The South Carolina General Assembly is debating OPM – Other People’s Money. OPM is a broad term that means cash is not coming from the wallets of people making the decisions. Decision-makers are largely immune from having financial skin in the game.
The spending vehicle is Santee Cooper. The issue is whether to maintain debt and carrying costs that customers pay. Every month. Every day. Even though customers do not have to pay under certain circumstances, as with a sale of the troubled company. (Set aside the opportunity for grid and power generation improvements in the service territory.)
It’s easy to make risky wagers when you play with other people’s money. Let’s be clear – a decision to keep state ownership of Santee Cooper is a risky bet. Santee Cooper has promised to change but has a track record of not keeping promises. How many times can you keep placing a bet on the same lame, losing horse?
Forever and ever, if you’re playing with other people’s money.
Money can be spent in four ways according to economist Milton Friedman:
- Spend your own money on someone else.
- Spend your own money on yourself.
- Spending other people’s money on yourself.
- Spending other people’s money on somebody else.
Nobody spends money more carefully than the money’s owner. That’s why it is more efficient, and right for people to be allowed to keep their own money. (Source) Don’t pass a dollar through a government system to turn it into a few cents.
The South Carolina General Assembly taps other people’s money when it comes to Santee Cooper. Board members of Santee Cooper are really deciding on other people’s money, even though some have direct exposure to monthly power costs for the utility.
Come on, let’s make it real. Get this out of the realm of OPM. Those deciding what is taken from the wallets of Santee Cooper customers ought to have personal financial skin in the game. Spend their own money if they make a bad call. If they can commit OPM to pay for debt, pay some themselves. Now. Do they believe in their own decision-making or not?
That would say volumes about leadership. Or, it might say billions.
So make those billions real for the policymakers and the board. Personally. Right now those conditions are not there. After all, it’s OPM.