There is no better example of altruistic selfishness than the investment that parents make in the human capital of their children through spending on food, education and health.
These actions in favor of their children are a selfish act in the sense that parents derive satisfaction and increase their level of subjective well-being (in the lexicon of economic theory, their level of utility increases) to the extent that the well-being of their children also increases. Simultaneously, they are also an altruistic act because parents do not expect their children to repay them in the future for the investment they made in them, even though, by having allocated resources to their investment in human capital, they have sacrificed their own consumption. These selfish/altruistic acts can even continue even after the children have finished their formal education.
On the other hand, having already made that investment in their children, parents have to program a future spending pattern such that, when they die, the only thing left as a remainder is enough to pay funeral expenses, that is, not leaving any inheritance. It is possible, however, that they die before having spent everything or that some decide to spend less and, in this way, leave their children a positive inheritance, whether in real estate, jewelry, works of art or financial.
There are, however, cases in which parents did not save enough for their retirement or lived longer than expected. If this were the case, their maintenance would be the responsibility of the children, who would have to reduce their own consumption or, worse still, invest less in the human capital of their own children. Here the inheritance would be negative and everyone in the family (parents, children and grandchildren) loses well-being.
Something similar can be carried out in the decisions that governments make in the design and execution of public policies, particularly those related to spending, public investment and debt decisions, since it depends on whether the inheritance they leave is positive or negative, whether the well-being of the present and future population is greater or less.
Regarding spending, what is allocated to education and health services stands out here, the two main components of investment in human capital. The budget allocation to these two items has to be sufficient to cover the demand for these services and be, simultaneously, of high quality, which, in turn, depends on the institutional arrangement put together for these services.
This should be the government’s priority so that its actions result in a positive legacy; But, from what we have experienced in Mexico during the last seven years, is that the government has sacrificed spending in these areas, so demand is not satisfied and, worse still, public services, both educational and health, are of poor quality. In education, the “new Mexican school” and the new textbooks, together with a set of perverse incentives for teachers, lead to a notoriously deficient education. As for public health, on the other hand, López practically destroyed it. Consequently, the government, in this area, is not contributing to the greatest present and future well-being of Mexicans.
Another relevant aspect is public investment decisions and their financing. To make a positive social contribution, investment projects have to have a positive net present value, being socially evaluated. An analysis of the projects undertaken during the last government (AIFA along with the cancellation of Texcoco, the Maya Train, the refinery in Dos Bocas, the Isthmus of Tehuantepec railway and Mexicana) indicates that all of them have, socially evaluated, a negative rate of profitability, which is why they reduce national wealth and reduce the growth potential of the economy. Also in this area, the legacy left by the government is negative.
Linked to public investment is what corresponds to its financing. If the projects are financed with resources that sacrifice spending on education and health, as partially happened during the López government, it implies imposing a negative inheritance on society, and even worse if, as noted, the projects have negative social profitability.
The other possible source of financing is debt, highlighting that the government can only incur this to finance investment projects with positive social profitability, such that the future income that these projects would generate is sufficient to pay the debt service (amortization and interest). Again, what we have is that all of López’s aforementioned whims (such as Sheinbaum’s trains) are and will be in deficit, so not only do they not generate the income to pay for the service, but they require government transfers to cover the losses. Another factor that increases negative inheritance is if the debt is used to finance current spending, as happened this year and will happen next year.
Thus, these seven years of the Cuatroté government have left us a negative legacy and lower social well-being for future generations.
