“It’s time to invest in the future.” “America needs to invest in the future.”

I’m guessing you have heard one of these phrases, or some variation thereof, recently. I heard Clinton-era notables Robert Rubin and Robert Reich utter these phrases on talk shows in the past two weeks. The President is fond of using this phrase in concert with several other similar phrases. The litany goes something like this: We need to invest in the future, in education, infrastructure, and science. As the 2012 election campaign heats up, you can expect to hear this phrase uttered many times, and not only by the Democrats.

What does it mean to “invest in the future?” Well, what is an investment? An investment is money put into a project in the hope of making back that money plus interest. There are ways individuals can invest in the future. You or I can purchase municipal bonds, for example. Municipal bonds can be issued by local entities to pay for capital projects. They can be issued by school districts, or to pay for airports and seaports. Municipal bonds are often tax free by the federal government, and can be traded by the investor.

Another way the individual can invest in America is by purchasing U.S. Savings Bonds. Savings bonds used to be a good investment. You walked into the bank, purchased the bond and the bank employee typed the name of the bondholder directly onto the bond. Today, the teller hands you a form to fill out first. The time to maturity is much longer than it used to be. The interest rate for Series EE bonds dropped to 0.7% in 2009, but is back up over one percent today. A $100 bond purchased for $50 in year 2000 is worth $74.40 today, at 1.5% interest. If you’re not getting much from your savings account, chances are you won’t make much on your bonds either, in hard times. You can buy savings bonds directly online.

And, of course, you can purchase Treasure bills with six months maturity dates, if you like. In the 1990’s T-bills paid a good seven percent and above.

You can invest in education by giving to your alma mater or to some other college. You can donate to your local library. But here, you would be straying from the business model that you would make a direct profit from your money invested.

Many of President Obama’s so-called investments are not really investments, at all. Investing in homeless shelters, for example, is really charity. You can invest in charities too. Is the federal government the best means of giving to charity? There is an old expression: “Charity begins at home.”

Similarly, much of the Recovery Act’s so-called stimulus billions are really investments in energy projects, quite a variety of them. Some of these huge sums may pay off in the future, others may not. Other of those billions went to prop up state governments running large deficits. So, tax dollars from residents in New York, say, went to support the inefficiencies in California state government. Is that fair? New York has its own fiscal woes.

Of course, a civilized society repairs and builds infrastructure: roads, bridges, and the like. Governments spend large sums on the state education system. A good education is important for everyone; for entrepreneurs like Bill Gates, who go on to invent new businesses that employ thousands of employees, and in the case of Microsoft, change the way the world uses computers. Bill Gates and others of the super rich are in the President’s sights to pay more taxes to help relieve the enormous government deficit and debt, to pay “their fair share”—whatever that amount may be, even though economists like Martin Feldstein have shown that increasing marginal tax rates on the super rich will bring in only a small fraction of the sums needed to pare down the deficits, much less cut the debt itself, maybe less than one percent.

The problem I have with “investing in the future,” as the President uses it, besides the fact that as a nation we are practically broke, is that it is open-ended and without accountability. What if these investments fail? New York City spends as much or more per pupil than any other city in the country on public education. Yet this year it is closing several dozen schools for poor performance. Why? Because there are social issues at work in the classroom that have little or nothing to do with money per se. Maybe residents should be able to invest directly in individual schools. If the students do well, you get your money back with interest. If the students run wild and flunk out and you lose your investment, then you will have a strong incentive to change the system.

Many Americans have come to think that the government is not only powerful, and can therefore stomp lesser monsters, but it is wise as well. These people think that government scientists are more likely to find a cure for aids that a private sector scientist who “works for profit.”

When I was in elementary school in the 1950s, we students were summoned to the nurse’s office to receive shots, a new vaccine known as the Salk Vaccine, to prevent new cases of polio. Polio was a great scourge of society. Many of its victims were compelled to live out their lives in an awful contraption called an iron lung. Jonas Salk was a scientist whose research was funded by the March of Dimes, a non-profit organization founded by FDR, himself a polio survivor. On practically every counter top in America there stood a cardboard display with slots into which you could insert a dime. I might have contributed a few myself. Those millions of dimes helped to put an end to the scourge of polio and the awful iron lung that many polio victims lived in just to take another breath in this world.

Dr. Salk was the great medical hero of my youth. You can’t dial up someone like that; and you cannot guarantee that so many millions of tax dollars will create such a genius either. One can hope that we will continue to live in a society where a dime from you and me and the next person will make such an achievement possible.

You can invest in the future.

By Hudson Owen. All Rights Reserved.