Mazzonomics

We have another of those attempts from Mariana Mazzucato to redefine economics for our age:

Instead of seeing spending on education, school meals and other priorities – such as tackling the climate emergency, health crises or the digital divide – as an expense, it should be recognised as an investment. And one that can drive innovation.

Well, yes, except investment is an expense. Both current spending and investment are expenses. They are money out, being spent upon things - or if we prefer, resources being diverted to do things - which cannot then be spent on something else. They’re expenses.

This doesn’t then give free ride to investment as not being an expense. Sure, it might be a better thing to do than current spending. But that then depends upon what do we gain in the future from investing now? It is the output of the expense, the return on it, that matters.

Free school meals for all could be an excellent investment, one that makes the economy grow in the future. It could be a terrible one, one that makes it shrink. But whichever of those it proves to be it’s still an expense right now.

Investment is an expense and don’t let anyone tell you different - not even a fashionable professor.