In the media, we hear a lot about the government “investing” in one thing or another. News commentators, elected representatives, or public officials tell us about the government allocating funds for a program or effort to do something they would like us to think is necessary to preserve or enhance our wellbeing. Using the term “investment” to describe this activity is misleading at best, and at worst it is outright fraud. They are not investing – they are spending.
Investing usually involves acquiring a tangible asset in the hope of making a profit. When we buy precious metals, commodities, stocks, bonds, or real property in the hope that it will increase in value; that is investment. Investing does not usually involve consuming the asset. We retain the asset over time to put our money to work for us – to create wealth.[1]
The profit or loss from true investments is real and measurable. One way to measure it is called return on investment (ROI). ROI measures the amount of profit or loss from an investment relative to its cost. It is usually expressed as a percentage derived by dividing an investment’s net profit or loss by how much it costs.[2]
Government spending seldom results in a tangible return on investment that is measurable. Benefits may, or may not, result from government spending, but too much spending results in inflation. In turn, the outcome of inflation is a net loss to us all.
Regardless, We the People
don’t like it when we are treated like we are stupid. We understand the difference between the
truth and “spin.” It would be nice if
people would stop using euphemisms to sugarcoat the (sometimes) bitter pills we
are given to swallow.
[1]
Hayes, Adam, Investment, Investopedia, 20 August 2021, https://www.investopedia.com/terms/i/investment.asp
[2]
Fernando, Jason, Return on investment (ROI), Investopedia, 30 June 2022,
https://www.investopedia.com/terms/r/returnoninvestment.asp
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