Feb 16th, 2009 at 8:44 am
“Reinvestment”
The official title of the stimulus bill that will be signed tomorrow is the American Recovery and Reinvestment Act. I understand why one would prefer calling it a “recovery” plan to using the funny word “stimulus.” And we progressives like to characterize spending as “investment” both for political reasons and because it captures our substantive beliefs. But why “reinvestment”? What is “reinvestment” anyway? Why isn’t it just “investment”? Among other things, I think ARIA is a better acronym than ARRA.
31 Responses to ““Reinvestment””
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February 16th, 2009 at 8:57 am
There’s something about a dame,
There’s something about a palindrome.
February 16th, 2009 at 8:57 am
Money you take out of an enterprise and then invest in that same enterprise to ensure its growth and stability is reinvestment. The Chinese have been undertaking an American Investment Act.
February 16th, 2009 at 9:03 am
It’s “re”-investment because we haven’t been making these investments for the last eight years, so now we have to “re”-start them.
February 16th, 2009 at 9:05 am
Also, “investment” probably has a negative connotation nowadays, whereas adding the “re” helps reinforce the positive connotation of the “recovery” part. It also implies a return to normalcy, which is what people really want.
February 16th, 2009 at 9:07 am
Could we have just called it the Jobs Act or something? Including the space, that takes up as many letters as ’stimulus’ and could’ve been the name used in the media.
February 16th, 2009 at 9:14 am
The one guy who Obama should have held over from the Bush administration is the poet that devised the titles of Bush’s bills. Classics like Clear Skies and Healthy Forests Initiative helped sell policies when Bush still had credibility with most of the public. Loaded titles like “Patriot Act” and “No Child Left Behind” probably skewed results in polls testing support for specific legislation (if you are a casually-informed voter are you going to tell a pollster you are against patriotism or in favor of leaving children behind). Even if the effect is at the margins, Obama and Company would be wise to put more thought into the titles of their bills as we need every poll point we can get to sustain momentum in a fast-changing environment.
February 16th, 2009 at 9:16 am
“Reinvestment” is the term used when one sets up an automatic policy, to purchase new shares with the dividends generated by common stocks one owns. Perhaps the intent is to give the impression that funds to put idle resources to productive use come not from the middle class, but are a “free lunch”, generated from the “profits” of a smaller original investment.
February 16th, 2009 at 9:19 am
Neil,
Thank you for making my point just prior to my post. “JOBS” poll tested very well and it was the dividing line for the public’s support. When the Republican’s frame of “spending” predominated, the focus groups hated the stimulus but when JOBS defined the debate, the proposal had overwhelming support. Why fail to take advantage by using the word that sets the terms of the debate in your favor.
February 16th, 2009 at 9:30 am
“reinvestment” sells better to conservatives than does “investment”.
Reinvestment suggests that you are merely maintaining something that you already have — to keep from losing it.
Investment suggests that you are embarking upon something new and untried — and conservatives regard anything new as a dangerous innovation that’s probably a stalking horse for libruls wanting to turn our children gay.
February 16th, 2009 at 9:36 am
An enterprise generates a profit. Some of that money is diverted back into that enterprise. Reinvestment, no? In this case, we are the enterprise (and it’s taxes instead of profits).
February 16th, 2009 at 9:42 am
It’s probably because President Obama’s all about…
RE-building America
RE-storing America
RE-newing America
It might be surprisingly effective at winning over somewhat conservative constituencies. What is a Conservative but someone who thinks it was so much better in the past.
Connect the present efforts to the better past.
And pretty much everyone wants to reconnect with a more properous era – the one that preceeded W.
February 16th, 2009 at 10:05 am
As everyone knows, investment can come only after capital accumulation, aka “savings” or as it is fondly referred to on this blog: HOARDING. We wouldn’t want to suggest the government was “hoarding” money to be spent on investment, merely liquidating assets and reinvesting them in more profitable enterprise. Of course neither is the case. The DEAFH (Defecit Expansion Act From Hell) would be a more accurate name. But the idea that “Republicans made bullshit names first, so we must do the same” will prevail. Strategy, Bush III is well underway.
February 16th, 2009 at 11:29 am
I think Jerry 101 is on to something with the “connection with the better past” point about the choice of “Reinvestment.” There also the angle that a lot of what’s being done (bridges, energy infra, etc.) are things that should have been done a long time ago. That we have to “re-” do things that we’ve been letting slide (if not actively screwing up).
Also ARIA might have been too good an acronym. Especially if it turns out it doesn’t work, or it works in an insufficiently obvious fashion, the conservative jokes would just write themselves.
February 16th, 2009 at 11:41 am
As everyone knows, investment can come only after capital accumulation, aka “savings”
Poppycock. There’s such thing as borrowing, you know. Debt is used to finance investments all the time. And as long as the return on investment is higher than your cost of capital, it’s a good idea.
Given the US government’s cost of capital (i.e. treasury yields) right now, the hurdle rate for the stimulus package is no more than 3-4%. And that’s only if you require the government to turn a profit, lest we burden “our grandchildren,” which is a questionable premise.
February 16th, 2009 at 12:19 pm
“arra” means “that way” in hungarian. it makes me think that the stimulus is actually going somewhere.
February 16th, 2009 at 12:23 pm
Actually, if you include every word, the acronym is TARARA. As in:
TARARA-boom-de-yay,
Did you get yours today?
I got mine yesterday,
That’s why I walk this way.
February 16th, 2009 at 12:55 pm
Lowell field is right. ARIA sounds fancy, nonserious and European, and lends itself to any number of established humorous tropes.
February 16th, 2009 at 2:38 pm
Poppycock. There’s such thing as borrowing, you know. Debt is used to finance investments all the time. And as long as the return on investment is higher than your cost of capital, it’s a good idea.
So where does the person you are borrowing from get money?
February 16th, 2009 at 6:26 pm
It has to do with the Democrat’s enormous fondness for the Community Reinvestment Act, which was used extract pledges in 2003-04 alone of $2,350,000,000,000 in lending to lower income and minority neighborhoods.
How’s that working out for us lately?
February 16th, 2009 at 7:16 pm
Poppycock. There’s such thing as borrowing, you know. Debt is used to finance investments all the time. And as long as the return on investment is higher than your cost of capital, it’s a good idea.
Hate to burst your bubble, but one can only borrow if someone else has saved. You cannot borrow rom the future; you can only borrow from what exists presently. We can only keep borrowing as long as Asia keeps saving and is willing to lend to us. “Borrowing” when no one is saving is essentially equivalent to printing money. You get more and more money chasing after finite resources, and you get inflation – massive inflation.
February 16th, 2009 at 9:21 pm
Nathan, Glaivester:
It comes from (1) the people who pulled their money out of equity funds because they want safer returns and (2) the same Asian savers as before, who are saving at a somewhat reduced rate but who are also seeking safer investments. True, there will come a time that these drivers are not sufficient to overcome the increasing rate of Asian consumption, but for a while we’re OK.
According to your logic, there should be no buyers for Treasury securities *right now*.
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