinking about what they might have done the last time they saw a hundred pounds of scrap metal.

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