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ECONOMY IN GOVERNM ENT S P E N D IN G : T H E CONCEPT1 C. Lowell Harriss, associate professor of economics, Columbia ' University The literature on government spending—official, academic, and popular--contains relatively little discussion of the concept of effi ciency or economy.2 Theories about the meaning of “economy” are implicit in the terms of reference, in the method of approach, or in the coverage of the special commissions that seek greater efficiency. Also largely implicit rather than clearly defined are the concepts of economy which underlie the normal workings of the budgetary proc ess (conceived most broadly). The writings of economists, so far as I am aware, give the problem little explicit attention. Yet in a world where governments have the role they do today, efficiency in government spending has an importance th at calls for our best in^ tellectual efforts. • T he G eneral C oncept or E conom y (E f f ic ie n c y ) Economizing is the process of getting good (better) value or, essentially the same thing, higher efficiency; success is achieved when the use of resources yields the best result possible. The crucial ele ment is a,relationship between (a) what is used up and ( i ) what is received, i. e., between input and output. Only when one compares tliis,relationship can one study economizing. A reduction m expenditure is not necessarily a move toward econ omy; perhaps the loss of output is even greater. In fact, onei per sistent fallacy in discussions of government economy is an assuffiiiption that not spending is economy; a person term inating his expendi ture on food would find himself with more money to starve—not my idea of economy. On the other hand, an improvement in ac complishment which yields something highly desired is not neces sarily evidence of greater efficiency; the cost may have been ......... excessive. There are some other things that are not necessarily guides to economy. The recent concern over the size of the budget totals as such, for example, seems to me misplaced. A rising or falling ex penditure trend, in itself, gives no indication of efficiency. No per capita figure, no percentage relationship to national income, no com parison with another era or another land—no such measure—can re-< 1 I t w a s only la te in A u g u st t h a t a release fro m o th e r com m itm ents p e rm itte d me to accep t th e in v ita tio n to p a rtic ip a te h ere. My p o in ts r e s t on w ork done over a p eriod o f y ears, w ith o u t th e new resea rch I w ould h av e u n d e rta k e n h a d tim e p erm itted . 2 T he o u tsta n d in g exception w ith w hich I am f a m ilia r is M ayor’s C om m ittee on M anage m en t Survey, M odern M anagem ent f o r th e C ity of New York, New York, 1953, vol. 1, p p. 32 ff. My sta te m e n t in th e te x t is n o t in ten d ed to d isp a ra g e th e w ork of th e H oover o r o th e r com m issions. 242 ECONOMIC GROWTH AND STABILITY 243 veal whether spending is economical. Such figures do not compare what we get with what we pay. The inputs of a business or a government are resources, human time and effort, materials, the use of equipment.3 In most cases they have money prices; consequently, a reasonably reliable money measure of cost is available. In a more fundamental sense cost is the best alterna tive sacrificed; money measures may not indicate the complete worth of the alternatives sacrificed. Consequently, a look beyond money figures is needed if costs (inputs of any economic process) are to be measured fully. Yet these more fundamental measurements are rarely feasible; for the most p art we assume that people spending their dol lars freely take as good account of alternatives as an imperfect world permits. Where compulsion rather than free market choice deter mines—and this is characteristic of the way governments get funds— there is a presumption th at dollars do not give an accurate measure of the worth of alternatives sacrificed. Yet I know of no way to allow for distortions in cost measurement th at result from compulsion. Still greater difficulty arises in measuring outputs of government. The procedure used in national income accounting (valuing output precisely at money cost, i. e., treating input and output as identical in money value) is utterly inappropriate tor judging economy and effi ciency. Yet there is no other simple or precise measure of output. Therefore, government spending presents a strikingly different prob lem from that of either business or family spending. Business has a tangible measure of output—the dollars customers will pay; these dollars are just like the dollars in which costs are p a id ; comparison of inputs and outputs is easy (except as gaps in time separate them).4 Families as ultimate consumers draw upon im mediate and direct experience to make their judgments of the worth of spending. W hat the public gets from government expenditure varies from indispensable elements of existence itself to services of insignificant worth, perhaps even positively harmful. W hat are these varied outputs worth ? And what about outputs that could be obtained from more or different spending ? Some might be worth a great deal more than they would cost, but so long as they are not “purchased” we have little basis for judgment. The difficulties of measuring outputs create the chief obstacle to applying the traditional economic or business concept of efficiency in government affairs. I m p r o v in g M ethods of O p e r a t io n Yet there is a level at which the problem of efficiency can be studied and mastered without raising the more difficult issues. Here we see the most readily understandable concept of economy. I t involves choice of methods of achieving immediate, specific objectives. The objectives ordinarily involve operation—heating a hospital, processing a voucher, dredging a channel, building a barracks. The thing to be 3 G overnm ent spending w hich tra n s fe rs com m and over resources r a th e r th a n uses them to c re a te goods a n d services p re se n ts problem s tre a te d la te r. T he definition of ‘‘govern m en t ex p en d itu re” is in f a c t mtfch m ore com plex th a n m ay ap pear. See C. Low ell I ia rr is s , G overnm ent E x p e n d itu r e : S ignificant Issu es of D efinition, J o u rn a l of F inance, D ecember 1954, pp. 351-364. 