One of the hardest things to measure is whether an investment now will pay off in the future. In the financial world there are safe investments and risky investments. The riskier the investment the bigger the potential payout has to be. Effectively multiply the potential investment by the chance of a payout and that needs to exceed any investment or its too risky.
There are many assessment tools in use and the simple formula above is certainly not universal, but it at least makes some sense.
It also matters if losing your money is something you can accept. We have had crashes and depressions where even safe investments collapsed.
Investing by the Government is trickier because the payout is not just financial and not direct generally. Does anyone doubt that the interstate highway system was worth building? It has had a tremendous impact on economic growth which has led to increased taxes. One can do some calculations using broad indicators but any numbers would be, at best, estimates. However without doing the math our logic tells us it was worth it.
If you look at the current Democratic priorities, they involve investing in physical infrastructure and maybe more importantly human infrastructure. The first one is done but the secon is still being debated. It shouldn't be because human infrastructure is the biggest return on investment we have.
Admittedly it is hard to measure but we see how under our current structure so much of it is wasted. Providing more children with the skills they need to create and prosper will pay off. They will usher in the future with ingenuity and desire. It will certainly pay off for the country.
There is no better investment really.
No comments:
Post a Comment