While I have a great deal of sympathy with Jeffrey Harding’s conclusion, expressed in his post at An Independent Mind, that our infrastructure deficiencies and the prospects for an infrastructure-building program’s giving the economy a boost are grossly exaggerated:
Here is the reality: America’s infrastructure is not crumbling, massive spending won’t create any permanent jobs, and productivity is not suffering because of our infrastructure. These are economic myths that lobbyists, infrastructure contractors, and the ASCE perpetuate to get fat contracts.
and I find his method, pointing out the mismatch between the gravest problems and the supposed benefits, interesting:
If the ASCE’s assumption that poor infrastructure is impeding progress, then we should look at the LA metropolitan area where traffic congestion is the worst in the world to see if they are correct. Based on their logic, LA’s economy should be suffering. But it is not. In fact, if you compare LA’s GDP to the rise in total US GDP, LA’s upward trend is almost identical if not rising even faster.
Sadly, it suffers from a failing known as the tertium non datur fallacy. It fails to acknowledge that it is possible that Los Angeles has the worst infrastructure in the country but that it is growing rapidly economically due to other factors.
I think he’s tilting at windmills here. There’s a substantial fraction of Americans and also a substantial fraction of economists who believe that how you spend money is unimportant as long as you spend enough of it in terms of boosting the economy. They will not be dissuaded.
My own view is that when national economies were more like little islands, your income and mine were more closely linked, and the U. S. was a developing country rather than a developed one, the prospects for Keynesian stimulus being effective were much better. Now when a poorly constructed and dilatory stimulus bill finally passes the Congress it’s far more likely to crowd out private investment than should have been the case, because so much of what we buy comes from China or elsewhere, and because the spending tends to be concentrated in so few hands the best case is probably that fiscal stimulus in the United States will stimulate the economy in Shenzhen or Bangalore.