The 3 Degrees of Purchase

As the debate rages on as to whether the American people should turn over more or less control to the state, I find it useful to relate a concept that many of us may already grasp conceptually, but not necessarily actualize and apply to our thought processes. It is the idea of the three degrees of purchase.

If I were to buy something for myself, let’s say a television, there are two determining factors that would be at the forefront of my decision-making: quality and cost. Quality because I am the user of the television, and cost because I am making a sacrifice of my own capital in exchange for the television. In this first person purchase, maximizing quality while minimizing cost is my highest priority in the transaction.

Now let us imagine that I am buying a television as a gift. Cost is still a priority, since I will be spending my own money, but quality is not necessarily as important. I may no longer need to look at whether the television is digitally capable, or has 4k, or has a longevity of longer that 5 years, or ensure that the CNET reviews are above 4 stars. I am no longer the user of the television, so my primary concern is finding a television within my budget. In other words, in this second person purchase, minimizing cost will become my single most important priority in the transaction.

Finally, let us say that I am buying a television for someone else, with someone else’s money. Maybe I have been given the company credit card to buy a TV for the break room. Or maybe I am buying a gift for someone who doesn’t have the time to buy it themselves. Quality is not a primary concern, because I am not the user. Cost is not the primary concern, because the money is not mine and any decision that I make will not affect my personal capital. In the third person purchase, the primary concern becomes completing the transaction, at the expense of quality and cost.

Understanding the Third Person Transaction is paramount to understanding government spending. The idea of your taxes being used to make responsible transactions that will benefit you is diametrically opposed to the nature of the third person transaction. There is no necessity for efficiency or quality. And responsibility is so diffused that any legitimate call to accountability will yield you a a low-level scapegoat if you’re lucky and a self-righteous speech on the importance of transparency.

At the time of this writing, the national debt is at 19.4 trillion dollars and climbing, and yet we continue to bite off on the puppy treat believing that our government deserves more of our money. That the more programs that our lawmakers sign into existence, the better our country will run. The government can do it efficiently and effectively, we say. And so we relentlessly demand more programs, more foreign aid, more government assistance, all the while forgetting that the familiar faces that spend your money for your supposed welfare don’t know your face.



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