The mismeasurement of liabilities has been the most damaging aspect of regulation when this has done by reference to the risk-free returns available from index-linked government debt of matching duration to those liabilities. [...] National debt and crowding out Public sector investment has now become a major issue and, applying the same principle of not favouring one form of capital spending at the expense of another, it should be encouraged providing it is not at the expense of private sector investment. [...] As the increase in income arising from new investment is likely to be a multiple of the additional interest paid on debt, a rise in the current account deficit (i.e., borrowing from abroad) to finance either public or private sector investment is probably desirable unless the impact on interest rates is not large and the problem of crowding out avoided. [...] The government should therefore encourage pension schemes which have them and this involves preferring industry-wide schemes to those based on single companies and avoiding the regulatory errors that have beset industry-based schemes in the past, for which the problems of The Universities Superannuation Scheme stand out as a sad example. [...] This caused the formerly dominant holders of UK shares to be persistent sellers and the assumption that this drove down the relative price of UK shares is too reasonable to be lightly dismissed.
- Pages
- 4
- Published in
- United Kingdom
