Elizabeth Warren recently announced that she is running for president. She is rightly criticized for a number of items such as falsely claiming Native American ancestry. But during that speech I was reminded how often politicians use the word “invest.” The word is a good way to pass large spending policies that otherwise wouldn’t be palatable to the public, but it doesn’t always mean that money is spent wisely.
Warren said that she is “tired of hearing that we can’t afford to make real investments in child care, college, and Medicare for All…that we can’t afford to make investments in things like housing and opioid treatment. Can’t afford things that address rural neglect or the legacy of racial discrimination.” Leaving aside the merits of those policies, her rhetoric is disingenuous.
In the real world investments are usually seen as a good thing that payoff in the long run. I don’t think anybody minds having more invested in their 401(k). But in fantasy government talk it’s another word for massive government spending that just pads the paychecks of special interest groups like advisers, consultants, and officials.
The key to understanding why words like invest are used to sell new programs lies in the motivation of politicians. It’s often assumed that politicians are noble servants trying to do what is right. In this case Elizabeth Warren claims to help save those who don’t have health insurance or feel like a victim of racism. But in reality, they are just as self-interested as every other group. The best way to keep their jobs is to look like they are solving problems. And the best way to appear to solve a problem is to announce a fancy-sounding initiative and throw money at it. Those motivations result in politicians announcing initiatives that will save the children, bring back jobs, or provide Medicare for all to thunderous applause. But the same politicians are rarely around long enough to experience the failure and unintended negative consequences of those programs.
Just because a politician uses the word “investment” doesn’t make it a good policy choice. There are many unintended or ignored side effects of supposedly wise investments. The “Affordable” Care Act actually increased my premiums to the point I couldn’t afford it. Higher tax rates usually produce lower revenues and Las Vegas will be paying for a professional football stadium long after the Raiders move back to Oakland. Medicare for all lowers quality of care and leads to rationing. Additional spending for schools ends funding a turgid bureaucracy that is jealously guarded and expanded by unions. Above all, there is an added cost to every government program because the government can only spend by taking other people’s money in the first place and people spend money much more efficiently than the government.
This applies to the wealthy who are generally taxed more to fund these programs. It also applies to the poor, who are often indirectly taxed a great deal through inflationary monetary policies and gas or sales taxes. Unlike the government, both groups actually know how to invest their money either through the stock market or by going to a thrift store on double-coupon day to use 20 dollars to buy new clothes for the entire family. (Personally, I enjoy 99- cent taco night at the local taco shop the most.) Every dollar in taxes to fund a bad government “investment” is a dollar that the people can’t use to invest in their own lives. In short, misusing the word investment is an attempt to mask the fact that politicians are gambling with other people’s money to enhance their own position.
It’s nice that Elizabeth Warren and other politicians want to “invest” so heavily in education, infrastructure, and healthcare. But we should question their motives, their wisdom, and the efficacy of just throwing more and more money at the problems the country has. Most important, instead of constantly asking for more they should better use what they already have.