Paul Krugman and Barack Obama urge more public spending on infrastructure and other throwaway projects. While Obama is making noise as to streamlining the pork spending process…no more parking lots, trucking museums, and fishing camps, we’ll see what the results are. George W Bush thought he could change the tone in Washington, too. Nevertheless, it wasn’t deficit spending that got America into the Great Depression, but deficit spending by all American citizens and corporations, and at all levels of government, is a major contributor to our current problems. If foreign investors have no confidence that America will get out of debt, eventually they will invest in their own “infrastructure”. The Chinese just invested 500 billion to “stimulate” their economy. They have the cash to do so, we don’t. Fred is right, here.
On a related note, Amity Shlaes warns against constructing an edifice complex like Japan in the 90s:
What lessons should the United States take away (from Japan)? It is wrong to assume that construction will guarantee a two-fer for the economy — shining structures and redemptive growth. The private sector is often better than politicians at guessing what the market needs. And infrastructure projects demand so much political energy that there’s too little energy left over for everything else. Congress might want to remember all this as it debates infrastructure funding in the coming months. An edifice complex seems more likely to petrify a country than to move it forward.
Worth reading the whole thing.