The Problem With Throwing Money at Problems

There’s a dangerous floodgate opened when liberals say that throwing money at a problem will solve it.  If liberals say that spending more money on something–like health, education, or the economy–will improve it, then it follows that you should spend as much money on it as possible.

After all, if graduation rates or test scores would go up 10% if a state spends $50 million more on education, then why not spend $100 million and get even better results?  Why not spend a billion dollars—a trillion!—and get a whole nation of guaranteed geniuses? 

If a spending proponent would say that such an exaggeration is silly, I’d ask to see what evidence they have that their claims of money-based progress have noted any limits or diminishing returns.  In the absence of such, if they believe what they say they believe, it would only be reasonable to spend as much as absolutely possible on these priorities. 

This is the same problem liberals run into with things like the minimum wage.  If it’s possible to artificially demand that everybody get paid at least a certain amount so their standard of living will be adequate, why stop at just $5 or $10 dollars an hour?  Isn’t that just arbitrarily putting a ceiling on the quality of life that the working class can enjoy?  Why not make it $100 an hour?  Wouldn’t that automatically make everyone rich? 

The next time someone says that we need to spend X millions of dollars to solve a problem, my reply will be, “Only X?  If X will make it better, then we need to spend at least ten times that much—more, if we can!  Anything less would rob our precious friends of their rights!  Why don’t you care about that?  What’s wrong with your cold, evil heart?”

8 comments on “The Problem With Throwing Money at Problems

  1. I don’t actually know any liberals who advocate throwing money at problems. At this point they are all focused on preventing the little money that is still being invested in solving social problems from being cut.

    I do find it interesting that conservatives are very vocal about the folly of “throwing money” at schools, or health care, or infrastructure, but when the money is thrown into unnecessary military spending or the idiotic “war” on drugs, we don’t get many complaints from them. What’s even more interesting is that conservatives think that throwing money away is actually beneficial. Not investing money in education or infrastructure, not spending money on armaments or “incentives” to corporate donors, but refusing to accept the money in the first place – simply throwing it away and hoping that those who would have been required to contribute to the public coffers will somehow do wise and useful things with the money and its benefits will magically trickle down to help everyone. Even when it becomes obvious that such a plan doesn’t work, the true believers just can’t accept the fact that they were wrong.

  2. Spinny, thanks for the thought. However, my overall point is still sound, and I think your rebuttal–while clever–is wrong. The existence of a minimum wage presupposes that much of the work force will only be paid that much (and would be paid less without a minimum wage), therefore, setting it any standard locks in what those workers will be able to earn, from a proponent’s point of view.

    Charles, your comment is thoughtful, but reminds me of something pointed out recently at National Review: whenever liberals want to justify more spending, they simply call it an investment.

    Your two examples of bad spending–military action and fighting crime–are two of the few legitimate, Constitutional functions of government. Sure, we could debate the merits of any specific war, and drug policy has its faults, but the fact that a lot of money is spent on those things is in no way inappropriate.

    Your non-defense of wild spending (by merely criticizing spending you don’t like) suggests that there is no results-based defense of spending. It reminds me of a local columnist who once wrote that we should try fixing education by spending more on it because, he wrote, it couldn’t hurt. Hardly a stirring call to arms.

    You also vaguely ridicule the productive class, particularly the idea of “trickle down” economics, which you claim doesn’t work (are you in R.E.M.?). To call it “magical” is to insult those who disagree with you, not to mention to reveal your ignorance of the actual mechanics of economics. If you care to substantiate your criticism of conservative economics with data, I’ll be happy to entertain your theories. Otherwise, who’s the real “true believer?”

  3. Huston, just because a type of spending is constitutional doesn’t make it prudent or justified or appropriate. It is far more likely that the dramatic increase in spending for wars (both military and drug) have more to do with the vast amounts of money being made by large corporate interests than in any defense of the nation or any devotion to the Constitution. Like most non-libertarians, I don’t subscribe to the theory that any function not delineated by the founders in the late 18th century as a federal function is prohibited today.

