Given that the West faces a somewhat inevitable economic
“lost-decade” in the foreseeable future with increasing unemployment and mass
financial inequality and fiscally bankrupt governments, will social investments
be the solution?
By: Ringo Bones
Maybe it was the dire warning put forth by Big Society
Capital chair Sir Ronald Cohen during the BBC’s Hard Talk interview back in May
10, 2012 that got me worried about the prospects of Western capitalism in the
foreseeable future. Especially given that Western capitalism, in general,
usually don’t with the social consequence of its day-to-day activities in order
to make a profit. Given a sobering outlook, will social investments offer a
more ethical – and hopefully a more profitable – rework of “traditional”
Western-style capitalism?
At present, most tenured financial pundits see social
investments as nothing more than mere charitable tax breaks that only boost a
typical corporation’s public relation’s standing as opposed to genuinely adding
tangible profits to its bottom line. But can it be tweaked to make traditional
style Western capitalism economically viable again for the rest of the 21st
Century?
A lot of successful persons who recently made it big in venture
capitalism and investment are quite hopeful that social investments can be made
to work in today’s uncertain economic times. Sadly, excesses often made by
Western capitalism that lead to the 2008 Global Credit Crunch have still
haven’t been dealt with yet. Bank executives with ridiculous risk taking are
still awarded exorbitant bonuses by their overlords whenever they make
short-term profits. And taxation schemes in most Western countries are for from
progressive. Economic gains by awarding tax breaks to the richest 1% can only
take a typical sovereign country’s GDP so far.
Sadly the measure of entrepreneurial risk of doing social
investments / social good, at present, is more perceptional and hearsay –
rather than a genuinely mathematical and scientific risk assessment. And an
overwhelming number of elected governments in the West are yet to make a sense
of obligation for social investments that would put a dent on the growing mass
inequality between the richest 1% and the rest of the population. Social
investments have the most potential to improve folks mired in poverty.
And the time is nigh to improve Western economies because
most of the world’s economic activity has been geared on the paradigm that the
Western economy had been growing for 3% per annum for 15 years before the
Subprime Mortgage Crisis of September 2008 almost threw everything into
haywire. The Western economy’s prospects for a “best-case scenario” in the
foreseeable future would be an annual growth of 1% assuming Western capitalism
does its business in the same “business-as-usual” manner. Can social
investments improve this growth outlook?
