Investments in Social Capital? But how do you fund it? – by Davian Lee

Donald Low’s note is a very interesting lecture on the importance of social returns and the importance of social capital. However, it does not answer the fundamental question. If you want to spend more, you must surely explain how you want to fund this spending. I think when committing to future spending of any sort, should a responsible government think about how it is going to fund them?

This simple question applies to :

a) social investments (the Government has many, such as public education, workfare, comcare, medifund, subsidised HDB) that it is hoped will strengthen our society or provide benefits valued by our society (eg preserve social mobility, help the poor to uplift themselves) or that may even yield economic returns or reduce costs in other areas;

b) economic investments that it is hoped will yield economic returns (or eg in wages or other incomes), or may even yield social benefits (by improving the quality of jobs and allowing broad-based improvements in economic welfare) Many expenditures will it is hoped yield social benefits. The Government is doing more to enhance social mobility and improve the welfare of the elderly, and seeks to justify them and to ensure we will be able to fund these programmes.

There is a good question in what Donald Low posed in one part of his article, which is a different argument from much of the rest of his article and CSM’s: “The central fiscal question is always “how should we allocate and prioritize our scarce resources?”

This is very different from giving a lecture on social returns, or on the returns from human capital. Or saying now that every expenditure sorts itself out or that “social spending is no more or no less “self-funding” than other types of government expenditure”.

PS: I also note that Mr Chen Show Mao did a bit of editing of Mr Low’s note that made the points confusing or just plain wrong – eg replacing Donald’s point that ‘from an accounting viewpoint” every expenditure is the same cost in the period it is spent (ie a brilliant observation that $100 today equals $100 today regardless of what it is spent on) by saying that from an economics viewpoint, there is no conceptual difference between any expenditure – which is embarrassingly wrong.

Link :!/note.php?note_id=257630124318597


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