You've Blown Your Trust
Ezra Klein via Kevin Drum asks, fairly reasonably, why with very low US borrowing rates does it not make sense to take infrastructure projects we know we have to do in the next 5-7 years and pull them forward. If we know we have to rebuild bridge X in 2016, lets do it now when there is so much construction capacity sitting around.
In an idealized Platonic technocratic world that many Lefists still insist on believing we actually live in, trustworthy and knowledgeable agents of the state would work up such a list and we could fund it, happy we have made a good financial decision. But we don't live in that world, as I wrote in the comments
The reason this does not fly has to do with politician's incentives and trust. In short, Democrats had their chance to do exactly this. Two years ago, nearly a trillion dollars of such stimulus was approved and sold to the American people as just this sort of infrastructure spending.
But it was no such thing. Most of the money went to state and local governments as transfer and stabilization payments to keep unionized government workers, who are reliable Democratic voters, employed. Congress and the Administration knew that the majority of the public would have been leery about spending it this way, so it was sold as "infrastructure" despite the fact that less than 10%, by my count, could reasonably be called this.
Having sold a trillion dollars of pork, waste and political payoffs as "infrastructure," you should not be surprised that the American public is reluctant to believe that an infrastructure project that just pulls future necessary spending forward is really any such thing. You have in short blown your trust, which is amazing given just how much of a mandate Obama entered office with. Note that this is not narrowly a criticism of Democrats, they just happen to be in charge. No one would trust Republicans either.
And by the way, it takes years to really get infrastructure projects up and running - the environmental reviews and red tape that most of the readers for this site have advocated in favor of for years causes these things to take forever. Not to mention the engineering and procurement. Even Obama has admitted that he did not understand that shovel-ready was no such thing, even though many of us warned of exactly this problem the first time around
The money is only "free" in a relative sense if we know we have to spend it anyway in future years. It is not at all free if we have to take it from some productive private use and redeploy it for some politician's whim that gives him or her a nice bullet point on their re-election web site. Unfortunately, in the real world we live in, rather than in the technocratic paradise Klein imagines, any such bill will be larded with just such flights of fancy from powerful representatives of both parties.
Update: Talk about history repreating itself, here is what I wrote in January of 2009.
The infrastructure piece, despite being less than 10% of the bill, allows politicians to call this “investment” and “green energy” and “infrastructure” which sell better with sections of the public than “welfare” and “transfer payments.” The minority infrastructure pieces allow Congress and Obama to call the bill new and forward looking, rather than the imitation of 1970s legislation that it really is.
DDC:
There is also the problem that if we do all of those projects now (instead of 5-7 years from now, when they are scheduled) we'll be in the exact same position that we now find ourselves in. We'll have a the same over-capacity and the same problems that result from that.
The solution isn't to artificially meet the demands of the over-capacity. The solution is to allow the market to correct itself. If we continually create artificial demand, we'll have a constant state of over-capacity ready to capitalize on the government's urge to "do something".
The cycle will just keep repeating itself over and over again.
August 30, 2011, 12:40 pmmarco73:
Well you have to admit that there were those nifty "stimulus" road signs tacked up around every construction project. And come on, Washington DC did get that vital dog park:
August 30, 2011, 12:46 pmhttp://dailycaller.com/2011/05/26/leaning-forward-only-a-nation-can-build-this/
Noah:
By the time the NIMBYs and greens get done, the only new roads would be built in the desert hundreds of miles from people, plants, and animals.
August 30, 2011, 1:14 pmNoah:
DDC:The solution isn’t to artificially meet the demands of the over-capacity. The solution is to allow the market to correct itself. If we continually create artificial demand, we’ll have a constant state of over-capacity ready to capitalize on the government’s urge to “do something”.
Aren't you mixing supply with demand? Where people are involved, demand is always infinite and supply is constrained.
August 30, 2011, 1:17 pmBenjamin Cole:
Sad but true. I do not trust Dems to spend on infrastructure, or Repubs to spend on defense.
It is 90 percent lard and coprolite.
August 30, 2011, 1:25 pmsteve:
There never was any trust. It is just the democratic tax eaters vs the republican tax eaters. Most voters understand this. However, they see no point in advocating for more sensible government. They see little possibility (correctly I think) that their own political power can accomplish anything more then unilateraly sacrificing their own benefits.
August 30, 2011, 4:00 pmWill:
I think your analysis of "trust" misses a crucial point. Yes, it is the case that we cannot trust politicians to pass good policies and not bad ones. But this doesn't mean that we should assume each specific policy is bad.
