Saturday, August 29, 2009

Investment Fraud

The language of government has morphed into the language of the market. Government spending is no longer spending, it is now an investment.

The first time I noticed this transformation was in the speech of President Clinton. Since then, it's become nearly universal. Politicians great and small talk so often about investing they sound like penny-stock brokers in a boiler room.

And why not? Investment does have a nice, responsible ring to it, better than nasty old spending. Investment numbs the suspicious nature of a public about to be fleeced again.

Using the same pitch, teenagers could pressure their parents to invest in telecommunications ("buy me a new phone"), invest in transportation ("buy me a new car"), invest in fabric and apparel ("buy me a new outfit"), invest in technology ("buy me a new laptop"), and invest in education ("spring break, Fort Lauderdale").

What is the difference between a teenager who wants to fleece his parents and a politician who wants to fleece his taxpayer?

Twenty years and two decimal places.

There are two possible reasons why politicians abandoned the vocabulary of the social progressive and adopted the vocabulary of the marketplace. One is that the general population has lost its confidence in private investments, and now seeks the reassurance of public investments whose benefits are shared more widely. Not insignificantly, this is also the explanation that puts the people in the public sector in the most favorable light. But this reason does not hold up.

If indeed the public has lost its confidence in private investment, why use the vocabulary of investment at all? The fact that politicians prefer the vocabulary of business over the vocabulary of government indicates that business still holds a competitive edge in public opinion, at least when it comes to efficiency and productivity.

Public investment is the worst kind of fraud. It has none of the redeeming features of private investment, namely voluntary participation and individualized risk and reward. Public investment is the dangerous combination of involuntary participation, socialized risk, and rewards that are all too often scooped up by politically powerful players.

Public investment is nothing less than taking other people's money under the threat of force while telling them it is for their own good. There may be cases where this is certainly true and necessary, but no one can doubt that this moral justification for the forceful redistribution of wealth is trotted out way too often. After awhile, it starts to sound like another stock pitch from Blindem and Robem.

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