Wednesday, December 31, 2008

Show me an Investment Plan

When the Detroit big three came to Washington asking for a loan to rescue their companies from pending bankruptcy, the Congress was steadfast on demanding a business plan. And they were right to do so.

Now, Congress and the incoming administration will ask the taxpayer to spend what some have reported to be close to a Trillion dollars on a new ‘stimulus package’. Taxpayers must demand an investment plan. They will be in their rights to do so.

It is undeniable that the economy needs a big shot in the arm to boost job creation, generate sustainable opportunities for investment, and stop deflation in its tracks. So, the issue is not whether we need a ‘stimulus’, but rather the kind of ‘stimulus’ we are going to get.

It would be a grave mistake if Washington just bundled up lawmakers' favorite projects and threw the people's money at them. I do not have any reason to believe that President Obama will allow for such an approach, but the usual deal-making in Congress may produce just that: Throwing money into the wind.

The so-called ‘Stimulus’ must be managed as both a public trust and a capital investment venture (irony noted!). First, I would not call it a ‘Recovery Plan’ or a ‘stimulus package’. Instead it should be designated as a National Investment Plan (NIP). The short-term goal, of course, is economic recovery, but the core objectives of this plan are the reinvention of American competitiveness and the retooling of the nation’s market institutions. Second, I would demonstrate and quantify every initiative in terms of Return on Investment (ROI) to the taxpayer and report on benchmarks along the way. The country needs smart investments in new technology, renewable energy, scientific discovery, and education.

There is no doubt that American universities are the best in the world, but let there be no doubt that the state of our primary and secondary school system is a national emergency. The only way forward for the US economy is for it to be a hi-tech economy. So, without a reliable farming system that produces the hi-tech skills needed to maintain US global leadership in the world, we may have to grudgingly resign ourselves to being a nation in decline.

Furthermore, if the country does not move aggressively to invest in technology and scientific discovery, others in the world will beat us to the punch in fields such as biotechnology, energy, aeronautics, and—yes dare I say— even information technology. The long-term implication here is that we slowly become costumers of new ideas as opposed to producers of breakthrough innovation.

So, to Washington: Seize the opportunity and think of those who will inherit this country after you are gone. Have your metrics for the short-term (market stabilization, job creation), but make sure you focus on reseeding the economy so that this country continues to be a place of both opportunity and innovation.

Oh yes – and we would like to see an investment plan before spending the people’s money this time around.


Anonymous ayala@israel said...

we expected small business to be supported, but with new taxes most of them will hardly survive... and what are this tax for? fight against ghosts like gw? its just crazy

February 12, 2010


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