4 N ot a ll-th e 'o b je c tiv e s businesses an d businessm en seek th ro u g h profitm aking ac tiv ity a re sold in th e m ark et. T he p u re exceptions ra ise problem s very like th o se t h a t ch a ra c te riz e go v ern m en t spending. 244 ECONOMIC GROWTH AND STABILITY accomplished has been decided upon and defined with considerable precision. Then the reasonably possible methods of achieving it can be compared and the cheapest selected. The problem may closely resemble one which business firms face; their solutions can be ex tremely helpful.5 So can the solutions of other governments. This approach, the application of businesslike methods, has helped improve government efficiency. (A change in operating methods to cut spending may also change the accomplishment; if the output is better, the desirability of the change clear; if accomplishment suffers, the wisdom of the change is very much harder to judge.) Frequently, the use of business methods will require at least a temporary increase in outlays, such as for mechanization; spending more saves money later. So much government spending is on wages and salaries th a t improvement in personnel policies (in the broadest sense) may offer the greatest challenges to those striving for more efficiency. Promis ing opportunities for bettering methods lie ahead, I suspect. How ever, in view of the determined efforts of recent years, I should be surprised if the application of business methods offers promise of great improvements in efficiency at the Federal level except as better methods are devised in business; Members of Congress are in a better position than I to judge the possibilities. Yet, as has been pointed out so often, the big problems lie elsewhere, in the formulation of programs. Before passing to the larger issues, however, it is wise to note some issues which may confuse the choice of one as against another operat ing method. A government spending program may seek mixed objectives. Consequently, a, businesslike method th at is best for getting one p art of the objective, perhaps the dominant one, may need to be discarded because it is ill suited for another. One thinks of the Walsh-Healey Act, the requirement th a t United States ships be used for transport ing a portion of foreign-aid cargoes, the desire to channel procurement orders to depressed areas, or ‘% uy American.” One also thinks of our desire to prevent corruption, dishonesty, personal favoritism—■ the “spoils system”—even at the sacrifice of flexibility and speed. A systematic survey of Federal spending policies would probably reveal many examples of mixtures of objectives which influence oper ating methods. All the objectives may be worthy. T hat is not the point here. The point is th at combination of objectives may impede the choice of the least expensive operating method of achieving the main goal. Even worse, the “mixing” adds difficulty in identifying the method which will give the best combined result. Difficulty in finding and using the cheapest method of achieving a stated objective also arises from government methods of accounting for capital items.6 I f spending proj ects provide services over different stretches of time, or if projects involve costs th a t extend over varying periods, judgments of economy can be reliable only if an appropriate interest (discount) factor is used. The choice of an appropriate 6 Successful businesses sometimes use different methods fo r perform ing an essentially sim ilar function. The business world will not alw ays contain one procedure which all recognize as best. * Developments since I la s t studied th is problem may have altered some of th e problems deeerlbed here. ECONOMIC GROWTH AND STABILITY 245 figure is itself a m atter for debate.7 Yet the essentiality of including the calculation in decision making is (or ought to be) beyond dispute. A second problem of capital accounting is depreciation (including obsolescence) .* The traditional method of treating capital spending plus maintenance as current expense and ignoring depreciation may give tolerably good results for the budget as a whole, though I have great doubts. F o r individual projects, such a method is certainly not the beet man can devise. The treatment of capital expenditures on long-lived projects as current outlays on the same basis as payment for labor services yielding only momentary worth (delivery of today’s mail) must distort judgments on the wisdom of capital outlays. The concept of economy in executing programs ought to include allowance for depreciation. Differences between leasing and ownership must sometimes complicate measurement of efficiency. The problem of tax exemption also arises in evaluation of one as against another method of achieving a social objective. This country has chosen to get much of the money for financing government from businesses, or more generally, from the process of creating income.8 Taxes are a significant element of cost