Is Increasing Federal Infrastructure Spending Helpful For The Economy?

First, watch this short video, John Stossel – Infrastructure Spending

https://www.youtube.com/watch?v=mmAgSOgJ7NY

From the video:

“The way the infrastructure projects are picked is the survival of the unfittest.

The projects picked by politicians look good on paper, show costs will be very low and demand for use will be very high, but this never happens.

Nine out of ten public infrastructure projects have massive cost overruns, most of the time 50% above the promised cost.

The government has the worst types of incentives to serve the public well, it’s not their money and if they lose it it’s not their own cost.”

…

From article: “Infrastructure Gap? Look at the Facts. We Spend More Than Europe”

To convince a wary public to spend more funded with trillion dollar deficits, big federal government advocates gin up a national infrastructure emergency claiming safety, jobs, and well-being are being threatened.

Public spending lobbyists are ready to oblige with D+ report cards for “aging and unreliable” roads, bridges, and ports.

These increased infrastructure spending advocates substitute scare tactics for the facts.

We spend more than the European Union, which has about the same GDP as the U.S., on infrastructure.

If we spend more than Europe and have inferior infrastructure, that is a political failure for which someone should pay.

…

In both the United States and Europe, public investment and procurement are political processes characterized by waste, politics and corruption.

If we get less bang per buck from our infrastructure dollar than do our European colleagues, our problem would be not too few dollars spent but too much waste and corruption.

…

From the World Economic Forum’s Infrastructure Index report:

Among the twenty largest countries, the U.S. infrastructure quality ranks second only to Canada.

U.S. infrastructure beats the European Union average by a wide margin.

Organization for Economic Cooperation and Development (OECD) infrastructure experts find:

Europe has too much supply of roads and rail relative to the demand.

The U.S., Canada, and Australia have built close to the amount of infrastructure that fits the demand.

According to OECD statistics, 2006~2011 spending on infrastructure investment:

- the U.S. spends 3.3% of its GDP

- the E.U. spends 3.1% of its GDP

… …

From article: Learning from Japan: Infrastructure Spending Won't Boost the Economy

The benefits of a costly, infrastructure-focused stimulus package based on massive government spending may be intuitively attractive.

But past evidence suggests the impact of govern­ment spending programs intended to encourage economic growth is very modest and unlikely to enhance recovery or deter recession.

The Japanese government implemented such a program during the 1990s, and the consequence was two decades of economic stagnation.

Less ambitious infrastructure stimulus programs have been implemented in the United States over the past few decades.

Numerous independent and government studies have concluded these programs had little impact on economic activity or jobs.

…

The New Deal of the 1930s substantially and permanently increased the scope of the federal government, as Congress and the President attempted to spend their way out of the Depression.

After the stock market collapse in 1929, the Hoover Administration began increasing federal spending and continued by the Roosevelt Administration.

As a result, federal spending increased as a percent of GDP

-from 3% 1930

-to 7% in 1932

-to 10% by 1940

[in 2020 it was 31%]

In 1940, ten years into the Great Depression, America's unemployment rate still stood at 15%.

…

We must recognize continued investment in our infrastructure is an important underpinning of future economic growth and sustained prosperity.

But we must also recognize a economy stimulus scheme based on spending is ill-suited to the short-term stimulus needs of concerned policymakers.

Given current congressional practices, any stimulus package approved by Congress is certain to contain a host of projects having nothing to do with prosperity and everything to do with increasing political influence including to get more votes.