Government Venture Capitalism - Shrewd Economics
Making an objective assessment of the global financial crisis, and the United States' 900 billion Stimulus Bill, whose implementation will have huge ramifications to world economies in the format that it takes, it is very important that the basis for economic revival is driven in those directions that provide the greatest momentum through investment. The pure momentum of economic revival is not related to the size of the investment, but it is instead driven by the growth expectations that the stimulus can provide as leverage to each stimulus area.
Packages like the U.S.'s 900 billion stimulus or the EU's 5 billion Euro sustainable energy stimulus package when spent on projects with shrewd administrative acumen will derive huge benefit to the economies by driving the global stock markets in the true growth areas aligned to the stimulus. The administration of the investment becomes the greatest challenge because if the wrong people are allowed to enter the investment equation the money is just squandered.
If governments can act like venture capitalists and look to invest to obtain a return from their invested capital, then the derived money from each investment will become recoverable in multiples beyond the initial investment. This type of investment philosophy will also allow the governments to remove themselves from ventures and sell them back to the private sector at a profit. Projects that have a future like solar energy, wind energy, all conservation efforts and infrastructure efficiency improvements will pay dividends to the economy. Many material and service suppliers will move to create jobs when they can see a long-term future for new growth industries that have significant government support and create a real future for both the economy and the natural environment.
The real danger is ineffective utilization of government stimulus packages when they only support one-time gain for individuals in only short-term perspectives. Money can disappear easily when it is not spent in the greatest interest of the people, and recent history has shown that there was no overall benefit to the economy when only a few benefited.