Wednesday, May 14, 2014
Why Infrastructure Spending Doesn't Work
This is the second time I have written on this subject at The New Narrative. However as an editor of the now defunct New York Construction News and publisher of The Infrastructure Pipeline and Juvenile Justice Magazine I have had many opportunities to explore the issue. The main reason infrastructure spending cannot provide an immediate stimulus is because it takes years of planning to build or repair even the simplest of roads or bridges. Add to that the actual length of physical time it takes to do the work and you have projects that require many years to develop, implement and complete. In fact, most states have to spread their infrastructure plans over several years because many projects simply take years to build. Anyone who does serious driving will tell you there is road and bridge construction in almost every state. Many of these projects have been ongoing for several years. Infrastructure does provide jobs, but in most cases those jobs already exist and most of those people are already working on another project. Most government financed infrastructure goes to government employees or firms that already do business with government and are familiar with bidding systems. Perhaps that is why fours years into Obama's first infrastructure stimulus he remarked "the jobs weren't as shovel ready as we thought;" And the truth is they won't be this time either. Federal and State governments fund their Highway Trusts from a variety of sources including the gas tax, highway use tax, etc. They do it every year so a close look will tell you they already have billions to spend but can't do it because infrastructure spending has to be developed and planned before it can be put in the pipeline. The effect can never be immediate. When a politician tell you otherwise he is lying.