Sunday, November 11, 2012

On Being a Fiscal Conservative

What does it mean to be a fiscal conservative?

One of the things that happens when forty thousand people look at something you’ve written is that they ask you what you actually meant.  This can be tricky, especially when they focus on parts that turn out not to have been very well written, parts where what you meant and what you actually said can easily be taken as being somewhat at variance.  Don’t get me started on how many times I’ve had to clarify my position on home schooling, for example.  That bit would be the first to get rewritten if I had the chance to write the piece again, if only to save so much work further down the line. 

On a forum where someone had posted a link to that piece (see? I don’t even have to say which piece – you just know, don’t you?), a commenter said that while she enjoyed it in general, she didn’t like it when fiscal conservatives declared that they should only pay for the government services they actually used and she wondered how I could square such a belief with my stated support for communities in general.

I felt that was something that was worth a response on that forum, and I think it is worth elaborating on that response here as well.

Some of it was simply miscommunication, either poor writing on my part or misinterpretation on her part or both. 

The bit she was referring to said, “I’m also a fiscal conservative at heart – you pay for the services you demand and you don’t push debts onto your grandchildren.”  That’s 21 words out of more than 5000, so I suppose I could be forgiven for being a bit opaque there, except that it annoys me to be opaque and no matter how I crunch the math it still doesn’t work out to being a decent excuse for not writing clearly.

Because while I can see how someone could read it the way she did, that isn’t actually what I meant. 

I was not saying that you only pay for the services you, personally, use.  That is, in my opinion, a foolish and impractical position.  Making those kinds of fine distinctions is an impossible accounting job, and nobody could pull it off correctly even if it were worth doing.  I will return to this point in a bit.

My point, however, was that if the will of the people demands that government do something – whether it is a war or a social safety net or delivering the mail or whatever – then there should be a concrete plan in place for paying for it or it shouldn’t be done at all.

It doesn’t have to be paid for all at once.  You don’t have to have the money in hand before you spend it – all you need is a firm commitment that you will structure the laws and finances to pay for what happens and that you will not shirk that burden off onto the next generation by doing so.  Taking responsibility for your own actions, that’s the key here.  We didn’t have the cash up front to buy our house, but we felt it was worth it and we were willing to commit to paying of the debt incurred.  We have a mortgage, and we – not our children – pay it off bit by bit, including the interest.  On the government level, this means taxes, taxes that – when it comes to programs you want – you and not your descendents should be paying.  Governments have no money of their own.  If you want the government to do something the only place it gets money from is you, and you either pony up or shut up.

For example, it has been a very long time since this country actually put its money where its troops were.  We decided back in the 1960s that we didn’t have to raise taxes to pay for the wars we fight.  Johnson started that.  Nixon continued it.  Reagan expanded it.  Bush Jr. raised it to an art form – he didn’t even bother to put his wars on book, let alone try to pay for them.  That’s irresponsible.  If you think it’s important enough to send the military out there to do the hard work of defending this nation’s interests and you’re not actually wearing the uniform at the time, you should at least be chipping in for it with your own money in the form of taxes.  Cheap yellow magnets in the shape of ribbons stuck on the back of your car are not enough.  Either pony up or accept that we should keep the troops home and find some other way to defend those interests.

This general principle applies across the board as far as I can see.  If you think a social safety net is important enough to have, you should help pay for it.  Likewise education.  Arts.  Law enforcement.  Infrastructure.  Corporate incentives.  Border patrols.  National parks.  And all the various things that government does, day in and day out, at the local, state and federal levels, they all fall under this rubric. 

If you’re not willing to pony up, if you’re one of those benighted souls who think taxation is theft and you should never ever ever have to pay for services received, then you probably don’t want anything enough to have it done.  Stop asking for things, stop using the things and services that government has already accomplished (such as roads, police protection, fire protection, educated workers and so on), go Galt already, and leave the rest of us the hell alone. 