I remember, before the stimulus, believing that it didn't complain enough infrastructure spending. Were you also, before the stimulus, aware that it was mostly transfer payments to individuals, transfers to states, and payroll tax cuts? I can't think of a reason why you wouldn't be. Yes, some people were fooled by glitzy marketing. But the glitzy marketing campaign didn't stop when the bill passed. (See the stimulus road signs). So those people aren't the reason.
Perhaps it's people like you and me who pay attention to politics? But people like you and me who pay attention to politics can tell what bills do in advance. Yes, we're not perfect, and bill-writers are sometimes devious. But often we can make pretty good predictions.
If Congress, today, passed a bill that apportioned money to infrastructure spending, maybe some of it would be wasted on overpaid construction workers or dubious projects. But most of it would go to infrastructure.
The point that we shouldn't trust politicians has a lot to say about electing politicians, which is obviously the most important part of a democracy. But it doesn't have much to say about commenting on specific bills.
August 30, 2011, 4:54 pmpolk tsi400:
I'm not clear how investing in infrastructure stimulates the economy...it creates jobs temporarily, but once done those jobs are gone. IMO lowering corporate taxes is a better way to stimulate the economy and creating jobs.
August 30, 2011, 6:25 pmjoe:
noah: ivanpah is a green (solar) project in the desert but you can still find environmentalists who oppose it.
August 30, 2011, 9:50 pmolddog:
BLAH blah blah,,,infrastructure uses tax dollars in a cat chasing tale scenario...tax more..put in a little more (gotta substract da fees''payoffs)..jobs have been off shored for years..benifiting you know who...either add vat to imports or an outright tarrif..and who believes this pres or congress will get it right?..face it JOBS REAL JOBS are not gone just not in USA!!!!!!!!! doubt it just press 2 when on hold....green jobs make you feel good ps only if IQ above 120,, as you go to Wal Mart to buy China while you complain there no local jobs!! get a grip..it will be tough.
August 30, 2011, 10:09 pmEric Hammer:
Noah: Demand is infinite given unlimited resources, at least at mundane levels, but at the same time we might want to spend money on something other than roads. At some point we will have fixed all the roads and built all the new roads we want and we will go right back to over capacity, just with some more debt.
Worse, and more likely, is that due to base line budgeting the government will spend the money on roads one year, then the next feel as though they need to spend just as much to avoid losing it and keep their domain growing, eventually spending money to dig a ditch and fill it back in.
If only we could trust them to simply spend more to fix the over capacity and then spend less. Unfortunately that is like trusting an alcoholic to take just one more drink for courage, and then stop cold turkey.
August 31, 2011, 7:57 amSmock Puppet, Shadenfreude Expert To The Stars:
.
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You’ve Blown Your Trust
Strangely, when I first saw this, I read it more along the lines of
You’ve Blown Your Trust (Fund)
Which is also, in terms of our overall Federal financial soundness, disturbingly true.
Jus' Sayin'....
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August 31, 2011, 4:19 pmSmock Puppet, Shadenfreude Expert To The Stars:
>>> green jobs make you feel good ps only if IQ above 120
No, sorry, lots of smart people know better.
The number you're looking for is "Wisdom Quotient". If your WQ is less than 80 (i.e., you are almost certainly a liberal twit as a direct correlation) then you LOVE Green Jobs.
You can have a very high IQ and still be clueless.
Intelligence is the ability to learn from books. Wisdom is the ability to learn from experience.
The two are not necessarily found in the same mind -- there are wise idiots and foolish geniuses (see Chomsky, Noam)
"Fools say that they learn by experience. I prefer to profit by others' experience."
August 31, 2011, 9:09 pm- Bismarck -
the other coyote:
People keep saying there's all these unemployed blue collar types out there just begging for a job, and we need shovel ready jobs to put these blue collar types back to work.
My company (domestic oil and gas production) has over 100 field jobs open as do most of our competitors. We can't find anyone willing to take them, even at the very good salary and benefit level we pay.
Furthermore, while I admit that I do live in the Southwest, in a heavily Hispanic state, but I don't see anyone working the endless road construction in our city that is not Hispanic. I can't say whether they are legal or not, but laying asphalt in 106 degree weather is probably as high on the list of desirable jobs as picking lettuce. Just saying.
We also have over 100 open office jobs and no takers. By and large, the office jobs do require some experience in the industry, but come on! I am becoming convinced that there is either a massive labor mobility problem, a massive case of malaise to where folks won't even try to sell themselves to a new industry, a vast underground economy to where the "unemployed" really aren't, or that it's easier to live off your employed wife and government transfer payments.
September 1, 2011, 3:47 pm