Last year on April 15, I shared with you how the concept of taxes can be taught in the classroom. I figured I'd take a similar approach on this most disheartening of days. Many years ago, as a young and inexperienced public school teacher, I learned a valuable lesson about government spending and financial waste at the expense of hardworking citizens who didn't even know they were being taken advantage of. Multiply the experience I'm about to share with you by a crap-zillion and you'll start to see how taxes work.
My principal called me into her office one day in late spring and proposed an offer to me. Another teacher was leaving before the end of the school year (for a reason I never knew), and some of her workload needed to be completed as the year was winding down. My principal told me the work (some grading, some filing, basic teachery administrative stuff) would take about 12 hours and I would be paid at a rate of $24/hour. Would I be interested?
I remember looking at her and thinking an extra $288 in my pocket sounded pretty sweet. The deal got even sweeter when I quickly did some mental math. As a fast worker, I knew the tasks wouldn't take me the full 12 hours. They would probably only take about 6 hours. That means I would make an awesome $48/hour for some work I already knew how to do (since I had to do it for my own class anyway) and could knock out in one evening. I'll take it, I said.
Here's where we learn the lesson. Esteemed economist Milton Friedman famously explained that there are only four ways that money can be spent: "You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government." Keep in mind that I was teaching at a government-operated public school.
Using Friedman's list, how can we determine the most efficient way of getting the work done that remained when the previous teacher left? 1) The cheapest way to get the job done would have been for my principal to just clean up the mess herself. Sure, it would've cost her her own time and energy, but at least no cash would've been paid. 2) If she simply didn't have time to take on the extra work and absolutely had to contract it out, which is understandable, she could have presented me the situation and asked me my fee for the overtime--negotiate with me. What she would've learned is that I knew the task was only going to take me 6 hours, and because the job was relatively easy, I would've done the work for only $10/hour. She could've gotten the job accomplished for only $60. For you math majors, that's a lot better deal for the town's taxpayers than the $288 she offered without even asking me. 3) She offered me the rate of $24/hour because that was the rate demanded by the district's teacher union--a group to which I didn't even belong. Therefore, union members demanded taxpayers foot the bill for a fee that wasn't ever asked for and for a person who wasn't even a part of said union. 4) My principal (and the union she was appeasing) felt just fine about paying someone $228 more than she needed to for one very important reason: it wasn't her money. The money came from innocent, hardworking citizens whom she never had to face and explain why she just overpaid an employee with their money by nearly 400%.
Government can only use money by way of Friedman's fourth method--and it's the same method used by my boss that day. When people whom you don't know spend money they got from somewhere else and pay exorbitant prices on projects that may or may not even need to be done without caring about such expensive and inefficient results, congratulations--you are now part of our wonderful democracy.
Did I feel bad about accepting the money that day? Not really. After all, I was just getting some of my own tax dollars back. But perhaps I was part of the problem, too. Perhaps I should've had the guts to stand up for my fellow citizens and decline some of the money and demand the school district return some of those dollars to their rightful owners. But we all know that's impossible--the money would've just been misspent somewhere else.
So there's a lesson about Tax Day for you. And that's what went on in my little public school all those years ago. Remember Friedman's rules for spending, and the world will start looking a lot different to you. As you file your returns, consider where your hard-earned money might be going. If my story can happen at a school over a matter of $288 dollars, just think what may be going on elsewhere.
My principal called me into her office one day in late spring and proposed an offer to me. Another teacher was leaving before the end of the school year (for a reason I never knew), and some of her workload needed to be completed as the year was winding down. My principal told me the work (some grading, some filing, basic teachery administrative stuff) would take about 12 hours and I would be paid at a rate of $24/hour. Would I be interested?
I remember looking at her and thinking an extra $288 in my pocket sounded pretty sweet. The deal got even sweeter when I quickly did some mental math. As a fast worker, I knew the tasks wouldn't take me the full 12 hours. They would probably only take about 6 hours. That means I would make an awesome $48/hour for some work I already knew how to do (since I had to do it for my own class anyway) and could knock out in one evening. I'll take it, I said.
Here's where we learn the lesson. Esteemed economist Milton Friedman famously explained that there are only four ways that money can be spent: "You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government." Keep in mind that I was teaching at a government-operated public school.
Using Friedman's list, how can we determine the most efficient way of getting the work done that remained when the previous teacher left? 1) The cheapest way to get the job done would have been for my principal to just clean up the mess herself. Sure, it would've cost her her own time and energy, but at least no cash would've been paid. 2) If she simply didn't have time to take on the extra work and absolutely had to contract it out, which is understandable, she could have presented me the situation and asked me my fee for the overtime--negotiate with me. What she would've learned is that I knew the task was only going to take me 6 hours, and because the job was relatively easy, I would've done the work for only $10/hour. She could've gotten the job accomplished for only $60. For you math majors, that's a lot better deal for the town's taxpayers than the $288 she offered without even asking me. 3) She offered me the rate of $24/hour because that was the rate demanded by the district's teacher union--a group to which I didn't even belong. Therefore, union members demanded taxpayers foot the bill for a fee that wasn't ever asked for and for a person who wasn't even a part of said union. 4) My principal (and the union she was appeasing) felt just fine about paying someone $228 more than she needed to for one very important reason: it wasn't her money. The money came from innocent, hardworking citizens whom she never had to face and explain why she just overpaid an employee with their money by nearly 400%.
Government can only use money by way of Friedman's fourth method--and it's the same method used by my boss that day. When people whom you don't know spend money they got from somewhere else and pay exorbitant prices on projects that may or may not even need to be done without caring about such expensive and inefficient results, congratulations--you are now part of our wonderful democracy.
Did I feel bad about accepting the money that day? Not really. After all, I was just getting some of my own tax dollars back. But perhaps I was part of the problem, too. Perhaps I should've had the guts to stand up for my fellow citizens and decline some of the money and demand the school district return some of those dollars to their rightful owners. But we all know that's impossible--the money would've just been misspent somewhere else.
So there's a lesson about Tax Day for you. And that's what went on in my little public school all those years ago. Remember Friedman's rules for spending, and the world will start looking a lot different to you. As you file your returns, consider where your hard-earned money might be going. If my story can happen at a school over a matter of $288 dollars, just think what may be going on elsewhere.