Tuesday, October 28, 2008

A question about infrastructure

One of the commonplace ideas that's being bandied about these days is that the magic bullet to stimulate the economy is to put massive amounts of money into fixing our infrastructure, our roads, our bridges, our reservoirs, and so forth. A lot of bright people has touted this "solution" in articles and blog posts and in appearances on talk shows. I won't try to cite names (try Googling "stimulus" and "infrastructure" and see what you get), but Robert Reich offers a pretty good ongoing summary of the argument.

Here's what I don't understand, any more than I understand why "investments" in new energy necessarily imply great wealth and riches for the American people: why is infrastructure going to rebuild our economy any more than anything else?

I know that we need to spend this money, that most governments have hopelessly neglected such projects in their continuing need to maintain the fiction that they get more and more things done without raising taxes. We have not kept up with the things we have, though we do sometimes find money for new splashy things (I live close to a multi-year project that is rebuilding an intersection, along with associated interchange improvements, despite the fact that the reality of the labor market means that the troublesome intersection is no longer a problem).

But there are two contentions I don't get. One is that these projects will create good jobs. I'm not sure what the profile of jobs created by construction work is, but I'd like to see some evidence that it's necessarily a high-compensation set of positions. Since we've seen the diminishing power of unions in this outsourcing world, I don't know that these are great jobs with good pay and limitless futures.

The second contention that confuses me is the idea that these projects will help our economy grow. The growth of any economy is directly tied to innovation, and it just doesn't seem to me that rebuilding a bridge or a highway is "innovative" enough to create that growth.

There are two possible answers to my questions that I can foresee, and they may provide enough of a positive effect to offset my concerns. The first is that infrastructure improvements enable other segments of the economy to grow, that by building new roads we create opportunities for the faster movement of goods, which helps the economy. True though that may be, I'd think that our long-time neglect of these things implies that much of this "investment" will be used to maintain the status quo, not directed to growth.

The other possible answer comes from something that the proponents sometimes include in their message, that we will improve our human infrastructure as well, by building new schools, extending the Internet, offering help for college. And I suppose that these things, even if they're part of any legislation, would help (though I have serious doubts as to the matching of future supply with demand). But these are long-term solutions with no guarantee of proper implementation; if we haven't figured out how to fix our schools yet, why is now any different? So, even in the 10-15 year timeframe, it's hard to see how this part of the "investment" solves any of our current problems.

It's possible I'm missing some part of the argument, but I've been reading what I can find about it, and specific details as to how our infrastructure spending will transform our lives are few and far between. One of the apparent problems with this year's "stimulus" is that it was unfocused, that it had no framework to guarantee that it would stimulate anything in particular. I'd sure like to have a few more answers before we commit more billions to build more stuff.

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