Weekend Economists Mourn David Bowie 8 January 1947 – 10 January 2016 (1/15/16)

[Proserpina]

8. YVES SMITH: I wanted to add a couple of thoughts...

http://www.nakedcapitalism.com/2016/01/capitalism-versus-social-commons.html

One reason capitalists wind up with profits that they do not adequately reinvest is that they set their return targets too high. This has been documented periodically. A recent example comes from Andrew Haldane of the Bank of England on short-termism and how it leads to underinvestment.

Second is that many projects are best undertaken by government, such as infrastructure that will serve as the foundation for growth, basic research, or other projects where the time frames are too long, the payoffs too ambiguous, or the resource mobilization too great to make sense for the private sector. In keeping with the Ed Walker’s use of writings from long ago to shed light on our supposedly modern problems, Michal Kalecki explained in Political Aspects of Full Employment why businessmen prefer to have lower employment and as a result, growth:

The reasons for the opposition of the ‘industrial leaders’ to full employment achieved by government spending may be subdivided into three categories: (i) dislike of government interference in the problem of employment as such; (ii) dislike of the direction of government spending (public investment and subsidizing consumption); (iii) dislike of the social and political changes resulting from the maintenance of full employment.