This is a major discussion nowadays, in the economic world. In the settled storm (that resembles a lot that of the 20’s and 30’) should State interfere through a tax reduction or public investment? In other words, should the State run the investment or create the conditions for the private sector to do it by itself? I will give you my opinion.
I think the State should pursue strategic investment that allows for national development (especially that that doesn’t interest the private sector, due to its limited immediate payback – and please, remember this is the real World and not economic theory, so don’t say that if it doesn’t have a payback, that is because it shouldn’t be done; we all know that private investors don’t see the long term and aren’t as patient as the State), but create even better than usual conditions for private investment to flourish and create growth generating opportunities.
We know that public sector usually is not the most efficient investor (it doesn’t always run business at a desirable low cost, through, usually, a responsibility dilution) and, especially in Portugal, has shown a bias to major public works investment (usually highways or other major infra-structures) that sometimes raise an eyebrow on its neediness… Still, I don’t say it should cut back investment – I say it should take a closer look to what is really necessary and keep it (the incredible work that has been done on alternative energies is remarkable, and I am sure it will pay off for future generations) and get rid of the rest (I am still to be convinced that there isn’t any more efficient alternative to Montijo airport…)!
And then it should, basically, lower taxes. Generate more available private money to be invested in the economy. People usually have that capability – they invest their own money in what they consider to be the best investments. Sometimes private money gets well invested, and it pays off, other times, it doesn’t – and one moves on. But usually it does it on a much more efficient way than public sector. And it should really be the economy growth motor.
So, when EU (and Portugal) says no to tax cuts (and prefer public investment to it), let me say that it raises my eyebrow.
I think the State should pursue strategic investment that allows for national development (especially that that doesn’t interest the private sector, due to its limited immediate payback – and please, remember this is the real World and not economic theory, so don’t say that if it doesn’t have a payback, that is because it shouldn’t be done; we all know that private investors don’t see the long term and aren’t as patient as the State), but create even better than usual conditions for private investment to flourish and create growth generating opportunities.
We know that public sector usually is not the most efficient investor (it doesn’t always run business at a desirable low cost, through, usually, a responsibility dilution) and, especially in Portugal, has shown a bias to major public works investment (usually highways or other major infra-structures) that sometimes raise an eyebrow on its neediness… Still, I don’t say it should cut back investment – I say it should take a closer look to what is really necessary and keep it (the incredible work that has been done on alternative energies is remarkable, and I am sure it will pay off for future generations) and get rid of the rest (I am still to be convinced that there isn’t any more efficient alternative to Montijo airport…)!
And then it should, basically, lower taxes. Generate more available private money to be invested in the economy. People usually have that capability – they invest their own money in what they consider to be the best investments. Sometimes private money gets well invested, and it pays off, other times, it doesn’t – and one moves on. But usually it does it on a much more efficient way than public sector. And it should really be the economy growth motor.
So, when EU (and Portugal) says no to tax cuts (and prefer public investment to it), let me say that it raises my eyebrow.
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