The 4 Ways Money Can Be Spent and the Indiana Jones Scale of Morality

Milton Friedman had a legendary explanation of the four ways that money can be spent. Here’s the great man elaborating on the concept:

It’s an elegant explanation of why it’s dumb to try to funnel everything through a central government and expect good results to come out the other side.

But Friedman’s explanation focuses on efficiency and value, two concepts that have fallen out of favor in the America of trillion dollar debt and stimulus slush funds. ┬áNope, we’ve got to leave efficiency and value behind, because, gosh darn it, people are hurting. The government has to redistribute the nation’s wealth for them because it’s the right thing to do.

But is it really the rightest thing? Friedman doesn’t mention morality, but each of his four ways has a moral component to it. Which one is the most moral? Let’s look at that question, and introduce the Indiana Jones Scale of Morality.

You can spend your money on yourself

Some people might call this selfishness. Those people are dumb. If money is going to be spent for your benefit, what’s more just than to spend the money that you yourself earned? You acquire money by providing something of value to someone else, and you then spend that money to meet your own needs without placing an undue burden on someone else to provide for you. That is the perfect example of fairness, and the perfect example of how a free market is supposed to work.

If we measured morality of the ways to spend money using Indiana Jones movies as a scale (and what else would you use?), this way of spending money would be Indiana Jones and the Last Crusade: not the best, but still very good and enjoyed by pretty much everybody.

You can spend your money on someone else

This is less efficient, because you can’t know another person’s needs as perfectly as you can know your own. And like Friedman says, if your buying something that’s not for you, then you’re not going to care as much about the value that you get for your money.

However, inasmuch as it shows love for your fellow man and willingness to sacrifice for his sake, this the most moral of the four ways to spend money. It demonstrates the denial of yourself in order to provide an unearned benefit for another.

On the Indiana Jones scale, this is the Raiders of the Lost Ark of morality: an all-time great, easily the best of the four.

You can spend someone else’s money on yourself

With these last two it gets a little tougher, because we’re talking about taking money from the person who earned it without giving that person either the benefit of those earnings or input into how the earnings are used. This is a morally shaky proposition from the get-go. You might say, “Well, what if they’re giving me their money voluntarily? What if giving me the money was their idea?” If that were true, it wouldn’t be someone else’s money; it would be yours. And it would fall under one of the first two ways to spend money.

Still, if you spend that money on yourself, at least you’ll take care that it’s spent well, and some value will come from spending it. So, on the Indiana Jones scale, we’ll call this Indiana Jones and the Temple of Doom: disappointing, but could be worse, as we’ll see below.

You can spend someone else’s money on someone else

What makes this morally worse than spending someone else’s money on yourself? Because, along with denying ownership rights to the person who earned the money, and along with spending it in a way that does the least to guarantee that it’s spent wisely, this way introduces an element of deception.

Because the person who receives this largesse is going to be under the impression that you are being generous. But as we all know, generosity requires ownership–you can’t be generous with something that doesn’t belong to you. But really, that’s the only reason money is ever spent this way–to create the impression of generosity without sacrifice.

This way of spending money is unfair, inefficient, and a lie. For these reasons, it lands on the bottom of the Indiana Jones morality scale at Indiana Jones and the Kingdom of the Crystal Skull: an absolute travesty and crime against humanity. If I was being completely accurate, this would run off the bottom of the Indiana Jones scale all the way down to Gary Coleman as Alabama Smith:

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