Given a lot of the infrastructure is state or federally-owned, the government has a duty really to improve such things. And given that a lot of the country’s infrastructure needs to be rebuilt or fixed, it would be a really good thing if some kind of major works project happened. I think the Administration tried to start up a public-private deal but it didn’t seem to get off the ground for reasons I can’t recall. But I think a public-private deal to work on infrastructure, even if only a few things at a time, would be a good thing for this country. The electrical system for one could use an overhaul.
Wealth isn’t profits either. If I grow a bunch of food, and give it away for free, I make no profit. But its silly to say that the food represents zero wealth. Someone who got one of my apples would be more wealthy then someone who didn’t.
Again, I think your confusing wealth with profit. Profit is made of dollars, wealth is made up of goods and services. The gov’t generally doesn’t make profits*, but they make plenty of physical goods. Those goods are wealth. If we lived in a Communist society, the gov’t would, at some level, make everything. That wouldn’t be an efficent way to make wealth, but its wrong to say such a society has “zero wealth”.
The IP of PARC is wealth. Saying that Jobs created all the wealth represented by an Ipad is just like saying that the owners of the shipping company that Apple uses to transport Ipads from their warehouses to consumers/retail made all the wealth represented by an Ipad. After all, without said shipping, the Ipads aren’t doing one any good sitting in the warehouse.
Each step in the production of a product ads value. You can’t just grab one step and say “here is where it becomes wealth”.
*(though there are plenty of gov’t owned corporations out there that do make profits. I don’t think such things are the best allocation of resources, but there isn’t any fundamental reason that gov’ts can’t net profits)
That is because the goal of the government is wealth in general. That’s why papers by government employees are not copyrighted. The return on investment from people using the road should drive investment decisions.
Xerox PARC is a similar story, unintentionally. They were set up to create wealth for Xerox, but for reasons we all know wound up enabling wealth creation for other people. AT&T didn’t get much all that wealth from the transistor as it turned out; but they certainly enabled the vast wealth that was created.
Companies have gotten smarter about not enabling wealth for other people, which is why government investment is even more important than it used to be.
Bingo.
And in response to John Mace’ point, I’m not going to argue about the difference between creating wealth and facilitating the creation of wealth. There’s no doubt it’s the latter; even when the government spends money to build a new highway interchange, it’ll be a bunch of private highway contractors who actually build the thing. But there are many situations where the private sector won’t create wealth unless the government facilitates it, in which case the government’s role in facilitation is essential.
I cooked some eggs for breakfast this morning. Getting technical, I didn’t; the heat from the burner on the stove actually cooked the eggs; I and the skillet and the spatula facilitated the cooking, and those things, along with many others, made the cooking possible. But normally people don’t disagree when I say, “I cooked the eggs.”
Well, Somalia certainly isn’t, but I am not if comparing the second-largest economy in the world to the largest is much of a stretch.
[QUOTE=Honesty]
In contrast, Nazi Germany pulled themselves out of a recession by using public works programs.
[/QUOTE]
The OP is talking about massive, deficit-funded spending, not inflating the currency or annexing the Sudetenland.
Regards,
Shodan
Yes, you forgot the benefits of actually having all that infrastructure. Roads, highways, bridges, etc are all good for business apart from the jobs they create while building them. Our countries infrastructure is in the dumps, a few years ago we couldn’t go one month without hearing about a bridge collapse.
Actually, in a situation where an economy’s resources are substantially underutilized (e.g. the past five years, and the next few years as well), wealth is created by the multiplier effect. As WWII demonstrated, in such situations, you can create wealth by paying people to dig holes and fill them back up again, since fighting a war is a fairly close economic equivalent of that.
You know the drill: they take those dollars and spend them, and the people who make/provide the goods and services they spend them on spend a portion of those dollars in turn, and so on. What the multiplier is depends on how much of the money will get spent. And right now, we’ve got lots of people who have far more needs than they have money to spend on them, so you get a hell of a bang for your buck. (If the economy was operating at capacity, the result would be more dollars chasing the same quantity of goods and services, resulting in inflation, but we’re nowhere near there.)
And if you’re not just spending money on holes, but on creating or upgrading infrastructure we really should be creating or upgrading anyway, or if you’re sending money to cash-strapped cities and counties to put teachers back to work that they had to lay off, you’re coming out ahead from the beginning, and the multiplier is all gravy.
Thanks, seriously. But, I think I did have that in my OP
So maybe I was more complete than I anticipated. And if I, essentially an ignoramus about such matters, can see the benefits, then why not ‘the powers that be’? Or, more likely, they do but are paralyzed by political fears and realities.
Let’s be clear on something: you’re wrong.
In a sense, we’ve got two economies. There’s the one where most of us are in, where the vast majority of our income is spent on goods and services. Then there’s the economy the very rich are in, where the vast majority of their income is spent on investment instruments of various sorts - mostly stocks and bonds and real estate, and derivative instruments based on these things.
In an ideal world, the two economies would have an underlying balance: the income of the rich going into investment instruments would find its way to investment in the creation of new productive capacity, and there would be sufficient spending capacity by the rest of us to buy the things created by that new capacity. If things are substantially out of balance in either direction, you’re going to have problems.
Right now, things are quite out of balance: wealth is piling up in the hands of the rich, but the rest of us don’t have any excess spending capacity to justify new investment. So there’s nothing really for further increases of that wealth to do.
Moving some dollars from the rich to the rest of us increases our spending capacity, which gives the remaining dollars in the hands of the rich more legitimate investment opportunities. More wealth is created, the standard of living of the rest of us goes up, the investments of the rich prosper as well, everybody wins.
That’s an oversimplified picture, of course: we’re not just divided into rich and non-rich, since people are in varying places along the scale of affluence. And there are pension funds and the like that benefit middle-class people that basically act like rich people’s money. But every model is an oversimplification in one way or another.
