Friday, June 07, 2013

Our Biggest Blown Opportunity

I've written about this topic before, but with the collapse of the bridge near Seattle I felt it was worth writing about again.

Here's the checklist:
  • Our infrastructure is woefully in need of fixing. We get a report card grade of D+ by the American Society of Civil Engineers with needed investment for repairs estimated at $3.6 trillion by 2020.
  • Our bridges, roads, buildings, etc. will not improve or fix themselves over time. The needed repairs will only grow in number and worsen, becoming ultimately more expensive to fix.
  • The longer we postpone infrastructure upkeep, it not only becomes fiscally more expensive but also more costly in terms of human lives at risk.
  • Importantly, real interest rates are negative and have been negative for months. This means we as a country are being paid to borrow! If there ever was a time to borrow, it's now. And yet thanks to the deficit scolds, the public has been convinced we should do the opposite, cut back and pay down existing debt. No doubt we will look back 10 or 20 years from now and deeply regret the fact we let this rare opportunity pass us by, as real interest rates by then could be north of 10%.
  • By borrowing and investing in our infrastructure now, we would be able to stimulate our sluggish economy and put people back to work. Every $1 spent on infrastructure helps boost the economy by $2, i.e. a massive 2-1 multiplier effect. Given interest rates are negative and unemployment has seemingly stalled at 7.5%-8%, I repeat, now is the time to borrow/invest!
I'm sure the list could be longer, but you get the point. It's a complete no-brainer. The pros far and away outnumber the cons. In fact, I can't think of any cons (at least not any good ones).

Oh wait, that's right, there is one con, the big con, that being the lie hoisted by Republicans onto the naive public, having them believe our deficit is out of control and that we need to tighten our belt as a nation and pay for the sins of our past. But even as the deficit shrinks faster than anyone expected, there are no belated calls to finally spend the money on our infrastructure. No, instead we get new distractions in the form of trumped-up "scandals" ala Benghazi and the IRS.

Sad to say, we as a country get what we deserve, enabling the crafty few to hoodwink the clueless many.

1 comment:

Phoenix Justice said...

Some studies show the multiplier affect of federal infrastructure spending is even greater, approaching 3 to 1. But instead of taking care of our infrastructure, which would drop unemployment to below 5%, we keep increasing spending on the military-national security-industrial complex. And that multiplier is almost nil.