Dan Mitchell has an evidence-filled post about more effective approaches to infrastructure spending rather than being done at the federal level. State and local governments and private operators do a better job. Bonus: the U.S. does not suffer from “crumbling” infrastructure.
Reading through their agenda, I conclude its the same old crap. More government control, rules, and bureaucracy. And, the results will be the very results they say they are trying to fix. For example, their first issue complains about special interests and so-called the rich getting the benefits of government largess. But, any legislation or regulatory change involves the input of special interests. In fact, Democrats welcome special interests to provide expertise in writing legislation. They are the experts and that’s why they’re involved. The Democrats invite the special interests that fit their agenda to help who then tilt the legislation to their benefit. The result is more bureaucracy and more complexity in the lives of the middle class they say they are trying to help. How much record-keeping do we already have for taxes, medical care, and on and on? Well, that is the result of the very government Democrats are pushing.
How about this:
Our plan for A Better Deal starts by creating millions of good-paying, full-time jobs by directly investing in our crumbling infrastructure and prioritizing small business and entrepreneurs, instead of giving tax breaks to special interests.
How are they going to “creating millions of good-paying, full-time jobs” Well, that crumbling infrastructure is located in states that have been run by Democrats, with an occasional Republican elected such as NY, NJ, CA, IL. The fiscal problem at the state level is that government employee pensions, public education, and Medicaid have consumed their budgets, leaving little budget dollars left for infrastructure. Having the federal government spend on infrastructure relieves the state governors, legislators, and judges of being responsible for the infrastructure in their states. No real reform here.
Next, “prioritizing small business and entrepreneurs, instead of giving tax breaks to special interests.” is funny because “small business” and “entrepreneurs”, from a political perspective, are special interests. “prioritizing” means giving special treatment to special interests. Democrats just hide it from the public by burdening firms with the rules then we get ticked off at the firms for acting the way they do.
Here’s another: “We will crack down on monopolies and the concentration of economic power that has led to higher prices for consumers, workers, and small business”. The monopolies in the economy are the federal, state, and local governments. Further, firms cannot raise their prices. The prices of products and services that are rising faster then general inflation are those with heavy government involvement such as college tuition and public education.
Another problem with their approach is that all this activity interferes with the peaceful, voluntary actions of the American people interacting with each other and others across borders. That interference tilts the playing field because that is how the Democrats view everything. In Progressivism, someone must lose for someone else to win.
Next, their plan “provides new tax incentives to employers that invest in workforce training and education and make sure the rules of the economy support companies that focus on long-term growth, rather than short-term profits.” That means more paperwork, meetings, and time taken away from concentrating resources on doing the work for the customers of the firm. As well, firms have strategies for the short, medium, and long terms. They may not be completely filled out, but that is not possible because the future is unknown. The details get filled in as more information is available and more knowledge acquired. That’s why 10 or 20 years plans are nonsense.
The funny thing is, if a firm invests for the long-term, the results might pay off in government antitrust action against it, see Amazon.com. They invested for the long-term by keeping the retail prices low to build market share. But, Democrats want congressional hearings on its proposed acquisition of Whole Foods Market Inc. So the people at Amazon.com invested for the long-term and they get rewarded with congressional hearings. That makes no sense unless of course the hearings are for show and graft. Ahhh, graft. Squeeze a firm so its employees make financial contributions to the party.
And let’s not forget the mess the Democrats created in the health insurance market with Obamacare — monthly premiums higher, deductibles, higher, insurers leaving markets. So all in all, the Democrats are pulling the same stunts they always do.
Russ Roberts points to this article by David Leonhardt in the NY Times about government infrastructure spending. There’s a chart that shows the steady increase in spending. The problem is:
And yet when it comes to the nation’s infrastructure, money isn’t the main problem.
A lack of adequate financing is part of the problem, without doubt. But the bigger problem has been an utter lack of seriousness in deciding how that money gets spent.
Passengers are directing their anger at the wrong party. The airlines are simply tenants and users of Kennedy Airport; they do not own or operate it. They follow the rules imposed on them by the operator: The Port Authority of New York and New Jersey. This entity is jointly managed by the states of New York and New Jersey.
The infrastructure investments are one part of a package of targeted proposals the White House is expected to announce in hopes of jump-starting the economy ahead of the November election.
So it’s politically motivated, meaning the positive economic impact will, at most, be short-term. The long-term effect will be negative because politicians’ short-term thinking got us in this mess. Democrats are desperate, and bad politics makes bad policy.
Mr. Obama will also call for the creation of a permanent infrastructure bank that would focus on funding national and regional infrastructure projects.
This is also known as a political slush fund. More of our precious tax dollars spent to buy votes. Forget it.
Obama made infrastructure investments a central part of the $814 billion stimulus Congress passed last year, but with that spending winding down, the economy’s growth has slowed.
More proof the “stimulus” was a failure, and more proof that government spending does not create sustainable economic growth. The GDP figures were temporarily boosted by the spending because when GDP is calculated, government spending is an addition to it. More spending temporarily inflates GDP.
How about the remaining “stimulus” spending? More than 1/3 has not been spent or distributed.
To top it off, as this report shows,
We often hear the nation’s infrastructure is crumbling, but state highway conditions are the best they’ve been in 19 years, according to Reason Foundation’s 19th Annual Highway Report. Unfortunately, the recession is partly responsible for the improvement in road conditions: people are driving less which has helped slow pavement deterioration and reduced traffic congestion and fatalities.