Tuesday, June 12, 2012
" The purchase works out to a cost of $6,600 per reader. No doubt there may be extra support and software that comes with these Kindles, but $6,000 plus worth? Kindle's on Amazon's web page now sell for between $79 and $379."
State Department Pays $6,600 per Kindle for 2,500 Kindles
Yup, the State Department has awarded a $16.5 million contract to Amazon to stock designated libraries and U.S.-friendly educational centers around the world with 2,500 Kindle e-Readers, procurement databases show, according to Nextgov.com. The contract includes 50 titles, a secure central management system and round-the-clock help desk service.
The purchase works out to a cost of $6,600 per reader. No doubt there may be extra support and software that comes with these Kindles, but $6,000 plus worth? Kindle's on Amazon's web page now sell for between $79 and $379.
Is this a procurement horror story reminiscent of years past that saw the Defense Department by claw hammers for $435, toilet seats for $640 and coffee makers for $7,600? It sure smells like it. But don't expect the State Department to own up to it.
During the Reagan Administration, when President Reagan learned of the outrageous prices for hammers, toilet seats and coffee makers along with news that the military was paying $1,118.26 for a spare plastic cap for a navigator’s stool on a B-52 bomber (worth about two cents), he demanded answers from Secretary of Defense Casper Weinberger. Weinberger promised he would get to the bottom of the outrageous prices.
What happened though is that Weinberger appeared on Capitol Hill and defended the shocking prices.
Murray Rothbard made the case that all government spending is waste and should be subtracted from GDP and this is correct. As Mark Thornton writes:
...government spending does not have its value tested with consumers in the market, and much of the spending is actually bad for the economy. Government could pay people to dig ditches and other people to fill the same ditches, [Or it could pay $6,600 for kindles!-RW] and it would increase GDP, but no one argues this is the path to prosperity...
Murray Rothbard addressed the problem of measuring a big government economy with the concept of private product remaining (with producers), or PPR, which basically takes GDP and subtracts from it twice the amount of government spending. Government spending is subtracted once to obtain gross private product and it is subtracted again to account for all the resources that government has siphoned off from the private sector.
Rothbard has the theoretical point about ALL government spending right, but it is nice to come across an example of government spending that appears so totally absurd, that even Warren Buffett and Henry Blodget will have to think twice before defending the expenditure and calling for higher taxes to pay for the expenditure. It's a teaching moment.
Clearly, what really needs to go on is cutting of government expenditures and cutting and cutting. Not increasing taxes to pay for bureaucratic government spending.