Last week’s “FREE Insights” (October 21, 2009) characterized our Federal Budget as a common pool. Like fish in the oceans, a classic common pool resource, the federal budget is subject to the tragedy of the commons. In such circumstances, valuable resources with no owner or manager to control takings are overexploited to everyone’s long-term detriment.

In the case of the federal budget, coalitions of politicians, organized interests, and agencies organize and conspire to tap the common pool via budgetary allocations. Because these interests are concentrated and focused, while taxpayers are diffuse, divided, distant, and distracted, there is not a countervailing pressure or strong budgetary constraint on overexploitation.

Ear marked appropriations for grossly inefficient and excessively expensive projects are common, predictable results. That’s what we “hire” our senators and representatives to produce and that’s how they campaign. In our transfer society it’s naïve to think otherwise.

Alaska’s “Bridge to Nowhere” may be the most notorious of recent examples. Five of Montana’s 14 border crossing stations also qualify with Wildhorse receiving almost $16 million, the Port of Scobey just under $15 million, Del Bonita almost $16.5 million, and the Port of Morgan $14.5 million. Whitetail, which processes “about three travelers every day,” was allocated another $15 million. As Senator Tester assured us, “I’ll keep working in the Senate to shine the spotlight on the northern border. Montana and our nation demand nothing less.”

According to the Helena Independent Record, Senators Tester and Baucus have taken credit for the Homeland Security money flowing to the northern border. The AP report questioned how these crossing stations cut ahead of busier crossings in getting money.

On September 17, CNN reported: “The Department of Homeland Security had announced it was spending $31 million to enhance and upgrade two remote border crossings — just 12 miles apart — on the border between Montana and the Canadian province of Saskatchewan. The spending was lauded by Montana's two senators, even though only an average of 22 cars a day traveled through these border posts.” And this was in summer.

The report went on: “The Scobey border crossing itself seemed perfectly adequate. But the Department of Homeland Security had warned its agents not to allow us inside, so we don't know what the interior is like. If we came in, we would be too disruptive, one government spokesman had informed us. In Scobey, that claim seemed a little far-fetched, since there wasn't anything going on here — disruptive or otherwise.

“In Whitetail, it was even quieter. The town has grain elevators and a post office. Bureau of Transportation statistics show only about two people a day cross the border there, and the agents’ building seemed in good shape, save for maybe needing a paint job.

“The DHS planned to spend $15 million on the outpost. That would buy a lot more paint than the building seemed to need. So why did these two areas get so much money? Locals and critics suspect politics might have played a role.

“Baucus is chairman of the Senate Finance Committee; Tester is on the Senate's Homeland Security Committee. Both took credit for convincing the DHS to give these towns millions for border crossings, bragging in a joint press release that they pressured the agency.

“So, the nagging question: Did politics, rather than security, guide the DHS? Especially when a border town like Laredo, Texas, which sees 66,000 crossings a day, was getting not one dime of the $400 million in DHS border stimulus funds. Montana, in total, was to receive $77 million.

“In an interview Wednesday with CNN, Trent Frazier, the director of port modernization for the Department of Homeland Security, denied that politics played any role.”

This sort of silliness has one benefit; it illustrates the political economy of our transfer society — and that is what America has become. This world is one that initially mystifies attentive citizens, especially economists, engineers, and ecologists, for here the cost of a project really is the benefit. Any normal measure of efficiency is totally irrelevant when, due to political calculations, costs equal benefits.

When America was rich we could afford such silliness. Now, however, such folly gradually erodes our wealth, especially when financed with funds borrowed from foreign sources.

A cost often ignored is that of the dishonesty generated by the political transfer game. That system clearly rewards politicians skilled at deception, distortion, and denial. It also increases the value of public choice economics for this discipline offers analytic leverage for designing reform.

Last week I introduced a means of rectifying the problems sketched above, the predatory bureaucracy. Such an agency would opportunistically identify and then prey upon environmental, ethical, economic, and efficiency problems flowing from political allocations of wealth and opportunities.

I devised this reform three decades ago, but the published piece was only an intellectual curiosity, not widely recognized as a possible constructive reform. As America’s financial situation becomes evermore dire, perhaps this and other changes that constrain avarice and plunder will be taken seriously.

I’ll present the logic and provide examples in future “FREE Insights.” You can see one version, written with Doug Noonan, a student who went on to a Ph.D. in economics and public policy from Chicago, by linking to our book Managing the Commons.