Investments, Savings and False Economies

On my way to the Saturday sessions of the New England Political Science Association meeting, I listened to the Governor’s weekly radio address and Senator Phil Bartlett’s response from the Democratic party. First, let me say that it is possibly my very favorite thing about Ronald Reagan that he inaugurated the tradition of weekly radio addresses from the executive office. He was basically drawing on FDR’s Fireside Chats in doing so, but really, he made it his own thing. So an entirely unironic thank you to President Reagan for enhancing our expectations regarding regular public communication from governmental leaders. A second aside: I have been starting and stopping a post about Governor LePage’s elevated levels of name-calling — a habit he has been ramping up recently in what appears to be a deliberate, if confusing, strategy. However, those observations are still percolating. They have certainly been informed by Amy Fried and Jim Melcher’s very interesting paper on the rhetoric of Tea Party governors.

These radio addresses which I listened to in the car concerned the bond package which the Maine legislature will consider when they reconvene.  It will not shock you to hear that Gov. LePage opposes the bond package while Sen. Bartlett supports it — although it does help convey the state of fear that the Governor has created in the legislature that news stories optimistically note that he has not actually promised to veto it.  The different perspectives on the bond package were actually quite clear on their divergent understanding of how a state prospers: either through savings or investment.

A state is a large, complicated corporate being and it is analytically incorrect to draw an analogy between state budgeting and budgeting for individuals or families.  There’s just no direct parallel for “bonds” at the individual level: the government sets the terms for its own loan, it can restructure if necessary, some of those bonds capture additional money from the Federal government, the bond money stimulates the private as well as public sectors, etc. Nonetheless, there’s very little other way to communicate about state budgeting because all we generally know is individual or family budgets, so analogies to those familiar terms it is. In the Governor’s terms, bonds are “a fancy word for borrowing money the State doesn’t have.” This is intended to call up visions of high-living folk who spend beyond their means, refusing to perform the virtuous work of saving (a virtue with which the Governor is apparently attempting to become near-metonymic.)  Meanwhile, Senator Bartlett describes the need for the bonds money by asking listeners to “think about your own home. If there’s a crack in the foundation and investing in its repair is ignored, your house will eventually crumble. We must position our state, our economy, our financial house in a strong and viable way. If the governor turns his back on investment in our workers, in our roads, bridges, and our educational facilities, then he’s weakening our foundation and eventually our economy will crumble.”

The two positions staked out by the two sides come down to the classic choice between investments and savings.  Investments are riskier, but potentially have much greater reward. Savings are less risky in the short-term, but if they interfere with long-term growth then the money that was saved is ultimately shown to have been illusory. Saving money is a grand idea but nobody builds wealth that way.

If Bartlett really wanted to cut to the chase with his framing of the bonds package he would have chosen the thematically apt Marden’s analogy. Sure you can have your savings now by buying your boots at Marden’s because it’s less money than buying them at a department store. But when the sole wears through in half the time, and you’re not sure the steel toe is really steel? In terms of the family budget, what we call that is false economy.

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