Sean Meriwether's Reviews > The Value of Everything: Making and Taking in the Global Economy

The Value of Everything by Mariana Mazzucato
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bookshelves: ecomomics

“We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.” – John F. Kennedy

Kennedy’s oft-repeated quote appears in one of the final chapters of The Value of Everything and captures the spirit of Mazzucato’s vision for the future of our global economy. Following an overview of the history of accounting and what has been considered “productive” vs “unproductive” over the centuries (determined by the viewpoint of the era in which it was measured), the author outlines the difference between making and taking value. Over the last few decades a class of economic vampires has emerged to extract value from the economy, including financial firms that gamble on risk and are bailed out by taxpayers, private equity firms that secure excessive loans to pay themselves first when they buy and sell companies that eventually fail from debt, venture capitalists who step in at the right moment to reap excessive rewards after the hard work has been completed, along with big-pharma, patent trolls, and other economic plunderers who have earned their criticism.

This short-term approach, she convincingly argues, extracts value from the economy because of quick timetable to gain profit as the only outcome. These profits are increasingly being funneled into the hands of a smaller number of individuals, who do not reinvest them in continue growth but horde them, often offshore in tax havens. This has created economic disparity on an unprecedented scale and has negatively impacted our long term prospects since they have less to invest in research and development (“R&D”) to create new value. Instead companies routinely pay back their shareholders and CEOs. These companies also do not include the expense of externalities, for instance damage to the environment, which tax payer dollars are stuck paying for. Seeking money for its own sake has skewing the economy into a new gilded age. She uses real life examples to show how austerity has had the opposite of what the IMF and World Bank suggested and has destroyed GDP because the government cuts back funding when it is most needed, which in turn restricts long term growth, further shrinking the economy.

Mazzucato argues that for the long term health of the economy and continued value creation that we investment in R&D, and underscores our government’s underappreciated role. Governments (specifically the US and UK, where the book stays focused) have historically funded long term projects including infrastructure, training the work force, public assistance, and social services like police/fire departments/mail. They also have the scale and resources to invest in long term projects that may take decades to develop, such as computer technology, the internet, GPS, space travel, and medical advancements; they often do this without reaping the same (or any) rewards that private investors do. Never mind that governments stepped in to bail out the financial industry and car manufacturers, for example, that had taken on too much leverage, but the government got nothing except a bad reputation for bailing out fat cats. This money helps move the economy yet is typically left out of the “productive” column of the spreadsheet. Looking toward the future, we can turn long term investment into new green jobs, help mitigate the impact of the climate crisis, and create new industries in the same way the space race did, and in doing so begin to equalize economic success.

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Reading Progress

September 9, 2019 – Started Reading
September 9, 2019 – Shelved
September 9, 2019 – Shelved as: ecomomics
October 16, 2019 – Finished Reading

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