…that’s pretty good, even if you’re not a wackaloon Chartalist like the Mad Biologist. Andrew Samwick writes:
The right reasoning is that with aggregate demand lower by hundreds of billions of dollars a year, there are unemployed and underemployed workers and underutilized capital whose services could be purchased on the cheap. If we have projects that add long-term value, this is the right time to be undertaking them. Plenty of those projects are to repair and maintain our seriously degraded infrastructure. Others are to make the upgrades necessary to plan for a future with different forms of energy transmission and communication. Instead of fighting about which multiplier is the biggest and clingng to the misguided notion that all measures be “timely, targeted, and temporary,” we should be building while it’s cheap.
Some further elaboration from Samwick:
First, the nation does not have an underconsumption problem. The personal saving rate hovers around zero. The government’s budget has been in surplus in only four of the last 35 years. The nation has run current account deficits with the rest of the world for the last 15 years. If we are looking for additional economic activity, consumption is a poor choice.
Second, we do not have an underinvestment problem in the private sector. Interest rates have been very low by historical standards, and the Federal Reserve intervened immediately to lower them even further. With or without additional tax-based incentives, corporations have plenty of access to cheap credit to expand their capital stocks.
I’ll just add that corporations are sitting on massive piles of cash right now–they are not underinvested. Back to Samwick:
Where our country does have an underinvestment problem is in our public infrastructure. The failed levees of New Orleans. The collapsed bridge in Minneapolis. Those are but two recent examples of an area where the federal government is falling down on the job. Regrettably, they are not the only examples. In 2005, the American Society of Civil Engineers released a report card in which it estimated that $1.6 trillion would be required over a five-year period to restore the nation’s physical infrastructure to good condition.
Because infrastructure projects are in many cases public goods or natural monopolies that can be provided more efficiently with government regulation or implementation, the government should bear responsibility for them. Looking ahead, the country faces potential bottlenecks in network infrastructures in broadband and alternative energy that could be added to the ASCE report’s recommendations.
Whether you’re Mike the Mad Chartalist, a liberal Keynesian (New or Old), or Samwick, the point is we’re all converging on a similar solution: a jobs program based on public infrastructure projects.
By the way, Andrew Samwick was George W. Bush’s chief economics advisor of the President’s Council of Economic Advisers from 2003-2004. That should tell you the extent to which the madmen of the batshitloonitarian right and cruel calculating cynics have taken over the Republican Party.
No nation can survive half Grover Norquist and half free….