Who knows what Will was referring to when he gave that total. Does he include Social Security, for instance? It’s been very effective at fighting poverty among the elderly.
Building on what iiandyiii said, economic policies that don’t result in getting more money circulating are bad for most people. Particularly in bad times, we should discourage institutions (government, banks, rich people) from hoarding (i.e., saving) money; however willing I am to sell my labor, I can’t if no one’s buying anything.
I don’t know if those numbers are accurate or not, but even if they are, that’s not a lot of money. I mean, 6.6 trillion is a lot of money in itself, but over 40 years, spread among the 314 million, that’s only about $525 a year per capita. Obviously, this calculation is sort of bad, because we didn’t have 314 million people 40 years ago, but lacking skill at logarithms, it’s probably the best you’ll get from me.
If the stimulus in 2009 is any indication, it is no solution at all.
Giving our current politicians a trillion dollars to “stimulate” the economy just begs of crony handouts.
Only in fairyland, otherwise known as the indignant pontifications of Ivy League economics professors, would it work. You can’t just throw money at the problem when the holes in the foundation are still gaping.
The real answer (as to why all of the "stimulus"has failed (to move the economy past a measly 1.8% growth) rate is this: the stimulus was blown on things that never stimulated consumption-for example-the trillions lost on these bogus 'green energy"scam companies (like Solyndra, Fiskar Cars, etc.). That money went into the hands of the rich-who socked it away. And now, since so much of what we consume is imported, we would wind up stimulating the Chinese and indian economies. The whole thing will end when China stops lending to us…but can they really do that (without risking their own recession)?
The government should just hire everyone who wants a job, create wealth that way
It wouldn’t be anything like the New Deal for one thing. Back then, you could basically hand a bunch of unemployed some shovels and get them to start working. You couldn’t do that today. Building bridges and such are now vertically specialized labor. Even the guys who DO use picks and shovels (not very many of them) need to be trained on the safety aspects. So, what you are asking for would certainly employ some non-zero number of Americans, but it’s not going to put a lot of the people who have lost their jobs since 2008 back to work, even assuming that the majority of those people who have lost there jobs would even be willing to do such work if it was offered (I’m going to guess that outside of the building and construction trades that have been laid off the answer would be a resounding ‘no’…and even in those trades the answer might still be ‘no’ since the market for building and construction seems to be on an uptick).
I don’t believe the first is true. I don’t believe the second is therefore true either. Possibly the 3rd has some merit, but I doubt it would be a positive cost to benefit balance. I seriously doubt the 4th would be true or it would do much of anything about improving public ‘morale’ or optimism. To me, if you want to throw trillions away and get the public interested and optimistic, do something grand and difficult. Maybe a Mars mission, or a space elevator or something equally grandiose. Putting a few people to work fixing roads and repairing bridges is going to get a lot of meh…and a lot of pissed off drivers who have to deal with months or years of road construction.
I disagree with the first…I think SOME government intervention can certainly be desirable, and there is nothing wrong with the basic assertion that repairing infrastructure is good for society. Doing on the scale you are talking about and for the goals you want is what I think is the issue, not doing it in and of itself. IMHO of course. Certainly this would increase government debt. Again, that’s not necessarily a bad thing, but if your goal is to jump start the economy and put people (i.e. the majority of the current unemployed) back to work it’s going to be an epic fail. As to inflationary, well…yeah, I would guess so, though predictions of pending inflation have been wrong to date.
I think the basic concept of improving infrastructure is sound enough. It needs to be done in many cases and would benefit society. The reasons you are giving to do it, however, I find flawed, and the end goal seems to me to be a set up to fail. As noted up thread by another poster, this didn’t work out very well in Japan, and I think that this is a more applicable situation to current day America than either the New Deal era (which is debatable whether it achieved the goals you are looking for or not) or Nazi era Germany. It should be done in and of itself, not as an overarching goal of social engineering or morale boosting, which to me is bound to fail. And I think it should be done on a budget, not tossing around figures like trillions.
Would it even be possible to spend $1T on infrastructure? Hold on, let me rephrase that. Does the nation even need $1T worth of repairs?
Loup Garou: Thanks for a very thoughtful, very helpful, reply. I really appreciate the way you structured your comments according to the way I phrased my OP.
I understand and agree (to some extent) that there may not be an unlimited opportunity for literal on-the-ground (or in-the-ground!) workers. But, still, there is a lot - bridges are a prime example.
More to the point, though, and as I alluded to in the OP, in addition to the prototypical construction jobs, would it not be possible to also employ people in fields involving communication/information, including things like cables, optical links and connections, etc.? Projects like making all urban areas totally WiFi (or similar) connected? Or, along those lines, maybe design, construction, launch, and maintenance of a fleet of communication satellites?
I know those are vague, glib ideas. But I would think (hope?) that more informed and imaginative people could come up with a slew of better and ultimately more productive and important “high tech” projects for a 21st century workforce.
sweeteviljesus: It needs even more than that!
From ASCE’s* 2013 Report Card on American Infrastructure:
That includes “aviation, bridges, dams, drinking water, energy, hazardous waste, inland waterways, levees, ports, public parks and recreation, rail, roads, schools, solid waste, transit, and wastewater.”
Oh, and when they’re talking about grades, they gave the overall infrastructure a D.
*American Society of Civil Engineers
“Trillions” were not spent on “bogus green energy scam companies”. :rolleyes::rolleyes::rolleyes::rolleyes::rolleyes:
I agree the stimulus was unsatisfactory, however-most of it was tax cuts rather then spending and this would have been an excellent opportunity to build a national high speed rail system and constructing dozens of new nuclear power plants.