quarta-feira, outubro 01, 2003
A Falácia do Investimento Público
Retirado do livro "Fifty Economic Fallacies Exposed" (IEA 2002). Dedicado ao dr. Ferro Rodrigues.
Exhortations to invest more are common. Opposition parties (in every country) are habitually accusing governments of "underinvesting" in this or that. Sometimes the criticism is truly fatuous, and governments are urgwed to invest more in our future - as if we could invest in the past, perhaps in last year or last century. But even when that particular stupidity is not perpetrated, the advice to invest more is not necessarily sound.
People can spend their incomes on the consumption of goods and services, or they can save. Before there can be investment there has to be saving. Investment, in other words, is deferred consumption.
It may have been deferred so that more can be consumed later. It may have been deferred simply to enable there to be consumption later - an important reason for saving by individuals with volatile incomes. Or it may have been deferred so that it can augment the consumption of future generations by being bequeathed to descendants.
But whatever the motive (except in the rare case of the individual who accumulates savings simply for the pleasure of accumulation and with no other end in view) saving, and hence investment, is not an end in itself. It is a means of achieving an end. Therefore in turn it is only desirable to increase investment if doing so furthers the achievement of that end, and does so at a price worth paying.
In other words, the return on the investment is of great importance. When politicians urge more investment, they should think both about what the return on it will be, and what is being given up by that investment. Does the benefit of the return exceed the benefit that would have come from what has to be given up? That is the crucial question, and despite being crucial it is often ignored.
We frequently hear it claimed that Britain is investing too little in this or that compared to "overseas competition". But looking at the amount invested in different countries, and saying we should increase ours to that of the highest, is simply wrong. For the costs of investing elsewhere may be lower, or the returns higher, or both. It can be worth investigating, and is always worth thinking about, why investment (relative to, say, income) differs in different countries. But the simple fact of difference in itself can justify only that investigation. It cannot justify trying to increase investment forthwith.
This is the more so because, starting from the notion that investment is a desirable end in itself, calling something investment is then thought to justify expenditure on it with no more ado. The concept of investment in education is an interesting example. We are told to "invest more in education". What does this mean? It has been applied, for example, to increasing the salaries of school teachers. Now, there may or may not be a case for that. But increasing the wages of providers of services is about as far away from investment that is to say, the purchase of a durable asset which provides a stream of service in the future as we can get!
There are also claims, derived from some modern theories of the causes of economic growth, that investment will raise an economys growth rate. By this is meant not just that it can temporarily boost demand, but that it can produce a sustainable rise in the rate of increase per head. If achievable, that is certainly desirable. This modern growth theory can support such claims; but in a very precise way, not the broad-brush way in which it has been seized on by advocates of increased state intervention in the economy. The theory essentially says that certain types of investment may need to be encouraged to raise an economy?s growth rate because they provide generalised benefits - benefits which do not accrue only to the investor. The theory does not say that raising any type of investment by subsidy from the general body of taxpayers will raise the growth rate.
To conclude, the basic fallacy behind the claim that we should invest more is to confuse outputs and inputs, ends and means. Investment is the deferral of the ultimate aim of economic activity, consumption. It is therefore a cost.
No-one has yet claimed - to my knowledge anyway - that if one uses lots of labour as compared with another firm or country to produce some good then that is desirable. Exactly the same applies to investment. Investment is a cost of production. We should invest as efficiently as possible, not as much as possible.
posted by Miguel Noronha 9:11 da manhã
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