Thursday, March 12, 2009

Word of the Day: Looting

My son's school does a word of the day, to help the kids in their vocabulary. Today's word, brought to you courtesy of the NY Times, is "Looting."

Earlier today, this NY Times article, "The Looting of America's Coffers," caught my eye.

The article summarized an earlier article by Akerlof and Romer (Akerlof went on to win the Nobel Prize in Economics), in which they found several financial crises in the 1980s resulting from private investors taking advantage of the government, by borrowing huge amounts of money, profiting when times were good and then leaving the government to absorb and make up their losses. If they were honest, according to these economic experts, the investors would have acted differently, and not without regard to the future likely consequences.

The author of today's Times piece then draws a comparison to today's economic situation, and distinguishes between moral hazards and looting. In sum, when the government plays a central role in the process, the tendency is to encourage looting, not market forces, because the government will always bail out those who take the risks for private gains.

Sound familiar?

Montgomery County appear to be headed towards a similar financial crisis, with the school system seemingly syphoning off public funds. Every day this blog posts more public contracts and deals from the public schools- whether smart board/promethean board technology, artificial turf partnerships, security cameras, credit cards, misdirected student and textbook funds, to list just a small purchases, that do not follow standard procurement practices, fiscal management or even routine audit standards. No one seems to care - not the County Council, State Board of Education, Inspector General, or State Attorney General. We hear from the state that MCPS is a county entity, we hear from the county folks that its a state entity, and we hear from Dr. Weast that "old laws" don't apply.

Call it what you may, but if no one is responsible, money is limited, and we are in a true economic crisis, this sounds like looting to me. In the end, the taxpayers and the public are ultimately responsible for bailing out the system, when fiscal realities catch up, and the current players in MCPS's Central Office have left the county for greener pastures.

Looting. Think about it.

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