-RWPublic "infrastructure" competes with private construction for labor and machinery so it isn't necessarily a net plus - due to crowding out. pic.twitter.com/eVEOSgSpRn— AlanReynoldsEcon (@AlanReynoldsEcn) November 21, 2016
Monday, November 21, 2016
On Trump's Goofy Infrastructure Plan To "Make America Great Again"
It will crowd out private construction in favor of FDR-styled make work programs that prolonged the Great Depression.
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─ Public "infrastructure" competes with private construction for labor and machinery so it isn't necessarily a net plus - due to crowding out. ─
ReplyDeleteA lot of people and especially Trumpistas (who are as economically illiterate as they come) want to believe that this crowding-out effect would be meaningless because "a job is a job and infrastructure has value." What they do not realize is that while private investment responds to a REAL DEMAND for goods and/or services, even when the projects are long-term, public "investment" responds merely to POLITICAL demand and not economic (i.e. real) demand and so you can't see the benefit that the expenditures are meant to bring except as show pieces for ribbon-cutting politicians and cronies. If there's any economic benefit derived from a certain project it will be the result of PURE, DUMB LUCK and not because the people in charge (the Top. Men.) have any special or extraordinary insight.
In essence, those resources - the machinery, the components, the labor - will more likely than not be wasted on fake activity, on raising Mo'ai (the Eastern Island stone heads) rather than in producing capital that people need. If that is what El Trumpo and his band of merry wasters have in mind when talking about "taking our country back," one has to wonder if the "us" implicit in that phrase means "us, the black shirted Fascisti."