Discussion Post: Public and private investment We are going to debate the relationship between fiscal policy, public investment, private investment, technology generation and growth. Watch this video, from Dr. Mariana Mazzucato in the World Economic Forum. Instead of focusing on the possible crowding-out effect of government borrowing (meaning the possibility that public investment will discourage private investment in an economy), professor Mazzucato argues that the state is the primary agent of innovation, using examples of successful companies of the United States to illustrate how risky, long-term investment is essential for the private sector to thrive, but discouraged by traditional markets. However, she argues, the profits of those public investments are increasingly privatized, while the costs are socialized (paid by the public through the government). How does this socialization of costs and privatization of profits impact fiscal policy (i.e. how does it encourage fiscal austerity discourses)? What are some of the suggestions offered by Dr. Mazzucato to create a symbiotic (instead of parasitic/predatory) relationship between public and private investment? Consider the substantial government expenditure of the United States during the COVID-19 pandemic, and the positive impact that it had on households and businesses. In that context, do you think that the United States Government will and should get some of the profits that result from that investment? Justify your answers.
● Your post should be at least 6 sentences long ● You are expected to make your own post and comment on at least one other
In your communication with other students, please:
● Expand on or clarify an important point. ● Offer an additional argument to support a position taken in an answer. ● Suggest ways in which an idea could be more clearly expressed. ● Identify passages where you think the writer misunderstood a concept or
applied it incorrectly. ● Disagree or agree with a point or position made in an answer.