Mariana Mazzucato: What the fuck is this woman talking about?

For example, credit ratings that banks give to companies underemphasise their real health, such as their productivity. In research for a Policy Network report launched on Monday, we found that the probability of receiving a bad credit rating is just as high for a highly productive company as it is for an unproductive one. Companies spending more on R&D, for example, will inevitably have a higher risk profile because innovation is so uncertain. Yet risk associated with innovation is about (good) speculation aimed at the production of new products, not simply (bad) speculation for its own sake. The inability of banks to distinguish these two types of risk is partly why, during the credit crunch, the most innovative UK firms are being hit the hardest.

Eh?

A credit rating is a measure of risk. Those performing more R&D are riskier. But banks are bad boys for noting this?

WTF?

In the last decade, Fortune 500 companies have spent $3tn in buying back their own shares; we found that such spending has damaged the willingness and ability of companies to spend on R&D and long-term training. While the usual explanation is that \”buybacks\” are the only thing to do when there are no investment opportunities, the biggest repurchasers are in industries like pharmaceuticals and oil, where there are plenty of opportunities, such as in new medicines and renewable energy.

Why should oil companies invest in renewables? They know how to find, drill for, pump up and refine oil. What does this have to do with their ability to make solar cells for God\’s sake? are we to throw out the entire economics of comparative advantage as it pertains to implicit knowledge in the firm?

And a state owned industrial bank investing in manufacturing under a strategic plan to only invest in the real economy…….snore

 

15 comments on “Mariana Mazzucato: What the fuck is this woman talking about?

  1. It’s nonsense but it’d be great if we could just go along with the good speculation – bad speculation meme for a while. But she won’t. Before long she’ll be doing an article about the windfall profits to big pharma arising from exactly those R&D gambles she’s currently praising.

  2. Yes, please, more of the good speculation. Where can I find it? I’m definitely putting my money behind it, once I’m sure I’ve found it.

  3. And I was stupid enough to go look at he article:

    “A state investment bank, formed from the ashes of the Royal Bank of Scotland, could give the state a direct return for its investments in high-risk technological innovation.”

    God help us. This is the group that’s turned its retail banking arm into such a profound clusterfuck for the last week they’ve had to open branches on Sunday to try & placate furious customers. Trust them with investments in high-risk technological innovation? Just at the moment they’re running a distant second place to a china pig in banking expertise.

  4. The big oil companies may not spend a lot on renewables, though it’s probably a lot more than you think with fuel cells and hydrogen power etc. The people who ARE heavily involved are the contractors (like I work for) who are bidding for construction of all these rubbish wind farms because there is a lot of (wasted) money in them. We are also in to the Fracking market, biofuels and difficult stuff like Tar Sands. They also do a fair amount of Nuclear work including work on Fusion. Never think that Oil is just Oil, it isn’t.

  5. Sorry Rob, this is directed investment we’re talking about. Like the way the bicycle manufacturers were encouraged to go into the perpetual motion business, back in the day, rather than mess around with dead ends like heavier-than-air flight & automobiles.

  6. I blame rich people. They are so stupid.

    They know there are all these sure fire investments that clever folk like Will, Polly and Ritchie know will give a guaranteed return on their investment, and yet they STILL insist on investing in stuff that might lose them their money.

    What the hell is wrong with them?

  7. here there are plenty of opportunities, such as in …… renewable energy

    Opportunities to suck at the nipple of public subsidies.

    Oil companies general struggle to find investment opportunities due to the fickleness of politicians the world over. Do all the hard work and they steal your assets or increase your taxes if successful, but are noticeable by their absence if you fail.

  8. share buybacks are also driven by tax, as a tax efficient way of paying dividends (the value of shares held after the buyback should rise, thus making the owners liable for capital gains if/when they sell rather than instant taxation on the dividend). Want to stop them? Cut tax.

  9. BIS at 6
    “Like the way the bicycle manufacturers were encouraged to go into the perpetual motion business, back in the day, rather than mess around with dead ends like heavier-than-air flight & automobiles.”

    Eh? Either that “encouragement” is a figment of your imagination, or it was the most ineffective bit of encouragement ever.

    “Bicycle companies that converted to car manufacturing about 1900 included Bianchi, Singer, Peugeot, Opel, Morris, Rover, Hillman, Humber, Winton and Willys.” (“It’s all about the Bike” Robert Penn).

    Also Triumph and BSA made bikes before they made motor bikes and cars. And Michelin and Dunlop made bicycle tyres before they made car tyres. In the US, the Dodge brothers made bikes before cars.

    And as for “the dead end of heavier than air flight”*, the Wright Bros were of course the founders and owners of the Wright Cycle Company, with five shops. They used the profits of that business to carry out their experiments into aircraft.

    * I’ll accept you might have point about that being a dead end – Warren Buffett once calculated that the airline industry collectively had destroyed all shareholders’ funds, and said that from a capitalist’s point of view, it would have been best if the Wright Bros had stuck to bicycles.

    .

  10. “Eh? Either that “encouragement” is a figment of your imagination, or it was the most ineffective bit of encouragement ever.”

    Well I did rather regard it as a reference to domestic PV & wind of any description, as they’re both about as viable. But I write gags not economics, so a little licence?

    Not saying there’s much difference, these days. Apart from the laughs, that is.

  11. Well then there’s hope for us all – maybe PV and windpower will turn into something useful (if not for the reasons the current cheerleaders think).

  12. @ Luke #10
    Except in Japan, bike manufacturers were *not* encouraged by government to go into automobiles. Some of them just did it for themselves.
    Henry Ford never built bikes, nor did Rolls or Royce

  13. This is not a research paper, it is political propaganda that straightforwardly lies.
    “all the key technologies behind the iPhone trace their funding to the state”
    “venture capital… due to its emphasis on returns that are high, but quick and low risk”

  14. Actually the oil companies do invest in R&D relating to renewables. Why would they invest their own money, though, when our crooked governments are perfectly willing to take our money off us to give to oil companies for this purpose?

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