January 8th, 2009


I agree with Obama

-although my reasons are probably dramatically different from his.

Obama seeks new 'foundation' for economic growth (New York Times)
With the near future virtually guaranteeing high unemployment and massive free capacity - particularly in construction - this is the perfect time for government to do all its infrastructure spending. It will be far cheaper than competing with private business for scarce capacity. Also, it will not force up prices for what there still is of private and corporate investment, to a painfully high level. For users, it would obviously be best if a fixed sum was spent each year on repairing and renewing infrastructure, such as school buildings or bridges. But this would cause price spikes during a boom. The government was right to let buildings go unpainted during the fever years of the economy. And it is right to pump out huge orders now, using that excess capacity. Just be sure to keep all projects divided into closable parts, and don't commit to investments that may happen after the economy picks back up. (Although if we are lucky, it will never again be as crazy as it was. A lot of the investment over the past years was motivated by raw greed rather than fulfilling genuine human needs.)