Thursday, February 18, 2010

The Role of "Cheap Caulk" in Providing Public Goods

Why do some of us conjecture that government is less efficient than the voluntary sector at helping people? How about the following report from ABC News and then Daniel Foster at So far, the federal government has paid $522 million in its home-weatherization ("cash for caulkers") program, and has actually weatherized either 9,100 or 22,000 homes, at a cost per home of between $24,000 and $56,000. Detailed data from one state (Texas) puts the cost there at $78,000 per house with only $4,255 due to materials and labor. All of the rest is the administrative costs in the system (even the $4,255 may be greater than what voluntary charities would have spent because of federal "prevailing wage" requirements).

Supporters of the federal program say that this is misleading because of most of the $522 million has been spent in start-up costs. But that's the whole point. For example, Federal bureaucrats had to spend months going county-by-county through the U.S. calculating what the "prevailing wage" for caulking really was, just so the program could begin. That's the waste. That's what a voluntary program would never have had to do.

I don't have the link, but a recent newspaper article here in Tallahassee suggested that a large chunk of the major savings for low income individuals was sometimes in just demonstrating that turning off lights or adjusting thermostats by even one or two degrees could make a serious difference in the monthly utility bill. And good caulk can be gotten for about $6.00 a tube.

Some people may argue that the real objective of the program isn't to help poor people, but rather to perform a macroeconomic stimulus function. But it appears that all of the rest of the country has just spent $525 million to stimulate the economy of the Washington D.C. metropolitan area, as if it needed any more stimulus.

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