Investing in Happy Endings

Public and private investment in the real economy has been under attack since the 2008 financial crisis. In difficult economic times, it may seem logical to cut investments that yield results only in the long term; in fact, it is deeply irrational.

LONDON – Public and private investment in the real economy has been under attack since the 2008 financial crisis. In difficult economic times, it may seem logical to cut investments that yield results only in the long term, and thereby conserve money and resources to address short-term problems. In fact, cutting investment in our future – be it in people, the planet, political institutions, or business – is deeply irrational.

It is only through investment in visionary ideas, blue-skies thinking, research and development, and innovation that we can ensure that the future will be better – freer, more peaceful, and more prosperous – than the past.

Early-childhood education, preventive medicine, libraries, physical infrastructure, and basic scientific research, for example, all cost money – and studies show that they are worthwhile. But when policymakers need to cut spending, investment in these public goods is often the first thing to go, because voters do not feel the effects in the short term. Most of the pain is deferred, which is precisely why such cuts are politically attractive.

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