Maybe you've heard it. Of course you've heard it. You're a Kossack. You've heard it from Tweety. You've heard it from Morning Joe. And Lou Dobbs. Pat Buchanan. Mike Barnacle. And perhaps even Jim Webb. And you've seen it repeated here on blog after blog here at DKos. It's a hip meme and those passing it along seem to think it makes them sound "smart" and "tough" and "serious". It shouldn't. It should make them sound, like, so sixty years ago.
It goes like this: The way to stimulate the economy is by investing in "infrastructure", by which is meant "roads and bridges". In Obama's stimulus package only 25-30% of the money is going to "infrastructure" investment. Therefore Obama must not be serious about stimulating the economy.
It's a load of crap.
Dollar for dollar, investment in welfare has a more "stimulative" effect in the short term. The same is true of investment in education and health care. Take for example the program for research and treatment of viruses which was just gutted. Such a program would be much easier to get off the ground than building a bridge, would yield both professional and entry-level employment. It would employ scientists, doctors, nurses, data-entry workers, receptionists, test subjects. And it would yield a long-term good, in the form of greater knowledge of disease and perhaps even new products or therapies. Or much-maligned spending on GED programs. With the money in hand today I could have a GED program running by June. It would employ academics, office staff, field coordinators, maintenance and security staff. With a bridge you'd be lucky to even get to day one of the bidding process by the end of the summer. By the time shovels were swinging Barack would be running for (from?) re-election.
And that's the thing, isn't it? The shovels swinging. These guys (and they're all guys, as far as I can see, white guys of a certain age, Eddie Rendell and Barnacle and the rest), they want to see the shovels swinging. That's stimulative, to them. Well, maybe they should read today's New York Times, which featured a brilliant article about the measures taken in Japan during the 1990s to stave off a similarly severe recession. The whole thing is worth reading, but I'd like to excerpt here the most relevant section to the project of killing this meme:
Dr. Ihori of the University of Tokyo did a survey of public works in the 1990s, concluding that the spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, he found that the spending actually led to declines in business investment by driving out private investors. He also said job creation was too narrowly focused in the construction industry in rural areas to give much benefit to the overall economy.
He agreed with other critics that the 1990s stimulus failed because too much of it went to roads and bridges, overbuilding this already heavily developed nation. Critics also said decisions on how to spend the money were made behind closed doors by bureaucrats, politicians and the construction industry, and often reflected political considerations more than economic. Dr. Ihori said the United States appeared to be striking a better balance by investing in new energy and information-technology infrastructure as well as replacing aging infrastructure.
Japan’s experience also seems to argue for spending heavily to promote social development. A 1998 report by the Japan Institute for Local Government, a nonprofit policy research group, found that every 1 trillion yen, or about $11.2 billion, spent on social services like care for the elderly and monthly pension payments added 1.64 trillion yen in growth. Financing for schools and education delivered an even bigger boost of 1.74 trillion yen, the report found.
But every 1 trillion yen spent on infrastructure projects in the 1990s increased Japan’s gross domestic product, a measure of its overall economic size, by only 1.37 trillion yen, mainly by creating jobs and other improvements like reducing travel times.
Economists said the finding suggested that while infrastructure spending may yield strong results for developing nations, creating jobs in higher-paying knowledge-based services like health care and education can bring larger benefits to advanced economies like Japan, with its aging population.
"In hindsight, Japan should have built public works that address the problems it faces today, like aging, energy and food sources," said Takehiko Hobo, a professor emeritus of public finance at Shimane University in Matsue, the main city of Shimane. "This obsession with building roads is a holdover from an earlier era."
Thus the mix of spending on infrastructure, energy development, social programs and education that Obama has arrived at seems just about exactly right, like a lot of the things our President is doing. We just need to help pry a few barnacles off that ship he captains.
Update: As always, Rachel was an answer to my prayers tonight (and I know exactly how weird that sounds). Watch her "Mind Over Chatter" segment. She articulates many of the points above, much more articulately than I have or can.