Three contractors are bidding to fix a broken fence at the White House in Washington, D.C.: one from New Jersey, another from Tennessee, and the third from Florida. They accompany a White House official to inspect the fence.
The Florida contractor takes out a tape measure, takes some measurements, and then does some calculations with a pencil. "Well," he says, "I figure the job will cost about $900: $400 for materials, $400 for my crew, and $100 profit for me."
The Tennessee contractor also takes measurements and calculates, then says, "I can do this job for $700: $300 for materials, $300 for my crew, and $100 profit for me."
The New Jersey contractor doesn't measure or calculate. Instead, he leans over to the White House official and whispers, "$2,700."
The official, incredulous, says, "You didn't even measure like the others! How did you arrive at such a high figure?"
The New Jersey contractor whispers back, "$1,000 for me, $1,000 for you, and we hire the guy from Tennessee to fix the fence."
"Done!" replies the government official.
And that, my friends, is how it all works!