Thank goodness for government investment funds!

Aren\’t we lucky little people?

The Government\’s going to spend some of our money on a structural investment fund or summat. And a Green investment fund. And decide whether banks should be forced to lend to SMEs.

Wondrous!

So, how well have they done with previous such funds and ideas?

Taxpayers have lost 93 per cent of their investment in regional venture capital funds since 2000, according to a report from the House of Commons public accounts committee.

A critical report from the parliamentary spending watchdog said the £74m invested in an effort to plug a perceived equity gap for small firms, is now worth only £5m.

The regional venture capital funds (RVCF) were among the worst performers among those backed by the Department for Business, with an internal rate of return of -15.7 per cent.

Ah, they\’re entirely crap at it. So it\’s a jolly good thing we\’re giving them more money, isn\’t it?

8 thoughts on “Thank goodness for government investment funds!”

  1. Vimothy,

    The private sector doesn’t have the right to demand my money.

    It’s not very difficult. If you decide to take someone’s money, you make damn sure that what you are going to do with it will be a success. If you’re not sure, use your own money!

  2. vimothy

    the private sector often gets things right. Tbe public sector invariably gets things wrong.

  3. The Great Simpleton

    vimothy,

    When private investors get something wrong they stop digging – only to be accused of short termism by the politicians who invested so wisely in the story above.

  4. vimothy:

    Both the private and public sectors are composed of fallible humans. But a couple of considerations predispose the public sector not only to losses but to their continuation.

    First and foremost is the inability to determine the asset values of the public-sector “inputs,” critical for destermining “I” (as in “ROI”), a condition only met by market (or marketable) assets AND without which it is simply impossible to determine whether a given activity has generated a profit or loss (or how much of either).

    There is also another, though lesser, dissimilarity at work. And that is the lack of direct correlation between the success (profitablility) of the activity and the fortunes of those directly involved. In the private sector, losses (or even less-than-expected profits) directly impact stockholders and other contributors of capital, managers, and employees, signalling to all–almost constantly–where change might be advisable. In the public sector, where an absence of direct competition shields those involved from much information concerning the unsatisfactory nature of their performance, the normal, even entirely well-intended response to
    any negative information is simply to consider the level of designated funding (or staffing, which amounts to the same thing) as inadequate to the purpose, resulting, musually, in calls for an increase in those magnitudes.

    Government, in any analysis, has only a single advantage, no matter the activity, over private effort: it may legally resort to force and even to violence in efforts to have its way. That’s a powerful advantage, I grant, but actually ephemeral, when all is said and done. Even the one-time contender for the position of the mightiest nation on Earth could not forever hold off the inevitable but, rather, disappeared almost overnight–due to the simple considerations I’ve described–though not before being the source of misery for uncounted millions for over 70 years.

  5. Govt has several advantages over private sector. One, ability to issue currency. Two, ability to tax. Three, (relative) unity of action. Only govt can be counter-cyclical.

    Anyway, I totally agree that banks are the people who should be allocating capital, not the govt. What is this–Atlas Shrugged?!

  6. Pingback: Native American goverment funds? | About Funds

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