It has become fashionable, especially on the left, for politicians to describe redistribution and government spending as ‘investment.’
Charlie does a terrific job eviscerating the euphemisms in a recent op-ed by New York City mayor Eric Adams. I want to pick on one particular euphemism that should be especially troubling: describing redistribution and government spending as “investment.”
Adams writes:
Other measures that put extra money in the pockets of working people – such as a more robust earned income tax credit and child care credit – help to stabilize their finances, protecting them from debt and reliance on social services.
These are not handouts. These are prudent investments.
As Charlie says, they are, in fact, handouts. They might be popular or even sensible handouts, but they are nonetheless handouts.
It has become fashionable, especially on the left, for politicians to describe redistribution and government spending as “investment.” It’s an odd trend for a few reasons.
First, it is often employed by politicians who villainize Wall Street. Apparently “investment” is exploitative, wasteful, and parasitic when it’s done by investment bankers, but righteous, uplifting, and additive when done by government. Why progressives believe that concept to be evocative of evil in one case and pleasingly euphemistic in another is beyond me.
More fundamentally, though, when you think about the metaphor for a few minutes, its implications become troubling. Investment implies ownership. When someone invests in a company, he or she becomes a part-owner of that company and therefore has a say in how that company is run.
If it’s the case that government is “investing” in poor people, it would follow that the state is acquiring some kind of ownership stake in their lives and outcomes. Of course, that’s not what politicians who use the word are meaning, but it’s what the word implies.
Then, there’s the confounding factor that the government is “investing” other people’s money, not its own. There’s plenty of private-sector investment that involves other people’s money, but that money is voluntarily deposited, can be voluntarily withdrawn, and is managed under strict conditions of fiduciary responsibility.
No such strictures exist when government is doing the spending. Taxation is coercive, not voluntary, and if you’re dissatisfied with how your tax dollars are being spent, you can’t opt out of paying taxes. You can’t move your money to a different fund manager or recalibrate it to different priorities; there’s one federal government and whatever Congress appropriates is the law of the land. Congress doesn’t face threat of prosecution for misallocating or wasting taxpayer money; politicians do it all the time with no consequences.
If a private-sector investment manager were overseeing government spending on education, for example, and was getting the outcomes that government spending on education currently gets, he’d be fired immediately. Government has spent more and more on education, while getting the same or worsening results, for decades. If that’s “investment,” it’s really crappy investment, and no actual investor in his right mind would put more money into it.
Politicians would be terrified to face the same requirements actual investment firms face about delivering value for their investors. And they’d be terrified to face the consequences that disingenuous investment firms face when their disingenuity is discovered. That’s why ESG investing, when carried out without the consent of investors, is such a problem. It’s playing politics with other people’s money.
Playing politics with other people’s money is what government does as a matter of course. Taxation is necessary, but it is a necessary evil that should be minimized as much as possible. The government does not create an ownership stake in society by taking money from some people and giving it to other people. It does not invest; it redistributes. There are many arguments for redistribution, but politicians should argue for it honestly instead of calling it something it is not.