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坐享其成的财政救助已不复存在

Jun 25, 2020 Mariana Mazzucato , Antonio Andreoni

伦敦——2019冠状病毒病危机和衰退提供了一个让我们重新思考政府作用的机会，特别是政府与企业的关系的特殊机会。人们一直信奉的政府是市场经济负担的假设已经被揭穿。重新认识到政府还是传统的“第一出资人”，而不是最后的放款人，已成为后疫情时代有效决策的先决条件。

所幸，公共投资已经回升。美国已经采取了3万亿美元的经济刺激和救助计划，欧盟则推出了7500亿欧元(8500亿美元)的复苏计划，日本也为家庭和企业增加提供了1万亿美元的援助。

然而，为了让投资能够创造出更健康、更有弹性和生产力的经济，光有资金是不够的。各国政府还必须恢复设计、实施和执行对受援国附加条件的能力，让私营部门以更有利于包容且可持续增长的方式运作。

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Mariana Mazzucato

Writing for PS since 2015
17 Commentaries

Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London and Founding Director of the UCL Institute for Innovation and Public Purpose, is the author of The Value of Everything: Making and Taking in the Global Economy and The Entrepreneurial State: Debunking Public vs. Private Sector Myths.

Antonio Andreoni

Writing for PS since 2020
1 Commentary

Antonio Andreoni, Associate Professor of Industrial Economics and Head of Research at the UCL Institute for Innovation and Public Purpose, is Visiting Associate Professor of the Fourth Industrial Revolution at the University of Johannesburg’s South African Research Chairs Initiative.

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0 Comments on this paragraph, 20 in all 20 Comments on this article

Ralph Musgrave Jul 7, 2020

The usual clap-trap from Mazzucato. For example she says Covid related assistance and/or the purchase of corporate bonds as part of QE “…. should come with strings attached, such as requiring firms to adopt emissions-reduction targets and to treat their employees with dignity (in terms of both pay and workplace conditions).”

So employers who get Covid or QE type assistance have to abide by higher emissions standards than other employers? Never heard such nonsense.
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Mats Gezelius Jul 6, 2020

Not "dirigiste", my ass. That's just what it is. Okay, governments should have conditions for distributing aid. Yeah, don't give taxpayer money for companies to rebuy their stocks, boost executive bonuses; don't give taxpayers money to companies that themselves avoid paying their fair taxes. That's fine. But, basically, do not provide corporate welfare at all!

Governments shouldn't pick winners and losers. They shouldn't micromanage. They should provide the rules and the laws, the boundaries within which corporations operate. That's it.

Otherwise, what will we get? Irrational and populist decisions. Take, e.g., the airlines. When people don't travel airlines will go bust. If people start demand travel services again, there will be those that respond to the demand. What we get is instead governments competing with each other to save their "national flag-carrier", pumping in billions and billions in an industry that anyhow was in need of serious restructuring.

Do we need a stimulus for the economy when a virus is wreaking havoc and governments close down whole industries? Yes, but not governments playing benevolent hedge fund capitalists.

What is needed is a bottom-up recovery plan. Create a floor below which no one sinks; a guaranteed basic income of, let's say, 1,000 dollars per month. For extra COVID stimulus, keep temporarily the $600 top-up. Add a generous child benefit. Pay it to everyone, working or non-working, to avoid a poverty trap that dissuades people from going back to work, even in low-paid positions or in the gig economy.

Yes, a lot of money will go to people "that doesn't need them". So they will deleverage, invest och add to their savings. No problem. We want to boost the liquidity in the financial sector, don't we? This way it happens bottom-up rather than top-down. Of course, this will not solve all problems, like financing small businesses etcetera. But I'm not sure that some government programs will solve this. The government has so far failed in everything, except feeding the already rich and crony capitalists - not ailing SME:s, mom&pop stores, bars, and restaurants.

Once the virus recedes, people leave their homes, there will be a demand for services and goods. Let the market provide that. It is good at it.
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leif wennerberg Jul 4, 2020

Given the urgency of the climate problem, and the pace of political "leaders" the financial community can have an important role, as to a smaller extent, can we who have retirement funds to invest.

Morningstar and MSCI are providing green finance analytics and indexes, the Climate Majority Project and the Global Investor Coalition on Climate Change, among many others, provide useful guidance, and mutual fund groups are providing avenues for investors to vote with their money, e.g. Blackrock's recent announcements and emails to CEOs.

