Comment by specproc
9 days ago
The problem is that the investment in this day and age is entirely extractive. Strip the assets, do minimal infra, and jack up the prices. Water here is a classic example. Investors want their returns, and the best way to get it is by rent-seeking and minimal outlay. I'd go so far to argue that "investment" is the problem.
There's been enough in the way of tax breaks and "derisking". A huge part of the problem with our public finances is being on the hook for some very ill-advised "investments".
The money going out exceeds the money going in, because that's what an investment is. An opportunity to make money.
What you are describing, from the POV of the British firm, is ownership, not investment. Water is a classic example of failure because there was no shareholder capital invested - exactly my point. We don’t talk about all the successful investments because they’re doing just fine.
What the UK desperately needs is actual shareholder capital actually being invested into British companies, so that they can create new wealth. They are welcome to take a share of the wealth they create! Everybody wins!
Can we talk about the successful investments then?
What I see is every national asset, every successful company, and increasingly land and housing sold to (typically overseas) capital, with the proceeds sucked offshore.
Whether it's new housing in London, ARM, the water, the electricity, most products and most supermarkets: the beneficial owner is outside the country, being largely taxed outside the country, and spending their money outside the country.
We're discussing this in the context of a deeply dysfunctional Britain. If the "wealth creation" route were in any way effective, we'd be in a very different place right now. There's been concensus among pretty much every party in my lifetime around supporting "growth", "investment", number go up. It's clearly not working for most of us. Everyone but a select few in this country is living on the edge.
I personally see a major component of our malaise as the rentierism practiced by largely foreign interests throughout our economy. Alternative explanations are welcome, but it's hard to see how we'd be worse off without the vampire squid up each and every orifice.
Private equity is absolutely taking over the UK - so many stories like this: https://www.msn.com/en-us/money/taxes/private-equity-boom-ne...
Had we never received foreign investments to begin with we would certainly be worse off, as indeed we were in the 50s, 60s, and 70s.
> There's been consensus among pretty much every party in my lifetime around supporting "growth", "investment", number go up.
Yes most U.K. governments have talked about fine talk but other than Thatcher, failed to actually deliver on securing enough investment. It’s not that the investments are bad, it’s that they have been decreasing for 25 years:
https://www.economicsobservatory.com/boosting-productivity-w...
It’s funny that you mention ARM because it was created under Thatcher back when the U.K. was willing to start businesses. Yes it should never have been sold.
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