He lists three reasons as to why not. Individually any of the three of them would evoke instant facepalm, but taken together they achieve some sort of resonant synthesis that creates a larger, more contextually rich epic failburger. To whit, Reason The First: Opportunity Costs.
The opportunity costs of using unemployed labor are not zero. The years spent building government roads and bridges are years in which the laborers are not learning marketable skills or moving to areas with better employment prospects. That is a serious opportunity cost.
One of the reasons unemployment has been so persistent is that the housing boom misdirected so many people into the construction industry, where they spent years acquiring skills the economy did not really need. Continuing this cycle of malinvestment of human capital is unfair to the workers and economically stupid.
It is better to be unemployed than to be in construction, because if you are working in construction, you aren't in business school or learning a useful trade like "CNBC Talking Head". In other words, since infrastructure involves teaching people how to build things, we're actually erasing more valuable information from the parts of their brains that hold other more useful skills like "collecting unemployment checks".
Reason The Second: China.
In the first place, China is involved in its early stage build out of its national infrastructure. Of course this is far more costly than the maintenance costs faced by the U.S. What’s more, China’s infrastructure program has all the markings of a make-work program—building roads and entire cities to nowhere in order to mask serious underlying problems with its economy.
Well, there are 1.3 billion of them or whatever. They need to do something with all that manpower. Perish the thought that we could ever use a make-work program facing nearly 10% unemployment. Unlike China, our economic problems are happily unmasked for the world to see.
Reason The Third is my favorite. Who needs infrastructure, anyway?
This is probably the most common argument for infrastructure spending. The flaw in the argument is that it assumes that it is rational to maintain 100% of our current infrastructure.
Let’s assume that Frank is correct that 25% of our bridges are obsolete or structurally deficient. This indicates that the bridges should either be closed or repaired soon. The question of whether they should be closed or repaired, however, cannot really be answered because of the government’s involvement in these projects.
A private firm would make entrepreneurial guesses about whether further investment would earn a high enough return to be justified.
You know, government needs to be more like a private firm questioning the amount of safety and infrastructure investments along the line of say, BP or Pacific Gas & Electric. If only government had the goal of profit motive like a private company instead of being concerned about the safety of American citizens like some useless government appendage, why we'd save a bundle of money on infrastructure costs!
Amazing stuff, folks. Here's a guy actually questioning why the government's chief concern about infrastructure isn't profit motive. Awesome. awesome stuff.
I can't wait until these guys are in charge of the infrastructure where you live.
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