Friday
Is Increasing Federal Infrastructure Spending Helpful For The Economy?
From the Stossel video, link below:
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% or more above the promised cost.
The government has the worst types of incentives to serve the public, it’s not their money and if they lose it it’s not their own cost.
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From article: Infrastructure Gap? Look at the Facts. We Spend More Than Europe
To convince a wary public to spend more, piling onto our ever-growing trillion-dollar debt, big federal government advocates gin up national infrastructure emergencies 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 someone should have to pay for.
In both the United States and Europe, public investment and procurement are political processes characterized by waste, politics and corruption.
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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.
The 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.
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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 govern¬ment 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, see Figure 1.
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.
We must recognize continued investment in our infrastructure is an important underpinning of future economic growth and sustained prosperity.
But we must also recognize an economic stimulus scheme based on infrastructure spending mostly does not grow the economy and most often hurts the economy.
The money spent and wasted by government could instead be kept with taxpayers for spending and businesspeople for demand-driven investment.
Then, taxpayers spend their kept money efficiently, growing the economy, in turn increasing the amount of tax revenues for government.
Economic stimulus packages approved by Congress are certain to contain a host of projects having nothing to do with prosperity and everything to do with increasing federal government power and getting more votes and political donations.
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In 2009 President Obama touted starting work on "shovel ready" infrastructure projects. What happened with the projects? ChatGPT:
President Obama initially promoted the 2009 stimulus package by emphasizing it would fund "shovel-ready" infrastructure projects that could quickly put Americans back to work during the recession.
However, after many projects encountered delays due to permitting, environmental reviews, contracting requirements, and other administrative hurdles, he later acknowledged the concept had been overly optimistic.
In June 2011, Obama remarked, "Shovel-ready was not as shovel-ready as we expected," and in another interview said, "There's no such thing as shovel-ready projects."
The comments reflected the reality while many stimulus-funded projects were eventually completed and contributed to economic activity, they generally took much longer to launch than originally anticipated.
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Was Solyndra one of the planned projects? CGPT:
Yes. Solyndra was part of the broader economic recovery initiatives associated with President Obama's 2009 stimulus program, although it was not one of the traditional "shovel-ready" roads-and-bridges infrastructure projects.
The California solar-panel manufacturer received a $535 million federal loan guarantee through the Department of Energy's clean-energy loan program, which was expanded under the stimulus law.
Obama highlighted Solyndra as an example of how government investment could create "green jobs" and foster new industries.
But the company declared bankruptcy in 2011, resulting in significant taxpayer losses, about $528 million, and making it a symbol for critics who argued the government had made poor investment choices in attempting to stimulate the economy.
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John Stossel video on infrastructure spending
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