Posts Tagged ‘investments’

We cannot afford NOT to spend the money

Wednesday, October 21st, 2009

There seems to be a thick fog of delusion obscuring rational conversation on the topic of government spending. Every day I hear another rant or read yet another article by one pundit or another about how we cannot afford to fight the battles that President Obama is waging. Just this morning, I read an article in the October 17 issue of The Economist (p.46) that serves as the perfect foil for my argument. The article paraphrased Democratic fears about the war in Afghanistan as a two-fold anxiety:

“One is that they might pour billions of dollars and hundreds of lives into Afghanistan, and still lose. The other is that a costly war could scuttle their domestic agenda. How will they pay for universal health care, for example, if they keep burning banknotes in the Afghan inferno?”

Indeed. This erstwhile intelligent and insightful publication, written and edited by astute men and women with a keen understanding of finance, did not immediately follow this passage with a clarification of the confusion in these statements. The erroneous language was allowed to stand as though it were complete and correct.

This really bugs the crap out of me because it promulgates noisy fear mongering and averts our mind’s eye from the real issue at hand—where are we investing our wealth?

Although we are in fact spending billions of dollars on the Afghan war, ostensibly to prevent another 9-11 and to ensure that we leave a legacy of productive engagement in the region, we are not “pouring” the money into Afghanistan nor is the money going into some black hole, never to return. Likewise, although this war is indeed costly, it is not a cash furnace “burning banknotes.” These metaphors are often used when decrying Obama’s wide ranging and ambitious agenda. Words like “wasting” or “burning” or “pouring” money imply that the money leaves us. This is simply not the case.

Let’s take a short, simplified walk with some of the dollars we are spending on the Afghan war. According to the same Economist article, it costs $250,000 to deploy each soldier into that operational theater for a year. More expensive than a plumber? Sir, yes sir! Where does that money go? Part of it pays that soldier’s wages. Where does his money go? Very often it pays for his family expenses—diapers, formula, bed sheets, clothes, sneakers, food, beer, toys and trips to the movies. All that stuff is made by companies in which Americans work or invested their money, so the profits accrue to Americans. The $250,000 also pays for the armor, specialized clothing, MREs, and weapons issued to the soldier—all made by American companies. In addition, that soldier is transported in a truck, or plane, or maybe that soldier flies a helicopter or drives an ambulance or a tank. Each of those transport systems and the communication systems that they use to coordinate their activities in Afghanistan are (more often than not) made by American companies, which use that money to pay American workers’ wages. Those American workers use that money to pay for their diapers, formula, bed sheets, clothing, sneakers, food, toys, trips to the movies, maybe an Xbox, a laptop, etc. Who gets that money? Oh yeah, Americans.

By now you can see where I am going with this. We are not burning our cash in Afghanistan. We are allocating a portion of our income and financial assets (in the form of taxes) to an effort we have deemed necessary for our well being—the war in Afghanistan. We pay that money to Americans more often than not, directly and indirectly. Even when we do spend it on Afghans, they often use that money to buy American goods and services.

Do we have the money to pay for the war in Afghanistan? Yes we do. Although it’s a huge expense in absolute dollars, it pales in comparison to what we have allocated to Medicare, Social Security and other programs. And yet even with that pile of cash expended, we still generate more wealth in this country than all of those projects combined. Do we derive economic benefit from the expenditure in Afghanistan? Yes we do. Do we gain political, military, and perhaps even national security from this effort? Historians will argue for decades at least.

The same economic logic applies to healthcare, to education, to infrastructure—in fact to any of the initiatives that President Obama asserts are imperative to our future. The money we spend on those projects comes from you and me in the form of taxes, and it’s paid to you and me for the goods and services we then deliver to ourselves, based on the priorities established by our elected officials, whom we selected to make these allocation decisions for us, on our behalf. In other words, we put money into a jar, from which we pay ourselves to do the work that we asked ourselves to do. Sounds circular? Damn straight it is.

Non-lunatic republicans believe that states are better suited to allocate our taxes than the federal government. Likewise, non-lunatic democrats believe the federal government is better suited to allocate our taxes than the states. The rest of the blue and red flag waving fools are using their party to further their own social agenda. It’s not a question of “burning” or “wasting” or “losing” money. The money doesn’t vanish. That is a spurious argument.

The only important question is—who invests into what projects.

Given the universally abysmal state of our highways, bridges, and public education; given the historically proven need for a strong hand in foreign policy; given the need for stable capital markets to allow inventors and investors to reach amenable terms for creating our future opportunities, I am one republican that believes that for a time, perhaps a long time, we need to spend whatever money we have on projects that help ensure that our nation endures for another 200 years as a significant contributor to the social and economic well being of our planet. A well-fed and well-educated world that can communicate clearly and easily is more likely to result in a peaceful world in which every human being can pursue life, liberty and happiness.

On what better things could we possibly spend our money?