The imperative to increase investment as the mechanism for an economic recovey - and to close the public deficit - is begining to gain ground among influential mainstream economists. A recent article in the Financial Times on that theme by its chief economics commentator Martin Wolf was highlighted here.
A follow-up article has elaborated that argument and suggests that incentives to private sector investment are the key to economic revival currently. PE's Michael Burke says that the FT's influential voice on the side of boosting investment is a welcome one, and Burke goes on to argue that hopes of a private sector-led investment recovery seem misplaced, and that arguments to cut the public deficit to achieve that are reckless, and could lead to disaster.
You can read the full post here.
3 comments:
Brendan Keenan in the Sindo today
In this regard, the emerging consensus among economists could also provide scope for agreement. It is the old Keynesian formula, forged in similar circumstances, that recovery from such circumstances can be led only by investment, and that public investment should initiate the process.
We have seen exactly the opposite from the Government -- the virtual abandonment of new capital spending in favour of the easy, but futile, attempt to sustain current spending. Even that required the pay cuts.
Mr O'Connor and the others have accepted the need for unpalatable choices. Unpalatable they will surely be, but some choices offer more hope than others. It is time for someone to pick up the phone, and for someone to answer it.
So this is the best that economists can offer? Oh, well.
Economists tell us that we cannot engage globalism as a zero-sum game and yet that is what management is doing. Management cannot do any better.
We have already subsidized management to no avail. Tax cuts have clearly demonstrated that they create no jobs, so this agreement by economists is bunk.
Until we have management that can create new categories and new value chains, we will continue to lose jobs to globalism.
As Mr Wolf points out regarding emerging economies much of the decisions regarding the extent of public investment may depend on the world you expect to awaken to after the recession.
An arguement i tried to articulate some months ago here was that the technological development that is coming in the next number of years is certainly considerable. The management of the financial aspects of all of these new technologies and areas of advancement, of course, will dictate whether or not we over stretch and lean towards the betterment of the few to yet another crisis or not, but what one can see with just a cursory glance at the tech, biotech, nanotech, genetic and robotic worlds is that we can certainly afford to invest.
In terms of just how exponential tech growth will be and remain in the future it seems (at the most conservative estimates) safe to liken the immediate future as a group (in their times) wondering if it would be wise to invest in these new rialroads, or combine harvesters or computers?
This, arguement is actually an aside to the deflationary aspect of current policy and whether public investing into a non-developing world would at least act as a counter balance to this negative cycle. I would argue that in light of what is coming we could and should borrow for the medium and long-terms even if it did not have the positive spin-offs that so many have elucidated here and elsewhere.
Post a Comment