for most productive organiza tions (creative activities). An activity that does not need to include expense of government as a cost will appear to operate more cheaply than activities which do pay taxes; yet the apparent “saving” is not a reliable guide to economy.10 A less generally recognized aspect of the tax problem as it bears upon comparisons of efficiency arises from tax exemption as a substi tute for expenditure. Seeking an objective th at requires use of re sources, Congress may rely on some form of tax exemption.11 Occasionally, perhaps, the taxes th at m ight otherwise be collected can be determined to provide a good index of cost; I can think of no case, however, in which the cost is treated along with dollar outlays as an expense of government. A ppraising the efficiency of guaranties and insurance as devices for achieving objectives presents other perplexing problems. W ithout either an outlay or a sacrifice of revenue, government can perhaps bring changes in the private economy. Yet how much guaranty (or insurance) will produce how much result ? and what kind %12 More over, there is the chance that sometime the Treasury may be called upon to make cash payments to cover losses. But how much ? Busi ness concepts of economy cannot really be applied to evaluate “operat ing” methods in such cases. I The ra te used should probably be th a t fo r which Government can borrow freely in the m arket fo r a period equal to th a t of the services and costs Involved. •A th ird problem, the treatm en t of loan transactions, would be discussed in a more complete study. • F o r th is purpose, the provision of housing services, through ren tal or owner occupancy, is a form of income creation. The chief ta x is the local property tax. 10 In try in g to improve the N ation’s transportation system, for example, we still fa il to solve the problem of differences between forms of tran sp o rt which cover less th an they cost (airlines not paying all expenses of term inals), those which pay approxim ately their cost (some trucks), and those (railroads) which, in addition to paying th eir own expenses, contribute to the treasuries of local, State, and the National Government for nontrans portation functions. In try in g to improve communication, comparison of the postal and telephone systems should take aceount of the widely different tax treatm ent. II Accelerated am ortization is even more difficult to appraise th an tax exemption. The interest lost to the T reasury from the tax deferm ent cannot be determined when tile decision to g ran t rapid am ortization is made. Nor can we judge how much will be accomplished th a t would otherw ise not be done. 11'The history of “606 housing” insurance suggests th a t all results of a well-intentioned policy are not desirable. Perhaps generous provisions for guaranty and insurance etf home mortgage*, by stim ulating demand, have raised land prices and buildiac costs; if so, some of the basic objectives were partially defeated. How could one, tfren, judge the efficiency of the Government’s m ethods for getting the results i t sought? 246 ECONOMIC GROWTH AND STABILITY C osts : C onceptual I ssu es I nvolved in J u d g in g E f f ic ie n c y Dollars raised by either taxes or government borrowing do not necessarily give an accurate measure of the worth of sacrificed alternatives.13 Some of the problems involved are inherently insol uble, but there is point in understanding them. Most taxes are compulsory contributions, clear or hidden. They exist because of the approval (or the absence of strong disapproval) of representatives of a majority of the voting public.14 Yet even casual fam iliarity with the process, of tax legislation should leave no doubt that the total an individual pays can be quite different from what would represent his freely but responsibly and conscientiously made judgment of his proper contribution. His marginal taxes— whether in a high personal income bracket, a tax on business earnings th a t is a cost of what he buys or a reduction of his income, or an cise tax—may or may not seem more desirable than some (marginal) government services. Few if any of us, I suppose, could make such a calculation for ourselves. How can we (our representatives) do so for others? How validly can any vote of taxes—forcing payment even from those unable to vote or voting in opposition—reflect the worth of alternatives sacrificed ? Some resources in private hands undoubtedly serve purposes of slight usefulness. To take them in taxes is to impose little sacrifice of a truly desirable alternative. The fact th at this situation undoubt edly exists has been used to justify some (a large amount of) high bracket rates even when there is no basis for determining how much of the money collected will actually come from such sources. Yet it is wrong, I think but cannot prove, to attempt to justify any signifi cant amount of government spending on the grounds th at payment can be made with tax dollars that impose slight cost on the taxpayer. Still less justification exists for implying that we know which dollars have such low cost. Taxes impose a type of cost unlike that of prices.15 This cost re sults from tax-induced distortion of economic (and social) life. The individual (or business), with some exceptions, gets the same services whether or not he (it) pays a Federal tax. Any one person’s or firm’s failure to pay tax brings no loss of government service. This situa tion contrasts with market transactions in which the product or serv ice can be obtained only if the price is paid. Consequently, the incen tives to escape taxes are quite different from those to avoid paying prices. The escape (evasion or avoidance) requires time and effort, costs which are largely pure waste for the economy; in addition, the escape will often involve choice of actions less desirable than one would otherwise choose. The allocation of resources becomes somewhat less efficient. Sheer losses to the economy result, but losses which cannot be measured.16 M Revenues from charges are more likely to m easure the w orth of sacrificed alternatives tolerably well. 14 Unlike many S tate and local taxes, Federal levies are not th e result of constitutional or charter provisions th a t decisively lim it the freedom of the voting public. Yet the dead hand of the p ast has powerful influence. Congress, the adm inistration, and the courts cannot In fact make frequent, large revisions in the revenue system. 