Thoughts on Big Investments

As a kid, I remember thinking that as a society we should undertake really big and grand investments. I often felt disappointment with the United States because we weren’t out building more modern-day pyramids.

Today, I couldn’t disagree with my youthful self more. Naturally there is a time for investment, for thinking and dreaming big - but what I never considered when I was a kid was the cost to maintain something big, and the drag this creates. The question as I see it now is: is the benefit of this big thing, whatever it is, large enough to outweigh both the initial and ongoing recurring costs of it? I know its a cliche, but a bridge to no where is never a good idea.

I mention this because I think the biggest risk that the world economy faces today (and perhaps that it has always faced) is poorly performing mega investments. Big things that don’t deliver. The news is full of stories about the massive sums being spent on AI, and the enormous ghost cities that have sprung up in one place or another. These represent genuine economic risk if they under-perform, as their under-performance entails loads and loads of broken expectations.