Why Giving Away 'Free Government Money' Is So Expensive

Rent seeking.  May the best lobbyist win.
The hidden cost of giving away free government money.
Dr. Michael Munger of Duke University explains why subsidies, grants and giveaways awarded by the government have substantial hidden costs in a phenomenon called rent seeking.  The "rent" is the money being offered.  When government gives money away, the people who compete for it incur costs—sometimes more money will be spent in total trying to compete for a grant than the amount of money being given away.
The end result is that governments give money to organizations with the best lobbyists, not those that provide the best services.
***
Further reading:

• 30 Major U.S. Companies Spent More on Lobbying than Taxes

• Experts Get Paid: Inside The Lobbying Media Complex

• STUDY: 25 Of Highest Paid CEOs Earned MORE Than Their Companies Paid In Taxes, Others Spent More On Lobbying Than Taxes

Cartoon courtesy of Qwartz.com