15 The cost of adm inistering some taxes may be less th an th a t of charging prices. “ W hen ta x rates are moderate, such distortions are insignificant; when ra te s are high, the losses, while not large in the n ational accounts, may be more th an insignificant in rela tion to the revenue from the top rates. Some dollars the goverment gets may cost the economy very much more th an the average. ECONOMIC GROWTH AND STABILITY 247 W hat the Treasury pays for funds obtained by borrowing may represent a good measure of sacrificed alternatives. This is probably true of proceeds of loans sold in open competitive markets when in formation is compete and no appeals to patriotism or other such con siderations sway decisions. To the extent that sentiment or ignorance influences the loan terms, however, the expense to the government may represent a less good measure of cost than might be obtained. When the loan is compulsory, as in the case of social security, how can one judge cost? A person compelled to lend to the Treasury for 2 per cent when he is paying, say, 6 or 12 percent on his own (marginal) borrowings may in a significant sense be incurring a greater cost than the Treasury pays. A still clearer departure of apparent money cost from the worth of sacrificed alternatives arises when borrowings come from the banking system, especially in times of substantial unemployment. Little or no sacrifice of desired alternatives may then be required. A t this point we have reached more complex considerations than my space per mits me to examine. The upshot of these comments on cost seems to be that tax dollars are likely to impose sacrifices worth somewhat more than the dollars suggest, especially when tax rates are high. So will compulsory bor rowing. Finally, conscription and other compulsion will likely in volve costs above those shown in the Treasury’s figures. A t t a in m e n t s : G oods a n d S e r v ic e s Now we return to the heart of the problem, the need to evaluate what is or m ight be obtained. Here is the task of program formula tion. I t involves two essentially different kinds of outlays: (a) Spending to get goods and services (national defense, postal services, tax collection); and (6) transfer spending (welfare, subsidies to farmers) .17 The first buys goods and services which are thereby taken from other uses; government use imposes real sacrifice, real cost. Transfers, however, do not use up resources (except for the relatively minor expense of adm inistration); they do not take pro ductive capacity from other uses to create government output. How much benefit does society get from an element of govern ment spending that yields goods or services? The gains may be incalculable in the sense of being great beyond measure. Almost always the results (good or bad) are incalculable in the sense of not being measurable. Rarely can fruits be evaluated with anything like the precision with which a business can value what its spending programs bring. I t is even harder to envision accurately the gains from spending programs that might be but are not being made. , The difficulties are likely to create a sense of frustration. Yet we must do something. The start is to define objectives,, both ultimate and immediate, as clearly as possible. W hat constitutes a better life? Peace, vic tory, personal freedom, to be liked abroad, reduction of poverty, health, the development of human personality and opportunity, jus tice, equality before the law—so goes the list of things most of us want, things that seem basic. Then one faces the choice of more a The two groups are not sharply distinct. 248 ECONOMIC GROWTH ANT> STABILITY instrumental objectives, desirable as means to help achieve the basic ends. Some of these instrumental objectives may (or must) be sought through government spending.18 Much of the analysis of objectives at both levels is intuitive. We cannot have all we w ant; so we must choose from among a host of good things. Few of us as individuals, I suspect, can measure and balance basic values to our own satisfaction. Doing so as a group is even harder. Confusion of instrumental objectives with those th at are more fundamental is a recurring source of difficulty; means get mixed with ends. Success in achieving some specific goal this year—new knowl edge about disease or improvement in recruiting Foreign Service officers—may be a fine move toward a more basic goal—better health or diplomacy. Yet this year’s success may only conflict with the achievement of a more basic objective. The low-interest rate policies of the late 1940’s and more than one feature of agricultural policy seem to me examples; failure to raise salaries of senior civil servants may save money now but cost heavily in longer run quality of govern ment services. Moreover, it is not economical to do efficiently some thing desirable if