At central bank levels, we have other promising signs: Network of Central Banks and Supervisors for Greening the Financial System (https://www.ngfs.net/en), Green finance strategy (https://www.gov.uk/government/publications/green-finance-strategy). Within the US Federal reserve there are green shoots, with the San Francisco FRB hosting a . last November, "The Economics of Climate Change"
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Angel Gavieiro Jul 2, 2020

Agreeing with the arguments of the critical role of governments to ensure that bail-outs this time come with society-beneficial conditionality, if the final goal is to take advantage of this crisis to change the fundamental flaws that current version of capitalism has demonstrated and has driven business purpose to increasingly be misaligned with society purpose, then we need to tackle the very core of these flaws.

We need to understand the ultimate root cause of this growing misalignment business vs society looking back the last 30-40 yrs. trend: management decisions following the treadmill to produce a target Return on Equity (RoE) so to sustain stock price growth; how much RoE? well, depends by industry and companies, but for all at minimum, an RoE > CoE (Cost of Equity) according to past mainstream in Financial Economics (ie shareholder value maximization), so that the only 'good growth' for a company is when happens at RoE > CoE, otherwise it is 'bad growth' because destroys value to shareholders.
But, who decides CoE? again, mainstream Financial Economics claims that CoE comes from 'shareholder expectations' which are embedded in past stock prices and can be estimated with the CAPM model for each company: CoE = risk free rate + Beta x market premium... in practical terms, {10 yr. govie yield + {specific stock volatility vs market} x {market premium}, the latter is derived from econometric regression of past stock market data series. So, for instance, for banks is considered a CoE in the 10-11% range.

In other terms, we have accepted this 'convention' to frame what should be 'shareholders expectations'... has anyone questioned the validity of this convention? This is not an small matter, since all management in large companies, and their incentive compensation packages, follows this logic.
But the story does not end there, we need to follow the governance chain: Board Directors take management on account to achieve this target RoE above min. CoE threshold, ... following the directives from whom? mainly Asset Management companies (nowadays own the vast majority of shares) that nominate them, who in turn owe their mandate to Institutional Investors (pension funds, insurance cies., mutual funds...), who in turn owe their mandate to the individual people that hold the given fund or policy, these are the Ultimate Shareholders, human beings (actually, an important part of the employees we are trying to help in the first place!... plus, of course, the 1%, the HNWIs of these world, as well human beings but that overall care much less about that, worryingly, they are progressively increasing their part of this pie of Ultimate Shareholding).

Now, if you ask them, would these Ultimate Shareholders demand out of companies' management the min. CoE from CAPM model if they were conscious of the management decisions' impact would have in their employment and other externality costs? I think we all know the answer... I tend to believe societies could live with much lower CoEs, depending on overall conditions of the real economy, and find a balance.

Evolving this 'governance chain' (to hear the mandate of the Ultimate Shareholders) along with substituting the 'CAPM dogma' (for a forward looking CoE based on the reality of the real economy) is what needs to be fixed (yes with a good deal of ingenuity and deep thinking) at the very core of the current system if we want to move from 'Shareholder Capitalism' to 'Stakeholder Capitalism' and achieve a better business & society alignment.

Sorry for the length.
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Michael Public Jun 29, 2020

should read "...to infinitely bail out antiquated loss making dinosuars..." - honestly, what terrible thing will happen to a country if it has no national airline?
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Michael Public Jun 29, 2020

"...to produce electric batteries."

Tesla is too far ahead in this to catch. If you throw a couple billion at the research problem by 2025 you will only be half way to catching Tesla. The problem is a culture one and not just a money one.
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Michael Public Jun 29, 2020

If we are going to French to describe the extent of state's control of the economy we should find a french word which represents a fair and justified balance between the economic extremes of laissez faire an dirigiste. I propose - 'main juste' (translation: fair hand).
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Michael Public Jun 29, 2020

Until 2021. Really? 2031 would have been reasonable.
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Michael Public Jun 29, 2020

I live in a country that adopted very strong pay and workplace conditions but could not afford them, and so unemployment has soared to stratospheric levels causing even bigger issues than the original problems. I would say such measures should have a clause that disbands them if nominal unemployment goes above (say) 10%.
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Edwin Hoffman Jun 29, 2020

Added complexity and distortions will fail. End the bailouts and let the public determine the winners based upon innovation and application of sound business practices.
- Paul Akhurst Jun 29, 2020
  
  If only the public was so discerning and able to influence markets to the greater good of all (or maybe you are arguing for survival of the strongest, that individual interest is limited to self-interest). An important role of government is to intervene in markets for the good of society because most businesses operate only to benefit themselves in the here and now.
  - Edwin Hoffman Jun 29, 2020
    
    They are, given the chance. Businesses only interested in the here and now do not stand the test of time, especially as the public gains knowledge and experience. Government intervention fails for lack of business acumen, and due to rampant corruption through the perverted influence of lobbying. Meddling by lawyers, academics, and bankers - who themselves have little to no experience producing anything of economic value - should be required to have owned and operated a successful business as a prerequisite to any such intervention. In short, eliminate all systemic distortions and let capital flow naturally toward the best products and services. We live in an increasingly interconnected world where corporate malevolence can be handily and publicly routed out by consumers alone.
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  - Ian Maitland Jun 29, 2020
    
    "An important role of government is to intervene in markets for the good of society because most businesses operate only to benefit themselves in the here and now."
    