    As for the difference between spending and investment, that is something with which we are all familiar. If I spend money now in order to reap benefits in the future, we call that investment. If I spend money simply on shiny toys for myself or to reap short-term profits, that is wasteful spending or speculation. The same is true with government. If government spends money to improve the future for its citizens, that is investment. If it is buying multi-billion dollar weapons systems that are useless against current and likely future enemies, that is waste.

    Lastly, I ridicule the idea of trickle-down economics because we have been cutting taxes on the wealthy for 30 years in this country and have nothing to show for it except a few asset bubbles, each of which bursts with more destructive force than the last. The end result of cutting taxes on the rich has been (surprise!) huge inequalities in wealth and income and a long period of unemployment staring us in the face. If this theory had any merit, it sure ought to be evident by now.

  4. Hmm, I don’t know if I would agree with “locks it in.” That makes it seem like it’s forever permanent. Say we abolish minimum wage, how low do you think employers would go (dollar amount) per hour? Just wondering aloud.

  5. Spinny, my best guess–only a guess–is that we might have some situations here like those overseas where people are paid very little (although those outsourced jobs are a reasonable godsend to those populations). We might also have the exact same kind of situations we often have now where people are unsafely and illegally paid poorly under the table, but it could be in legal, safer conditions.

    But how many more businesses, and jobs, could therefore exist if they weren’t being regulated out of existence by things like minimum wage? History suggests that ultimately there’d be more wealth for everyone if we continue to trust in the invisible hand of the free market.

    Charles:

    “It is far more likely that the dramatic increase in spending for wars (both military and drug) have more to do with the vast amounts of money being made by large corporate interests than in any defense of the nation or any devotion to the Constitution.”

    Really? How do you know? I’ve always wondered where the smoking gun is in this conspiracy. Opinions like this tend to make me wonder if people have just seen too many Hollywood movies where some corporate executive is the bad guy.

    “Like most non-libertarians, I don’t subscribe to the theory that any function not delineated by the founders in the late 18th century as a federal function is prohibited today.”

    And yet, that’s precisely what the tenth amendment says.

    Your second paragraph is just more circular logic: defense spending is unjustified because…it’s bad. Social programs spending is good because…it’s good.

    “we have been cutting taxes on the wealthy for 30 years in this country and have nothing to show for it except a few asset bubbles, each of which bursts with more destructive force than the last.”

    Really? The economy has not, overall, grown in the last thirty years? America, financially, has hardly gotten any better off than when Carter left office? The “asset bubbles” you bemoan have been squarely blamed by the mainstream media on (surprise!) Wall Street, but I wish we’d take a closer look at the mirror, and admit our own credit defaulting, bankruptcies, and poor savings habits, coupled with the government’s forcing of banks to extend housing loans to those with no ability to honor them.

    But aside from the current nexus of society’s failure to be responsible, the last generation has seen the creation of millions of jobs (just think–all those computer-based jobs didn’t even exist 30 years ago), low inflation, and an explosion in the standard of living that makes even our lower classes seem like kings (remember that in the 70’s most houses still weren’t even built with air conditioning).

    “The end result of cutting taxes on the rich has been (surprise!) huge inequalities in wealth and income and a long period of unemployment staring us in the face.”

    Really? I’d like to see your evidence that the one leads to another, because this seems like a case of false causation (assuming the numbers you link to are accurate). Aren’t there many more plausible theories for why the poor are poor than simply “the big mean rich people are hogging it all because the government won’t play Robin Hood enough?” Several years ago, progressive historian David Shipler wrote a terrific book called The Working Poor, where he tried to demonstrate that social inequality caused poverty, but only ended up showing that the vast majority of the poor are poor because of their own mistakes. It was, however, very well written, and I highly recommend it.

    But your theory also doesn’t account for the great fluidity between classes–in America, people move from one to another (and, often, back) all the time. How do you account for that, if the resources are being hoarded?

    And thanks for continuing a splendid conversation, gents!

  6. Since it is rather obvious that the United States does not need to spend more than all other nations in the world combined on its military in order to defend the U.S., it raises the question of why so much money is spent. The obvious question is who benefits, and the answer is clear.

