Thursday, December 17, 2015

Ugh! I've been making this point for years!!

Must-read piece in today's NY Times, covering the blown opportunity for us to invest in our infrastructure during these past years when interest rates have been near zero.

I wrote about this topic here, here, here, here and here.

As we've known for quite some time now, bridges, roads, airports, public buildings, etc., are in woeful need of repair and fixing. Such projects will not go away magically – at some point, infrastructure needs to get fixed otherwise it poses dangerous consequences and risks.
Since post-2008, the years of near zero percent interest rates has been the optimal time to undertake such infrastructure projects. Funding has never been cheaper thanks to the extremely low rates AND it would’ve put millions of people to work at a time when unemployment was high and the economy needed stimulus. It was the proverbial no-brainer.
But nope. During the post-2008 period, we had to hear about the “runaway” federal deficit and how we should be “tightening our belts” and cutting back. We heard repeatedly that the last thing we should be doing is spending (investing) taxpayer money.
Never mind that post-2008 was the exact time when you should spend and invest, to stimulate the economy and get things rolling again. Especially with rates so low! You’re supposed to cut back spending during good times, not bad, it’s Economics 101.
Also, never mind that studies show for every $1 invested in infrastructure projects, GDP rises by $2 (the multiplier effect at work). And never mind that another study shows for every five years a project is delayed, its total cost doubles, i.e. better to fix things now and not delay.
But all for naught.