Zuckerman’s Retort

No doubt chastened by the tongue-lashing I gave his last op-ed, in his latest op-ed Mort Zuckerman fleshes out his ideas about spending on infrastructure and education a bit more:

  • Create a federal bank that would take advantage of the low interest rates to dramatically increase private and public capital for new construction. Repair the infrastructure we have. In effect, we must create a domestic Marshall Plan devoted to profitable investments in the national electric grid and fracking infrastructure; in high-speed Internet; in bridges, roads, and tunnels; in airports and high-speed rail; and in human capital. Such a program would increase employment because of the well-documented investment accelerator/multiplier effects.
  • Increase investment in education, especially vocational training and postsecondary education, strengthening science, technology, engineering, and math in high schools and at the university level.
  • Stop talking about tax reform, and do it! Broaden the base and get rid of the loopholes, deductions, and credits—and the inherent corruption related to them—so as to enable lower marginal tax rates.

I actually think that these ideas have merit if they could be realized. I don’t think they can and I’ll list some reasons why I don’t think we should expect them to be:

  • State and local governments already spend plenty on infrastructure maintenance. They spend even more on state employee wages, healthcare, and pensions. That pattern is likely to persist. Governments don’t maintain infrastructure because they’re too busy paying payrolls of present and past employees.
  • The federal government is much, much more likely to put lots of jack into highly visible infrastructure projects (roads and bridges) than it is to invisible improvements in energy and telecommunications infrastructure. Your Congressman wants to be able to point to a new expressway to show the voters how he or she “brings home the bacon”. You can’t point to system resiliency.
  • That private investors aren’t already building highspeed rail suggests either that a) they don’t think it’s a money-making investment or b) they expect federal, state, and local governments to do it for them.
  • China’s experience with highspeed rail should really give us pause. They’ve spent boatloads of money for a dangerous system that isn’t buying them much.
  • The pattern of the last 20 years (at least) is that most of the additional money we’ll spend on education will be spent on administrators. I know of no scholarship that suggests that spending more on administrators delivers more education.
  • College grads, including science, technology, and math grads, are having problems finding jobs. Graduating more to be unemployed does not sound like a good investment to me.
  • While there is some evidence that cutting the typical class size in half could improve outcomes, the evidence that reducing the typical class size by one or two students will improve outcomes is not particularly strong. There is no prospect whatever that we will spend the money to cut typical class sizes in half.
  • Every loophole, deduction, and credit has a constituency for which it is a matter of life and death and is already mobilized to defend it. That’s why we’re already a decade overdue for a major overhaul in the tax code.
2 comments… add one
  • michael reynolds

    One of Zuckerman’s complaints seems to be that things are much worse than we realize because we’re paying extended unemployment, food stamps and SS disability. Yes. That’s why the nanny state is there, so that when things go wrong people can still eat and get medical care. To the extent that we don’t realize how bad they are, it’s because for 80% or so of the people, it’s not bad. And apparently paying support for the rest hasn’t made it bad. Which, again, validates the concept of a safety net.

    I’m not as convinced we couldn’t build a better grid. I think with some leadership we could. People can get the concept. It would mean pork for pretty much every district, so you won’t get regional issues dominating. It’s a case that could be made. A few hundred million in PAC money would do it if the White House got behind it.

    But of course Mort’s real point is his last one: broaden the tax base (raise taxes on working people) so that we can lower marginal rates (cut taxes for the rich.) The evidence that this will result in more jobs? Why, all you have to do is look at George W. Bush’s tax cuts. That ignited a whole firestorm of hiring. Oy, so much hiring!

    On the related topic of education: it’s going online, and it’s going to get a whole lot cheaper, and it’s going to end up cutting jobs in higher education. Twenty years from now a four year degree will cost $5,000 and we will be ass-deep in unemployed academics. And probably neck deep in highly educated unemployed people generally.

    I don’t think we’re going back to full employment. Not under Democrats or Republicans or Libertarians. I think we are going somewhere new and different that is neither the boom of the past nor the bust of the past. Paradigms are stubborn, and their end is predicted far more often than actually occurs, but with all that in mind, I think we’re going to a new paradigm.

  • I actually think that these ideas have merit if they could be realized.

    Really? The first bullet point is nothing more than:

    1. Fix our crumbling infrastructure…which you went after a few posts earlier.

    2. Education…which you went after a few posts earlier.

    The second is more education…the third is about tweaking a tax system that taxes income, and what do we know about that? If you want less of something tax it. So even there I’m not that impressed.

    Color me unimpressed for the very reasons you listed a few days earlier.

    …so you won’t get regional issues dominating.

    Bwahahahahaha…google the following:

    chino hills transmission corridor

    You’ll have to do a bit of sifting, but you’ll see plenty of resistance and “regional issues” for something that is essentially a done deal legally.

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