The Political Lure of Spending Less in the Present
We know that we could save a lot of money in the future by spending a little now. But we hardly ever do it.
The advertising slogan "You can pay me now, or pay me later" was made ubiquitous by the FRAM aftermarket auto-parts business. The message was that customers had a choice between paying small amounts in the present for replacement of oil and filters or large amounts in the future for major engine repairs. Whatever the merits of FRAM's particular case, the larger point is widely understood and accepted.
Consider a few examples. It is cheaper to maintain and, when necessary, replace one's roof than to let it deteriorate until major damage is done to one's home. It is cheaper to pay one's credit card bill in full every month than to borrow from credit card companies. It is cheaper to take preventive measures to avoid heart attacks than to incur them. Hundreds of examples can be readily offered, and no one would deny the economic truth of such propositions.
This economic truth applies to government, of course. It is less expensive, in the long run, to provide the broad array of public goods and services that have proved to be indispensable than not to provide, or to shortchange, them.
Again, consider a few examples. It is less expensive to keep streets, highways, bridges, buildings and physical assets of all kinds in good condition than to let them deteriorate to the point where they must undergo major repair or rebuilding. The Washington, D.C., region's Metro transit system, a once-proud symbol of our nation's capital and an indispensable regional asset, is a prime example; the system is now facing towering repair costs reflective of decades of spending too little.
It is less expensive to pay for clean air and water and sanitation than to pay the costs associated with dirty air and water and lack of sanitation. It is less expensive to improve highway safety than to pay the cost of accidents that could have been avoided. It is less expensive to avoid epidemics than to suffer them. It is less expensive to pay the costs associated with the rule of law than to pay the costs associated with its absence or insufficiency. It is less expensive for a society to educate its children than to pay the costs of not doing so.
As is the case with personal choices, if we lack the collective means or will to incur costs in the present that would avoid or reduce larger costs in the future, we will be stuck with those larger costs. Consider three especially painful examples of the moment. It would have been less expensive for Ferguson and Chicago to have provided professional and estimable police services than it will prove to be not to have done so. It would have been less expensive for Flint to have continued supporting its once-professional water department than to have turned it over to cost-cutters. Sadly, these examples are far from being exceptional.
We are not good at the economics of public spending. Taxation in the present is a proposition of certainty, while long-term savings to be derived from spending now, as opposed to later, are not so readily quantified. The easiest choice by far is to pay less in taxes now and figure out what to do about the consequences later. Moreover, there is political reward for cutting taxes now. When spending too little in the present turns out badly, as is so often the case, the consequences are borne by politicians and taxpayers of the future. The politicians of the present need not be concerned.
Nevertheless, the economic equations invoked by the phrase "you can pay me now, or pay me later" are the same for government as for individuals. Agencies of government everywhere enjoy a host of opportunities to save in the future by spending more in the present. But it is almost impossible to resist the political lure to spend less in the present.
This is why it is even more important for government than for private parties to make good "pay me now or pay me later" decisions. Our future economic well-being depends on it. Unfortunately, making these judgments is not part of the political process at all. As a result, the public sector has a terrible record in this regard. As the conditions of our schools and infrastructure and health and public-safety systems challenge us as never before, we need to find a way to make this a central part of our public debate -- now, not later.