Monday, October 11, 2010

Build S***



You know what the trouble is? We used to make s*** in this country, build s***. Now we just put our hand in the next guy’s pocket.
- Frank Sobotka


Not much is more blue-collar and un-disagreeable-with than infrastructure. Roads, bridges, rail, water pipes, ports, smart grid – real stuff built by real Americans. It’s both the foundation on which the private economy rests, and the oil that allows it to run smoothly—and with most of it decades to centuries old, it’s time to upgrade. Ezra Klein has a great post on why it’s more important now than ever to invest in infrastructure:

The Council of Economic Advisers has a report (pdf) out today making the case for more infrastructure investment…

Lots of stimulus programs can create jobs. But infrastructure investment creates the right jobs, for the right people, doing the right things -- and at the right time. Or, to say it more clearly, infrastructure investment creates middle-class jobs for workers in a sector with high unemployment and it puts them to work doing something that we actually need done at a moment when doing it is cheaper than it ever will be again.

[…]

And then there are all the other arguments you've heard me make. Raw materials are cheap. Labor -- due to the high unemployment rate -- is cheap. Borrowing money is cheaper than at any time since the 1950s. And this is one sector where the normal deficit objections simply don't apply. "You run a deficit both when you borrow money and when you defer maintenance that needs to be done," Larry Summers told me. "Either way, you're imposing a cost on future generations." Not spending a dollar on infrastructure repairs today means we'll have to spend it tomorrow -- and by that time, it will cost more than a dollar. More so than anything else I can think of in the economy, infrastructure investment is win-win-win-win, and I'm not certain I've tacked enough "wins" on there.

That last point is especially important, because it neutralizes the typical “deficits bad” argument: we HAVE to repair our crumbling infrastructure at some point, so why not get it out of the way now when interest rates are low and borrowing is cheap? In fact, this is exactly what the private sector is doing, with companies like Microsoft issuing billions of dollars of debt at low interest rates even though they haven’t figured out what to spend it on yet besides share buybacks. That’s why deficit hawks would make terrible businessmen: because they’d never be willing to issue debt to finance investments.

I’ll add one more point of my own – this is the stuff that is unquestionably the role of government. No matter what you think about OTHER government interventions in the economy, even the most hard-nosed libertarian would never argue that natural monopolies like roads or utility lines should be wholly privatized.

So the arguments typically leveled against OTHER government spending, whether “government power bad” or “deficits bad,” simply do not apply to infrastructure spending. Like energy efficiency, it’s not just a win-win—it’s a win-win-win-win.

I’m sure extremists will still dream up ways to argue that the government should not spend money building roads and bridges, but for most of us, it’s the sort of no-brainer that everyone should be for.

RELATED POSTS

Deficit hawks would make terrible businessmen

Yes, government creates jobs

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