the accomplishment of something still more im port ant becomes harder as a result.19 The definition and redefinition of objectives, fundamental and in strumental, must be a continuous process if we are to make the wisest decisions. In a dynamic society both needs and opportunities change. Economy requires more keeping up to date than we may think. Enough modernization of goals to prevent the continuation of serious waste—including waste in the form of failure to take advantage of new spending possibilities th at offer more than they would cost—is difficult in a world where so many things press for attention. Choice of objectives would be easier if the public had clear knowl edge of its wants in order of priority. Unfortunately, however, the world is too complex fo r public opinion to be clear on more than the broadest matters. We must rely upon our elected representatives (and, in my view, the civil service). One of the greatest of the difficulties they face is the identification of the general public interest. Government undertakes a spending program because the public as a whole will benefit.20 Unless there is such a param ount general con cern, the use of public funds is not justified. O r so it seems to me.21 Y et the total gam from any program will include some more or less specific benefits; not all individuals will be affected equally. Those aware of greater benefits—from this dam, th at research, or any mili tary installation—are likely to press for the spending more insistently than the average person. There may, in fact, be a oias against gen eral benefit spending in favor of th at for special interests; the strong est pressures do not necessarily—even “in theory”—reflect what will best serve the general interest. Another factor adds confusion. The many elements of our society are so interdependent th a t the prosperity of one influences th at of * The analysis will Involve the question, “I f th is goal Is one people in general w ant, why will th e free m arket not provide th e means to reach It If the w orth exceeds th e cogt?” * Federal-State local rivalry fo r funds may offer examples. M any localities, I suspect, spend less on schools th an they would if Federal spending (and taxes) w ere lower. Some of the Federal spending m ay be done efficiently, but on projects less ln p o rta n t th a n addi tions to school facilities. * Program s financed by charges on the user constitute exceptions. a Although th is view has been dom inant in the legal and scholarly w ritings, the “man in th e s tre et” m ight n o t hold to i t strongly. ECONOMIC GROWTH AND STABILITY 249 others. Consequently, groups press for government spending to bring them special benefits; they rest their plea on the claim th at the public as a whole will benefit; this general benefit is to come not from the products or services created but from the diffusion through the econ omy of secondary benefits which result from the improved position of the special groups.22 The pressure on Congress to vote for spending on the basis of special, rather than the general public, interest must complicate the determination (as well as the achievement) of what is most economical. The relative persuasiveness of special interests is not necessarily proportionate to the contribution of their programs to the general public interest. U p to this point we have shown, I hope, that economy in spending requires knowledge of (a) what the public wants (developed to a rather refined degree) and ( b ) what specific programs do contribute, not in their totality but to the general interest.23 Our ability to judge what the goods and services really do provide will vary. Newer budgetary procedures help focus on this problem, but they cannot yield all the answers we should like about what the public is now getting.24 The most serious problems arise, I suppose, in protective functions. This is true not only because the amounts are so large but also because the strength of the thing to be protected against (the physical capac ity and the willingness to use it) is unknown.25 In the case of national defense, the ideal minimum and maximum expenditure would seem to be the same—the amount th at will just prevent the need to use force actively. Not knowing what this amount is, however, Congress will act economically in providing a margin over what appears essen tia l; the losses can be so tragic that the risk of error which might bring war cannot be assumed. (Yet other outlays—on foreign service, in formation, foreign aid—also influence the amount of our need for defense spending.) Success may appear as waste, perhaps sheer ex travagance. The whole concept of economy in protective (defense) spending bristles with difficult problems, to say nothing of those that arise in implementing a program. Each of the other major categories of Federal spending presents its own problems of relating (a) what the public wants to, (b) what actual (and possible) spending does accomplish. The specialized papers presented later will doubtless do much to illuminate the is sues—how Congress has come to decide what the public wants, how money is spent, what the results are, and perhaps what m ight be gained from greater spending. One more point. The use of government as an agency to achieve objectives offers a way to serve the public interest where individuals and voluntary associations will do nothing or too little. Sometimes such spending can, as it were, tip a balance or fill a gap and thereby stimulate private activities that are highly desirable. Outlays to prow The h u rt to the general public from the necessary taxes is likely to be Ignored except as some other group may point out the connection. 