Consumption Function

I must've dreamed a thousand dreams
Been haunted by a million screams
But I can hear the marching feet
They're moving into the street
--Genesis

Increasingly policymakers spin current and future economic stimulus packages as 'investments.' As part of his recovery plan, for example, President Obama proposes that we invest in modernizations that would make three quarters of all federal buildings more energy efficient.

Spinning government expenditures as investment is not new; it can be traced back to at least the original New Deal. 'Investing' has a durable, learned ring that helps policymakers and citizenry rationalize the spending.

But spending is what it is, as government expenditures represent consumption. Investment comes from voluntarily allocating a portion of savings towards capacity for producing more resources tomorrow. Currently, of course, we have no savings to allocate. Moreover, government spending results from a process of obtaining resources from citizenry in a coercive, rather than voluntary, manner.

The appropriate solution to a debt and spending problem is to reduce debt and save. Such a solution, of course, is lost on policymakers.

Rather than investing in federal building improvements per President Obama's plan, we would be better off divesting the government buildings themselves. Proceeds could be applied towards reducing the deficit. Size of government (read: capacity for further spending) would shrink. And resources would return private hands where, over time, they are more likely to be productively put to work.

Not likely, I know, as our course seems fixed on achieving a destination of squalor.