In­vest­ing in happy end­ings

Financial Mirror (Cyprus) - - FRONT PAGE - By Lucy P. Mar­cus

Pub­lic and pri­vate in­vest­ment in the real econ­omy has been un­der at­tack since the 2008 fi­nan­cial cri­sis. In dif­fi­cult eco­nomic times, it may seem log­i­cal to cut in­vest­ments that yield re­sults only in the long term, and thereby con­serve money and re­sources to ad­dress short-term prob­lems. In fact, cut­ting in­vest­ment in our fu­ture – be it in peo­ple, the planet, po­lit­i­cal in­sti­tu­tions, or business – is deeply ir­ra­tional.

It is only through in­vest­ment in vi­sion­ary ideas, blue-skies think­ing, re­search and de­vel­op­ment, and in­no­va­tion that we can en­sure that the fu­ture will be bet­ter – freer, more peace­ful, and more pros­per­ous – than the past.

Early-child­hood ed­u­ca­tion, pre­ven­tive medicine, li­braries, phys­i­cal in­fra­struc­ture, and ba­sic sci­en­tific re­search, for ex­am­ple, all cost money – and stud­ies show that they are worth­while. But when pol­i­cy­mak­ers need to cut spend­ing, in­vest­ment in th­ese pub­lic goods is of­ten the first thing to go, be­cause vot­ers do not feel the ef­fects in the short term. Most of the pain is de­ferred, which is pre­cisely why such cuts are po­lit­i­cally at­trac­tive.

But this is low-hang­ing fruit that so­ci­eties can­not af­ford to pick. We must start in­vest­ing in peo­ple at the ear­li­est pos­si­ble mo­ment – right from birth. Univer­sal ac­cess to high­qual­ity nu­tri­tion and pre­ven­tive health care, as well as ear­ly­child­hood learn­ing pro­grammes, are nec­es­sary to pro­vide strong foun­da­tions upon which coun­tries around the world can en­sure their fu­ture so­cial ad­vance­ment and eco­nomic growth.

Like­wise, for chil­dren and adults alike, there is real value in, say, pub­lic li­braries – sec­u­lar and free gath­er­ing spa­ces that of­fer univer­sal ac­cess to learn­ing and, in­creas­ingly, pro­vide a gate­way to dig­i­tal ser­vices. The same is true of cul­tural pro­grammes and in­sti­tu­tions that stim­u­late growth in the arts and sciences; they, too, are nec­es­sary to en­sure that cit­i­zens can con­trib­ute pro­duc­tively to their so­ci­eties and economies. The temp­ta­tion to cut long-term in­vest­ment in eco­nomic hard times stalks the pri­vate sphere as well. And com­pa­nies around the world, big and small, have been suc­cumb­ing to it since the be­gin­ning of the global eco­nomic down­turn. As com­pa­nies are forced to look to their bot­tom line and in­vest­ment in re­search and de­vel­op­ment and train­ing, Mak­ing mat­ters worse, th­ese to be re­stored when eco­nomic be­come leaner, they cut de­vel­op­ment, em­ployee in­fra­struc­ture, and more. bud­get lines are the last prospects brighten.

For ex­am­ple, in the face of in­vestor pres­sure, phar­ma­ceu­ti­cal com­pa­nies have cut their re­search ac­tiv­i­ties dra­mat­i­cally, re­ly­ing in­stead on ac­qui­si­tion strate­gies. The aim is to “de-risk” by buy­ing up firms that have al­ready car­ried out all of the costly blue skies re­search and have de­vel­oped proven drugs.

Ob­vi­ously, such strate­gies will not work in the long term if no one is will­ing to invest in the ear­li­est stages of re­search in crit­i­cal ar­eas like biotech­nol­ogy, dig­i­tal tech­nol­ogy, re­new­able en­ergy sources, and the like. With early-stage in­vestors scarce, gov­ern­ments turn­ing away from blue-sky sci­ence, and fun­ders of univer­sity-based re­search in­creas­ingly de­mand­ing that grantees’ show the “im­pact” of their work, who will fund risk-tak­ing? If no one does, the well will run dry, and there will be noth­ing to ac­quire.

Like­wise, in­stead of in­vest­ing in new in­fra­struc­ture, com­pa­nies patch up the old. But patch­ing bro­ken things can work for only so long. By not com­mit­ting re­sources to invest in new, cost-ef­fi­cient, en­vi­ron­men­tally-friendly op­er­a­tions, or in de­vel­op­ing the skills and knowl­edge of em­ploy­ees, or in in­no­va­tion, com­pa­nies will find that their short-term sav­ings come at the ex­pense of their long-term suc­cess.

The choices that com­pa­nies are mak­ing not only af­fect their own op­er­a­tions, but also have pro­found con­se­quences for their cus­tomers, sup­pli­ers, and the so­ci­eties in which they are em­bed­ded. Fail­ure to invest in the fu­ture will af­fect that fu­ture for ev­ery­one.

Not ev­ery­thing that is worth­while has an im­me­di­ate pos­i­tive ef­fect on fi­nan­cial bot­tom lines, or can be put neatly in a box. If pub­lic and pri­vate in­vest­ment de­ci­sions are driven only by the eas­ily mea­sured and eas­ily de­fined, we will miss out on the break­through mo­ments that char­ac­terise so much of hu­man achieve­ment and ad­vance­ment.

In both the pub­lic and pri­vate sec­tors, we need to com­mit our­selves to long-term in­vest­ment, whether in chil­dren and ed­u­ca­tion, sci­ence and tech­nol­ogy, and health and medicine, or in build­ing strong in­sti­tu­tions that can serve as the sus­tain­able foun­da­tions of peace­ful, demo­cratic, and pros­per­ous so­ci­eties. An in­vest­ment in our fu­ture is never wasted. In­vest­ing in begin­nings is the only way we will live to see happy end­ings.

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