    And I suppose that government officials "operate" only selflessly for the good of society.
    - Paul Akhurst Jun 29, 2020
      
      Well, that is the general idea of government, to work for the betterment of society. And, at least we get the chance to change them every few years if we do not like what they are doing. Unlike companies that come and go for all sorts of reasons and once they are gone can leave desolate towns behind them.
      - Edwin Hoffman Jun 29, 2020
        
        Who gets to the chance to change governments, and what change in government is relevant when there is no resulting change in overall policy or cabinet composition? We primarily experience a change in veneer.
        
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- Michael Public Jun 29, 2020
  
  The problem is borders. This would work great if workers could freely cross borders to follow the jobs. In reality they cannot. If (say) Fiat closes in Italy it could mean tens of thousands permanently unemployed stuck in Italy. Open the borders for everyone to go work anywhere and it will force harder competition among countries and firms to offer up the best system.
  - Paul Akhurst Jun 29, 2020
    
    Your point is relevant since capital moves around far more freely than labour. However, it will take a lot more than just open borders to enable workers to move countries. There are language skills to overcome, differences in cost of living, housing, healthcare etc and the huge social cost of relocating potentially great distances from family and friends. (Not to mention racism faced by incomers to almost any country).
    
    Not forgetting, that companies move overseas to save costs and because the new host country offers lower costs in terms of wages, taxes, labour and environmental costs. None of which will make the new factory location attractive to the discarded workforce.
    
    A more sophisticated and local-based solution is needed.
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Ian Maitland Jun 29, 2020

It comes as no surprise that Mazzucato is using Covid-19 to make the same pitch for a government takeover of the commanding heights of the economy. A crisis is a terrible thing to waste. But apparently she hasn't been paying any attention to the fiascos over at the CDC, FDA and HHS.

If the government takes over, we will not be governed by idealized philosopher kings, but by bureaucrats like the ones at those government agencies who bungled our response to the virus. Over and over, regulations thwarted private-sector efforts to address the crisis. Everyone is familiar with the story of how a German company produced more than a million tests in late February when the U.S. had access to merely 4,000 tests. Permits to build mask factories took months to acquire. HHS didn't respond to inquiries about ramping up mask production in Texas. Why did it take a a change in the law to allow industrial companies to sell quality masks to hospitals? You can't make up stuff like the saga of American Airlines having to obtain the FAA's permission to offer hand sanitizer to its passengers. The "license Raj" had nothing compared to the epidemic of overregulation in the good old USA.

What will it take to remove the scales from Mazzucato's eyes? Today she makes the completely perverse proposal that we should make bail-outs of firms conditional on them implementing a long wish-list of measures like higher minimum wages, worker representation on corporate boards, and restrictions on dividends, stock buybacks, and executive bonuses.

Mazzucato doesn't seem to grasp that we are in the middle of a crisis. Firms are getting bailouts because, without the aid, uncounted numbers of them would fail and unemployment would reach recently unheard of heights. But the conditions that Mazzucato would impose would add burdens to firms precisely when they are most vulnerable and so would cause business failures to skyrocket. Her proposal is completely at cross purposes with the point of the bailout program.
- Michael Public Jun 29, 2020
  
  This fiascos may well have been caused by business capture of US politics and the ensuring under-funding that goes with it. For the WHO it meant they could then be easily bought by Chinese funds. If you look at countries with well funded government agencies/health systems they flattened the curve easily.
  The US is really an outlier among developed nations. But in the end you are right - the author has essentially hidden a government control agenda inside a Trojan horse of Covid-19. I would like see an intelligent redesign of the government-business split - one not serving the agendas of billionaires but rather of the full nation, which would probably create even more billionaires in the process because it is based on long term strategy and not short term advantage.
  - Ian Maitland Jun 29, 2020
    
    Don't make excuses for the bureaucrats' epic bungling unless you can do better than "may well." I remember a time when people used to say that the moon may well be made of green cheese.
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