Of course, we live in what is now a democracy.  That means that there are a lot of things that you, personally, don’t approve of that are happening and that you, personally, are helping to fund.  That’s how democracy works – put on your Big Kid Undies and deal with it.  Don’t like it?  Get elected and pass new laws.  Or admit you really have no interest in democracy and what you want is your own tin-horn dictatorship where you don’t have to pay to support anything you don’t like but everyone else has to pay to support things you like regardless of whether they approve or not.  Don’t be surprised if you find yourself somewhat less popular and respected when that happens, though.

So that was what I meant, all that, packed into that tiny little bit of writing.

But this really doesn’t answer her question, does it?  What exactly did I mean when I defined myself as a fiscal conservative, and how does that square with my stated belief in the importance of communities?

First, let me state right up front that I am the last person you want handling your money.  I’m honest and trustworthy, but anything more complicated than “try to spend less than you earn” and “put some aside for later, because you’ll need it” I tend to leave to the experts, defined as Kim or whatever fiduciary she feels is appropriate.  The nuts and bolts of money just make my brain glaze over.  But the general outlines of money – the psychological aspects of it, the political aspects of it, the cultural aspects of it, how money works in other words – those are fascinating to me and those I understand quite well.  This may or may not be enough to convince you to listen to me – you may feel, upon reading this paragraph, that I don’t qualify as someone worth taking advice from on fiscal matters – and so be it.  Thanks for dropping by.  Come back later, because I’ll be sure to be talking about something else soon. 

So what do I think it means to be a fiscal conservative?

Well, it isn’t shortsighted greed. 

Too many people think being fiscally conservative is simply a matter of out-Scrooging Scrooge, of taking everything that you can get, never giving anything back if you can help it, and complaining loudly when giving back can’t be avoided.  That’s not conservative, that’s covetous. 

You have to spend money to make money.  That’s the bottom line with money.  You can’t run a business if all you do is slash expenses, and you can’t run a government that way either.  If you want to make money you have to spend it.  If you want to make a better society – even if all that entails is leveling the playing field and getting out of the way, the way my more conservative friends insist it is – you have to spend money to do that.  Spending money is a given.

But what do you spend it on?

You spend it on things that will give you a return on investment, that’s what.  What fiscal conservatism is, more than anything else, is the art of making sound investments.

Investments grow.  You put resources into them, and you get more out of them.  You can do this in a purely financial sense – putting capital into things like stocks, businesses, notes, and so on, and if you are really good at it realizing enough capital gains to live on.  If I ever get to that point, I’ll let you know.  You can – and in a political sense, must – also do this in a broader sense, thinking of the resources you put in and the profit you get out not simply in terms of dollars and cents but in terms of other resources.  Economics is about the allocation and use of resources.  Money is just one resource among many.

A sound investment might actually lose money when you look at it that way, but it gains things that are worth spending the money on – it produces other resources whose value exceeds that of the money initially invested – and that counts as profit.  Of course, it might gain money too, in which case, well, win all around.  But it helps to think in broader terms.

I like investing money, time and other resources into the things I use.  They grow, I win.  I put money into my house, it grows in value, I win.  I pay taxes to support good roads, I drive on the roads, I win.

But even that is too narrow a way to look at it.  You have to define not only resources broadly, but profit broadly as well.

In simple terms, a proper fiscal conservative must also be willing to spend money on things that they personally do not use, because it is in their long-term interest to do so.  Often I profit from such spending, even if I am not the one personally using the things being bought.  It is an indirect profit, but no less real for that.

For example, I strongly believe in the importance of communities.  Strong, healthy communities provide all sorts of benefits to their members – stability, amenities, and so on.  This nation is strong only to the extent that its communities are strong.  It therefore makes sense for me to invest in those communities, because in the long run I will be better off.  This isn’t a question of morality (that case can be argued should anyone wish to do so, but for some reason it never seems to gain much traction with those who don’t already believe it).  It’s a matter of self-interest.  When I spend resources on things that benefit my community, I win.  It is in my self-interest to invest wisely in my community, because even if I do not gain directly, I gain indirectly – far more than my own costs.

