E.

Somer’s Principles of Government Expenditures:

What should be the magnitude and nature of government expenditure? Should the government
broaden scope of its expenditures or should it reduce its activities drastically. Well, the answer will
invariably depend on the particular objectives to be attained through a given policy decision.

Here, there are four (4) principles of government expenditures suggested by Prof. Harold M.
Somer:
1. Principle of Minimum Expenditure. The government should spend the least it can consistent with
the protection of its citizens (private toll bridges, widening of highways, postal services). This is
set up in terms of the maintenance of law and order.

2. Principle of Minimum Interference with Private Enterprises. This means that the services
provided by the public work should not compete with established private firms.

3. Principle of Maximum Employment. The aim of the government expenditures is sometimes to

raise the level of employment as high as possible, but this could only be achieved when there is
minimum interference with private enterprise.

1. Principle of Maximum Advantage. In order that a maximum advantage be achieved in all cases,
each should be spent where the marginal social utility is the greatest.

What you will do

Self-Test 2.2