It is frequently asserted that there is no money to finance investment. But the government can now borrow long-term funds at less than 2.5%, and returns on investing in affordable housing would be treble that. Similarly, the OECD has identified increased investment in higher education as a way to reduce the deficit, given the much higher tax returns from a highly skilled workforce. Investment in rail also yields very large returns.
I don\’t know where they get that number for affordable housing from but the other two are nonsense.
The earnings premium for a degree still exists, yes. But it\’s falling rapidly. Something which is an indication (although not proof) that the earnings premium to the marginal degree is negative. This is already true on average for male arts degrees (that is, degrees in arts done by males, not in the male arts) so the marginal experience, as we send yet another 18 year old off to study third rate novels at a fourth rate institution must certainly be negative.
And investment in rail: well, it might, if any project ever came in on time or budget. Which they don\’t which is of course why Network Rail continually makes horrendous losses (yes, I know they declare a profit, £400 million odd last time, but that\’s after the £3.7 billion subsidy).
This is one of the reasons I\’m soadamantly against \”Keynesian\” economics, the political version at least. I\’m willing to believe the bit about animal spirits and the like, but whenever we get to talk about what the money is actually spent upon the proponents seem insistent on simply pissing it away and lying while they do so.
Just not a good basis for public policy that.