Wednesday, January 07, 2009

Thomas Sowell is "Stimulating"

From his January 06 2009 column:

“One of the key reasons why infrastructure gets neglected, in the first place, is that there is very little political pay-off to filling potholes and repairing bridges, compared to spending that same money creating community centers, bike paths, and other things.

These new things create opportunities for ribbon-cutting ceremonies that give politicians favorable free publicity in the media. But nobody holds ribbon-cutting ceremonies for filling in potholes or repairing bridges.

The whole process is biased toward doing new things, even if the repair and maintenance of existing infrastructure would serve the public interest better.”

Sounds about right. The basic nuts and bolts of local government – police, fire, sanitation, and road maintenance – aren’t very sexy, since they don’t get much play in the press, and you can’t name a class of police academy graduates the “2009 Robert Byrd Graduates”. But you can get Bob to give you money for a new building or highway if you’re willing to put his name on it.

The other key notion of the Sowell article is timing – similar to the concern noted by Backus – is the lag between appropriating the money, planning to spend the money and clearing regulatory hurdles, spending the money, and the time it takes to actually work it’s way into the economy. By the time any benefits show up, we may well have been out of the recession and into an inflationary period, and the “stimulus” plan could well make that problem much, much worse.