Third Law of Budgets

Now we get to the fun part of reality. The politicians are really not going to like this. If the First Law of Budgets says you can’t win (get more out than you put in), and the Second Law says you break-even (get as much out as you put in); then our crafty politicians are going to want to work on eliminating the waste (nibbles) that occur in the financial transactions that their budgets feed. Politicians will want to make the nibbles so small that they become zero. They will want to make the exchanges perfect, a typical ideological vision: a get what you pay for nirvana.

But here’s the thing, there is no perfect transaction, no truly equitable exchange, no absolutely fair-market place. Maybe you can find ways to target a specific transaction and make it more equal, but that is one exchange and not the entire system. And every attempt to modify the process and method of transactions opens the door to new nibbles that also eat away at the value of the budget.

The Third Law as interpreted by C. P. Snow is “You can’t get out of the game.” And that is what will frustrate the politicians the most. They are denied the thing that they desire the most, the ability to control how things are to be. In the case of national, state or local budgets politicians want to be able to control how the economy will function; and being denied that authority will not rest easily upon their shoulders.

So in the end, the politicians have to live with the fact that they cannot win the budget game. They will never get more than they pay for, they won’t get even as much as they thought they should, and they can’t change that. What this means is that they have to learn what the real game that they are playing is. And in the budget world, it’s not deciding how much the budget should be. The game is deciding what the government pays for via taxes, and what the public pays for through the market place. And if you want to avoid the most waste or positively put, get the greatest bang for your buck, then you have to understand which avenue works best for everything you want in your shopping cart. Oh, and if you think the government or the market-place is always superior to the other, you would be ignoring history and you would be wrong. This is way political ideology is a mental blindness. It prevents the particular ideologue from seeing things that a clear mind can recognize with little effort.

The cure for the blindness is to be able to understand the forces that affect the size of the nibbles that the particular transaction approach imposes. Unfortunately once again, the politician will be left at a distinct disadvantage in this problem space, since comprehension is not their forte.