    If I put $10,000 aside for my child’s college fund wouldn’t you call that an investment? If I spent the same amount for the latest 3D TV home theater setup, would you call that an investment? The difference between wasteful spending and investment is clear enough when we bring it down to the family level, why do you have a problem with the concept when it’s applied to the national budget?

    I’m always intrigued by those who say we shouldn’t be concerned about the poor in this country because they are better off than the poor in some other God-forsaken country. Will you be concerned when America’s poor people live like the poor in India, or Haiti? Why do you want to compare America to that kind of nation instead of other rich, industrialized nations? Could it be because we have fallen behind them?

    Lastly, the fluidity between classes in America doesn’t exist any more either. We aren’t moving significant numbers of people up the economic food chain any more, again as a result of the massive inequity in wealth and income created by right-wing economic policies.

  7. Charles, you know, these might be some of the best conversations I’ve had in a long time. Thanks for all the thought-provoking feedback!

    “Since it is rather obvious that the United States does not need to spend more than all other nations in the world combined on its military in order to defend the U.S.,”

    Why is that obvious? I’m always intrigued by absolute pronouncements about such things. If you know that something is too much, then you must know how much is precisely enough. So, what is the exact amount that we should be spending, and how do you know that?

    “it raises the question of why so much money is spent. The obvious question is who benefits, and the answer is clear. If I put $10,000 aside for my child’s college fund wouldn’t you call that an investment? If I spent the same amount for the latest 3D TV home theater setup, would you call that an investment? The difference between wasteful spending and investment is clear enough when we bring it down to the family level, why do you have a problem with the concept when it’s applied to the national budget?”

    Your analogy still assumes that social programs are appropriate and effective–a rather large oversight, to say the least. Also, you’re still taking it for granted, on no more strength than the claims made above in the vein of “it is rather obvious,” that defense spending is excessive.

    I suppose the root of our disagreement here might come down to differing bedrock political priorities–not that we see the other’s values as wrong, but out of proportion, perhaps–but I still think that such discussions would be more valuable if we all took more care to explain where our values come from. It seems that you think your priorities are going to do more good for the so-called disadvantaged. Fine, I see that, and it’s not a bad thing. But I feel that not only are my values more in line with the even higher priority of preserving freedom, but will ultimately do even more for everybody, including the disadvantaged.

    “I’m always intrigued by those who say we shouldn’t be concerned about the poor in this country because they are better off than the poor in some other God-forsaken country. Will you be concerned when America’s poor people live like the poor in India, or Haiti? Why do you want to compare America to that kind of nation instead of other rich, industrialized nations? Could it be because we have fallen behind them?”

    When did I compare our poor to the poor of other nations? When did I mention any other country at all? This part seems kind of random.

    “Lastly, the fluidity between classes in America doesn’t exist any more either. We aren’t moving significant numbers of people up the economic food chain any more, again as a result of the massive inequity in wealth and income created by right-wing economic policies.”

    Do you see how a train of thought like this begins with an axiomatic assumption (unproven), full of conveniently undefined terms, such as “the income gap is growing,” which then leads to bigger assumptions and judgments? Even if you could document a growing income disparity in, say, the last thirty years (as you seem to imply), that doesn’t show that the lower classes are in bad shape, nor that they are being oppressed by anybody, nor that the upper classes are doing anything that’s directly responsible for their condition, nor that the actions of the upper class are anything other than fair.

    Worldviews like the one you appear to be espousing–that rest on the belief that there is a finite pool of economic resources that must be fairly managed and divided, lest the powerful rob the weak–always puts me in mind of the Simon-Ehrlich wager.

    Ever hear of it? Libertarian economist Simon and leftist social critic Ehrlich (author of infamously wrong liberal tract The Population Bomb) bet about the price of five important metals over the ten-year period from 1980-1990, with Ehrlich pessimistically prophesying that scarce resources would cause massive problems for those without access to them, and prices would shoot up as they were monopolized by the super rich. Simon disagreed.

    Ten years later the evidence was in. Simon won. Ehrlich paid up.

    Liberals might believe that the economic pie must be fairly cut up between everybody, but conservatives believe that everybody is capable of making as much pie as they want.

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