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The implied investment behavior differs significantly from that of the first-best no-agency solution.
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Commitment from national authorities implies investment of resources and time in creating effective policies and communication networks with control professionals, education specialists, health care leaders, and the community.
This implied that investment would have to take a continually larger share of the national income in order to maintain full employment.
A second fallacy is that the duration of a prototypical investment implied by a particular investment style or objective of a shareholder is relevant to the corporate value creation discussion.
That implies less investment.
What does this imply for investment and divestment at MIT and around the globe?
That implies less investment and lower real wages in high-tax countries, but gains for workers in low-tax countries.
Does that imply an investment splurge, as some investors clearly fear, or just a tightening of predecessor Adam Crozier's approach?
In reality, China has a current-account surplus, which means that savings must exceed investment, not the other way around.The obvious explanation is that investment is really much lower: last year's current-account surplus of 2.8% of GDP and a saving rate of 30% would imply an investment rate of 27% or so.
These precautions imply higher investment costs.
This still implies 100% investment in the equities market.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com