23 To the extent th a t a program is paid for by charges on users or beneficiaries, the general interest criterion doeB n ot necessarily apply. “ I t is my impression th a t as a rule the budget process throws little lig h t on w hat m ight be obtained from program s not in operation or even from bigger outlays on existing programs. “ Spending for research, inquiry into the unknown, presents problems th a t in some ways are more perplexing than those of protection. I t is inherently impossible to know w hat can be obtained until the job is done. 250 ECONOMIC GROWTH AND STABILITY fliote competition or expand knowledge are two widely different ex amples. Spending of this sort can have a powerfully multiplying effect; it may induce or force a mass of private activity into more productive channels.26 In the case of economic growth there are im portant examples.27 A t t a in m e n t s : T ra nsfer E x p e n d it u r e s 28 The concept of economy in transfer spending has received less at tention than the growth ox such spending would seem to require. The recipient’s benefit may be substantial, a dollar for every dollar re ceived. Often, he makes no sacrifice of desirable alternatives to get it.29 Sometimes there is sacrifice but of minor nature only. Normal “economizing” forces do not motivate the recipient in lim iting his “demand.” W hat is the general public benefit ? I t is rarely tangible, not even as clear as better courts, cheaper food, or less congested transport. W hat the public gains is membership in a society some of whose mem bers are in better situations than otherwise.30 The result may be a true benefit to the general public.31 The gain is hardly measurable, however. And who really bears the burden? One cannot be sure there is net gain until costs and fruits are compared. The diffusion of cost is likely to be over a group so large th at no real identification of burden is possible. Those who pay may be in no position to take effective action to press their interests.32 Is any approach to a concept of “economy” feasible ? W ithin limits, certainly. The essential start is a clear definition of purpose or objective. W hat is the need, in general and specifically ? Immediate and more permanent? W hat is the public concern in meeting it? Why? Are there gradations in urgency ? I f so, what is the relative significance of possible priorities ? I t is questions such as these th at must be an swered. Persons concerned directly, including potential recipients, must be consulted. Yet we can expect objective, balanced judgments— those reflecting real concern for economy—only if final evaluations are made by persons who can and will make the general interest para mount.33 The next step is to compare alternative ways of attaining the goals, considering, of course, but looking beyond administrative feasibility. Some methods, for example, may do more than others to remove causes. “ The situation Is usually either one In which benefits cannot be captured by a private creator (for sale a t th eir w orth to the public) or if captured fo r sale will not yield their full potential because the private owner will charge more th an m arginal cost. 27 Some of my views on th is subject appear in C. Lowell H arriss, The American Economy : Principles, Practices, Policies, 23 edition (Homewood : R. D. Irwin, Inc., 1956), pp. 732-750. 28 Space lim its, plus my own uncertainty, preclude a discussion here of the meaning of “tran sfer paym ent” and the “tra n sfe r” element in government spending which purchases goods and services. In some respects any government expenditure which yields substantial benefits to specific groups is a transfer, but more common usage lim its the concept of tran sfer to payments for which no goods or services a re received. 59 The Government employee or a seller to the Government makes sacrifices for the dollars he gets. If he were not working for Government, he would do som ething else w ith h is tim e and other resources. O rdinarily w hat he could earn would be alm ost as great. 30 If interest on Government debt is a transfer— I doubt th a t th is is the m ost helpful method of thinking of interest— the public gain is largely some form of freedom from the costs of inflation. 31 One of the blessings of modern productivity. In my view, is the power i t gives to alleviate destitution. ' On the other band, opponents may exert the big pressures w hile potential beneficiaries are generally ineffective. 33 T his statem ent assumes th a t the decision is not made by popular referendum. ECONOMIC GROWTH AND STABILITY 251 The most economical program may be one which for a time costs more than others but which accomplishes proportionately more. Some transfer programs, I suspect, are less economical than they m ight be because they offer benefits broadly; aid goes even where the need is much less than that which “sells” the plan to the public. The broader program may gain wider support than one more economical, one that would concentrate help where it would most efficiently achieve the objectives of general public interest. Programs in operation call for continual examination—the basic objectives, the methods possible under current conditions, and the procedures in use. The concept of economy in transfer spending can, I hope, be sharp ened. Final answers, however, will always rest on judgment. Yet whose judgment? And how formed—on the basis or what questions asked, what facts analyzed, what values appraised ? The papers and hearings stimulated by the Joint Economic Committee will undoubted ly make possible improved judgment.
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