Investment Versus Spending


Liberal politicians love to describe government spending as “investment.”  President Obama has been beating this term into the ground since his State of the Union speech, actually going so far as to claim the funds he would use for “key investments” don’t even count as “spending” at all.

The dictionary defines investment as “the outlay of money or capital for income or profit.”  Using the word makes government spending sound wise and prudent, conjuring the image of smart businessmen who know what they’re doing.  By causing the listener to anticipate “income or profit,” it also obscures the terrible vision of tax money waterfalls pouring into the abyss of Big Government boondoggles.  Investments return a profit.  We’ll be getting all that money back someday, with interest!

In reality, the true meaning of the term “investment” makes a mockery of political attempts to appropriate the word.  Barack Obama does not have “capital” to invest.  He has tax money, seized from its rightful owners, combined with vast amounts of deficit spending.  Capital is limited.  Its owners invest it wisely because they don’t want to lose it.  

As you can see from the budget he just submitted, Obama thinks his resources are effectively unlimited.  He has already increased the national debt by forty percent in just two years, and he plans to double it over the next ten years.  Along the way, he would jack up a broad array of taxes on every corner of the private sector.  He’s more like a wastrel son blowing through a vast inheritance than a wise and prudent capitalist… and even the most irresponsible and lazy trust-fund kid doesn’t think his inherited money is endless.

Investment involves risk.  The act of risking capital in a successful investment generates value, and the investor is rewarded with profit.  An entrepreneur with a great business idea seeks to attract investors by promising a positive return – in other words, they’ll earn a reward in the future for loaning him money today.  They’re being paid for risking their capital.  The entrepreneur is happy with this arrangement, because his backers made it possible for him to launch his venture, by accepting the risk that he might fail.  Of course, a successful investor is cut from different cloth than drunken gamblers throwing piles of cash down at a roulette table.  He carefully judges the odds, gathering as much information about each new business venture as possible.

This dynamic is wholly absent from the kind of government spending Obama likes to camouflage as “investment.”  He’s spending money according to ideology, and his primary objective is not receiving a positive return on those taxpayer dollars.  Instead, his paramount objective is securing political power.  That is the sole criteria used by politicians to judge the success of a government “investment.”  Where a private investor will be fired from his firm, or go bankrupt, if his outlay of capital doesn’t produce a positive cash return, a politician keeps his job as long as people keep voting for him.

Notice, for example, that all the “key investments” Obama talks about would involve throwing huge new sums of money at organizations that have already failed comprehensively, like the teachers’ unions.  He also wants to plow billions into railroads, which a review of modern history reveals are guaranteed to lose money.  A fund manager who proposed such “investments” to his shareholders would be escorted from the building by security. 

It’s absurd to speak to taxpayers as if they were shareholders in an investment firm, because above all else, investment is a voluntary act.  What if someone robbed you at gunpoint, then later came back and said he’d won a fortune playing poker with your money and wanted to cut you in on his winnings, because he felt bad about robbing you?  You would not be an “investor” in such a situation, because you didn’t voluntarily assume risk with the expectation of reward.

You will not be asked if you would like to buy into Barack Obama’s high-speed rail fantasy, and issued a stock certificate if you agree.  You’ll never even know exactly how much of “your” money is used on this project… and you will never receive a penny of dividends.  All of the “returns” from these expenditures of tax money are vague, generalized benefits.  In the best-case scenario, where government spending did produce the desired results, the benefits would collectively accrue to society as a whole.

If you are not voluntarily contributing to an enterprise and willingly accepting the risk of failure, and you cannot personally receive income or profit, then you are not an investor.  Anyone who pretends otherwise is playing you for a fool, using loaded language to create the illusion of capitalist wisdom and free-market reward.

The activities of a lawful, limited government are a necessary expense, to which we all contribute.  Every single dollar of local, state, and federal spending should be what President Obama pretends his “key investments” are: a carefully considered use of public money to achieve the greatest benefit possible, while minimizing the overall expense of government.  The activities Obama touts as investments are precisely the things government should not be doing.  Instead, those activities should be left to free citizens, risking their capital voluntarily in the pursuit of reward.  The results of genuine capitalist investment blow the doors off wasteful programs run by irresponsible socialists, every single time.