There is no denying that our county, just like much of the world, if going through a tough economic battle. There are as many would tell you, many different things the government could do (or not do) to get us ou t of these trying times. There are also just as many would would tell you how all those ideas are wrong and would send us spiraling into a deeper depression. Well here's one more crazy idea from an engineer who doesn't really think it's crazy at all. Infrastructure Spending.
The U.S. infrastructure could use at least $2-3 trillion of improvements by various estimates. These improvements would go towards roads, highways, bridges, tunnels, mass transit, shipping and various other items such as dams and power plants. These are are vital to both the everyday lives of Americans and the long term future of our civilization. (Have you ever head on Rome's great social service system? No. But you sure have heard of their great roads.)
While many, including me, say that to much government spending is bad, this type of spending is good, and here is why. As long as the spending of the trillions of dollars of money works under the various "Buy American" Acts, requiring government money to be spent on US products, the spending will cause a multiplying affect. The improvements to the infrastructural will create thousands, if not millions of jobs. Instead of spending money on social services that help people get by and maybe help pay for a little bit of college, construction jobs can lead to full time employment along with benefits and a good life style. The trillions of dollars would then be put right back into the hands of working Americans that can then lead to more jobs in every other sector of the economy. This is called Keynesian Economics. For a more formal and lengthy explanation of this, see this article in Business Insider titled Yes, It's Time For A Massive Infrastructure Spending Program. For a further debate on this style of stimulus see this video from Fox News.
Truthfully, no one knows how a massive overhaul of the U.S. infrastructure would affect the economy. But it IS something that is needed before it completely crumbles and this style of economics has been proven to work in the past.
The U.S. infrastructure could use at least $2-3 trillion of improvements by various estimates. These improvements would go towards roads, highways, bridges, tunnels, mass transit, shipping and various other items such as dams and power plants. These are are vital to both the everyday lives of Americans and the long term future of our civilization. (Have you ever head on Rome's great social service system? No. But you sure have heard of their great roads.)
While many, including me, say that to much government spending is bad, this type of spending is good, and here is why. As long as the spending of the trillions of dollars of money works under the various "Buy American" Acts, requiring government money to be spent on US products, the spending will cause a multiplying affect. The improvements to the infrastructural will create thousands, if not millions of jobs. Instead of spending money on social services that help people get by and maybe help pay for a little bit of college, construction jobs can lead to full time employment along with benefits and a good life style. The trillions of dollars would then be put right back into the hands of working Americans that can then lead to more jobs in every other sector of the economy. This is called Keynesian Economics. For a more formal and lengthy explanation of this, see this article in Business Insider titled Yes, It's Time For A Massive Infrastructure Spending Program. For a further debate on this style of stimulus see this video from Fox News.
Truthfully, no one knows how a massive overhaul of the U.S. infrastructure would affect the economy. But it IS something that is needed before it completely crumbles and this style of economics has been proven to work in the past.
Carson, you say that more infrastructure spending is necessary, which I agree with, and that our economy could you a pickup. You then suggest that a good way of dealing with both is through an infrastructure spending bill. In particular you suggest adding a “Buy American” provision to the bill to multiply its stimulus effect by requiring that most of the components be sourced from America.
ReplyDeleteThe problem here is that this was done on the last stimulus bill. The buy American provision in particular was found to be in violation of our numerous free trade agreements and had to be amended to include our partners as “American”. In addition many other countries threatened WTO action and while the WTO stated it was predisposed to rule in America’s favor (http://www.reuters.com/article/2009/02/23/us-wto-buyamerican-idUSTRE51M0T520090223), it was only particularly deft diplomacy that stopped a tit for tat trade war. In addition there were many examples of waste in funding and much of it went to marginal projects because states were grasping to pick up as much as they could as quickly as possible instead of providing funding for the most important projects (http://projects.propublica.org/tables/stimulus-investigations). In addition as the transportation spending was directly linked to the stimulus effort some opposition governors decided to reject some of the more planned out and vital funding (high speed rail in particular) to make a political show (http://www.csmonitor.com/USA/Politics/2011/0216/Derailed-Third-GOP-governor-rejects-Obama-high-speed-rail-plan), harming the overall plan considerably.
While I full heartedly agree with you that we must increase transportation spending levels, as our current funding is not enough to sustain the system or improve it to the levels expected and needed by a first world country, I think that trying to tie it to a stimulus effort will cause more harm than good. For one tying it to stimulus will only politicize and generate opposition to the project, as happened last time. There are many politicians who are skeptical of Keynesian Economics, some with decent and valid evidence at their backs, who will oppose any further stimulus. Also if it is billed as stimulus states will be more comfortable with wasting it on marginal or wasteful projects, as they still generate jobs, even if they don’t serve as much good as they could, as happened last time. I think the transportation spending needs to come from a conversation solely focused on our transportation needs and the bill that is passed must be one with master plans, so that the money already has destinations and strict requirements in order to fulfill its goals. Simply saying stimulus like last time and throwing a pile of money on the floor will lead to states competing for projects that benefit themselves marginally instead of cooperating on projects that help everyone greatly.
Avi
Avi, I would have to completely agree with you here. The last stimulus plan involving construction and infrastructure spending did not work nearly as well as anyone hoped it would. But if a different one was set with stricter guidelines with a heavy focus on planned projects, not just giving free money to states for small projects, it could work much better. And while I agree that it is difficult to follow any "Buy American" laws with our current free trade with other countries, many products would by nature still have to be purchase in the US such as asphalt and concrete that can not be shipped from overseas for road projects. It's a matter of creating new projects that create jobs, instead of just giving money away.
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