This is true for communities I don't even live in.  I may, someday.  And the nation is my community too.  It's in my self-interest to have a strong nation, all over the nation.

For this reason, as a general rule I support community development programs because many have a proven track record in making communities stronger by making the individuals in them better off.  This includes big things like job training, which makes community members more affluent, more stable, and less left on their own to get up to mischief.  Stronger communities give me more places to walk safely, more people who can share the burden of governance and volunteering, and more people who can chip in when my resources fail.  It includes little things like after-school sports programs to keep people out of trouble – crime is expensive and prisons are even more expensive, and if we can cut down on crime by preventing it that saves me money and makes my life less dangerous even if I’m not the one playing basketball on a Wednesday afternoon. 

It includes all sorts of things.

It’s not like this is cutting-edge thinking, only accessible to the wisdom of the 21st century, either.  The Founding Fathers knew this, for crying out loud.  For my dissertation I read almost every issue of every newspaper published in the city of Philadelphia (the capital at the time) during the 1790s.  That was an era of vitriolic and partisan writing and the editors of those papers hated each other with a personal passion that occasionally led to physical assault.  But the one thing they agreed on – the only thing they agreed on, really – was public education.  You spend your money to educate the next generation, even if you personally were not the one benefiting immediately from it, not simply because of morality or virtue but because it was in your own self-interest to do so. 

As Benjamin Franklin Bache (named for his grandfather) put it in 1792, “Let the education of children become a common charge.  If a man has property and no children, still he should be taxed to pay for the education of other men’s children.  The more knowledge, the safer his property.  It is better protection than armies.”

Or in more modern terms, “You see that kid getting off the school bus?  Someday she’ll be your oncologist.  It will be worth a few of your dollars to make sure she’s up to speed.”

Examples like that can be multiplied infinitely.  The point is that as far as I can see a true fiscal conservative has to think broadly in terms of return on investment – beyond mere dollars and cents – and be willing to spend money to make a profit.

Not all such spending is effective, of course, and a fiscal conservative monitors such things for waste, fraud and inefficiency.  You’re going to find such things because that is the nature of humanity and money.  You’ll find them in private industry too.  You’ll never get rid of them entirely, but they must be limited as much as possible.  You also have to evaluate results, because not every program actually pays off and those that don’t are not worth supporting.  Judge fairly, but judge.  You have to make sure your investment is not being wasted.

But that’s only part of the picture, not the whole thing.  Too many people stop there and think that rooting out fraud, waste and inefficiency is all there is.  It’s not.  More importantly, you have to be willing to make the investments in the first place.  You have to be willing to spend in order to make.  Otherwise it’s just greed.

This is why I can be both fiscally conservative and socially liberal – why, in fact, I find that the former requires me to be the latter.  People are an investment.  You invest money and resources into them, and you get a functioning society out of them.  In the long run you will get your money back and then some, but that isn’t the main issue – a government is not a business, and you cannot responsibly run it like one.  You have to think of investment in broader terms – not just money, but gains and losses overall.  Are you gaining more out of your investments than you are putting into them?  Then they are sound investments, even if they are costing you money.  You are simply gaining other things that are worth the money.

That’s what it means to be self-interested, not selfish.

Sound investments, in financial instruments and in people, is the heart of being a fiscal conservative as far as I am concerned.


LucyInDisguise said...

Could you take a few minutes and address the House of Representatives and explain this to them?

Getting your point across may actually require the use of a baseball bat and a quick call to Guido, but I'm certain that it could be done.*

Shortly thereafter, I'm sure that you could find some state legislators who could use some edumacation as well.


*(But then, I do tend to be just a tad overly optimistic.)

David said...

I could certainly try, though I have to admit I'm not as optimistic as you, Lucy. There are none so blind as will not see, and all that. But you never know - can't hurt, might help.

They sure could use some pointers, though, couldn't they?