What Happened in Vegas Didn’t Stay in Vegas . . . GSA Version

Taxpayers are agog as they read tales of the General Service Administration’s junket to Las Vegas that emphatically did not stay in Vegas.

We have read about private room parties, paid mind readers, sushi bars and expensive recreational opportunities. The fun was apparently so important, the agency sent out advance scouts on multiple early runs to check out facilities.

My students and I calculated the cost per attendee. The agency spent nearly $900,000 for 300 attendees. We came up with approximately $2,800 per person. Pretty rich for government work.

Some readers look at the cost of the GSA conference and say, “Big deal. Major corporations do this kind of thing all the time.” A couple of answers present themselves.

First, big companies are private entities, and it doesn’t affect me how they choose to spend their money on employees. It is up to their shareholders to concern themselves with whether they are losing profits due to overspending.

Second, I can count on the market test to protect me from their extravagance. For example, if Procter and Gamble was to regularly waste its funds on similar activities, there is a good chance Colgate-Palmolive could find a way to exploit the mistake and undercut P&G on price.

The problem with government overspending on fun activities and rewards is multifaceted. GSA might tell us their employees deserve this kind of trip to Las Vegas. They might say they’ve done an excellent job for us. But how do we know this is true?

With a private company, it is simple to see how well they have competed in the marketplace. We can observe whether they have made or lost money.

With an agency like the GSA, we basically have to take their word for it. Instead of having to earn money, the GSA receives a large appropriation from Congress each year. The trip to Vegas looks more like a way to spend all of the appropriation and ask for more the following year than it does like a reward for great service.

Another problem is that every time money is spent, there is an accompanying opportunity cost. For example, if a student chooses to take his parents’ money and spend it on video games, then he may not be able to buy his books for the semester. The one expenditure rules out the other one. Or it causes the student to resort to taking on more debt.

What opportunities is the GSA missing because it chose to spend nearly a million dollars and many hours of employee time on a taxpayer-financed vacation? What other uses might have been superior?

A million dollars might have paid for 10 inspectors to spend a year looking for government waste. And those inspectors might have actually found a way to return money to government coffers.

Given the trillions of dollars of debt the government currently faces, a figure shy of a million is pretty small stuff, a tiny amount. But the principle, if followed elsewhere, could add up quickly.

Besides, as one student pointed out to me, the amount the GSA spent could be more than the taxes he pays during his whole working life. And it would be a shame that those taxes were spent so wastefully.