Marc Andreessen is the billionaire co-founder of venture capital giant Andreessen Horowitz. His essay, “IT’S TIME TO BUILD”, was likely the most widely circulated and read essay in North American finance circles over the weekend.
It’s basically a call to action. Mr. Andreessen’s sees the lack of preparation for the COVID-19 pandemic as symptomatic of a broader culture of low inertia and destructively powerful status quo.
“The things we build in huge quantities, like computers and TVs, drop rapidly in price. The things we don’t, like housing, schools, and hospitals, skyrocket in price”, he writes, “We need to break the rapidly escalating price curves for housing, education, and healthcare, to make sure that every American can realize the dream, and the only way to do that is to build.”
Mr. Andreessen also sees the offshoring of labour as a failure. He notes that “We know how to build highly automated factories. We know the enormous number of higher paying jobs we would create to design and build and operate those factories.”
The author correctly identifies the entrenched interests in the way of his proposed ‘reboot’ of western economies. Wealthy NIMBYs quash plans for affordable housing, parents and teachers oppose externally driven education reform, large corporations with dominant market positions utilize political lobbying to prevent competition, domestic transportation dreams costing hundreds of millions of dollars are botched.
History provides ample reason for pessimism where the re-energizing of western economies is concerned, but the current pandemic may provide a silver lining for investors, a motivating force driving Mr. Andreessen’s vision.
In health care, for one, investment is almost certain to surge. Vaccine research, intensive care and protective equipment capacity expansion should provide opportunities for portfolio gains.
The potential for de-globalization offers the largest investor upside. The disruption in global supply chains caused by the virus is expected to incentivize more developed world manufacturing investment. The fully automated North American factories mentioned in the column could become reality, with all of the revenue opportunity for engineering and robotics companies this entails.
The response to the coronavirus epidemic has required a degree of policy and social co-ordination that investors can hope won’t be squandered, and that a fresh impulse towards growth and innovation arises from the crisis.
-- Scott Barlow, Globe and Mail market strategist
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