Monday, May 21, 2012

Prof. Mariana Mazzucato makes amazing discovery.

Mariana Mazzucato (professor of economics and other stuff) has made an amazing discovery, namely that investment is needed for economic growth.

At least that is the basic and only message in a recent Guardian article of hers.

She says “Growth requires investment”. You could have knocked me down with a feather.

And her final paragraph reads, “So if growth is really on the agenda, the focus should be on the productive investments needed to rebalance Europe, and mechanisms that allow that to happen.”

I have news for Prof. Mazzucato.

Investment is NOT NECESSARILY REQUIRED for growth: not where a firm already has enough invested. As to which firms do need to invest, and which don’t, we don’t need professors of economics to sort that one out. If we just increase demand, businesses which benefit from investment will do so automatically – else they’ll get driven out of business by their competitors.

As to what the mysterious “mechanisms” are that would “allow that (investment) to happen”, I’m mystified and Mazzucato doesn’t tell us. Though I do have one suggestion: if economics professors did more thinking before speaking on this subject, that would be helpful.


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