Answer to Question #210444 in Microeconomics for B. Smith

Question

Identify and explain at least three methods of stealing from the government. Give a specific example of each method.

Answer 1

Contractors, especially those that build roads for the government, know that it doesn’t make business sense to do a proper job. So they end up constructing substandard roads so as to save money.

Politicians know that there is money to be made from government funded projects, especially those that seek to help poor communities. They can siphon a couple of thousands of dollars by claiming that they are helping the poor. They also know that you can divert the funds to benefit relatives and friends.

The other most common way of stealing from the government is by dodging tax. Some people simply pocket what they are supposed to pay to the revenue authority.