New Infrastructure Will Not Come Good, Fast, And Cheap

Building Bridges Creates Jobs But Is Not Free

With a huge infrastructure package now in the works, we should remember America's national debt is exploding. This means it might be a good time to revisit the idea a country can create the illusion of economic prosperity by spending while at the same time not accomplishing its goals of long term growth. History shows that while a country can kick its gross domestic product into high gear by building a false economy based on infrastructure or war, this may not translate into sustainable growth. When a country gorges at the trough of deficit spending it can easily manipulate a big temporary boost in its GDP but solid growth is often the result of a slower well planned approach.

To be perfectly clear, the problem we face is that poorly spending even trillions of dollars does not necessarily create a strong economy. As usual, when it comes to government spending more often than not much of the money is simply squandered. This problem is exacerbated when the goal is to get it rapidly into the economy, "shovel ready" or a great deal of discretion is given to state and local officials as to how it should be spent. What is clear is that when Washington begins to talk about infrastructure spending hands go out across America as politicians and businesses rush to endorse such programs claiming they should be administered on a local level so the money is not squandered by the inefficient minions of Washington that do not understand the priorities we face.

Infrastructure spending has great potential to slide into the area of waste and corruption driven by political motivations rather than necessity. Much of the money slated for spending generally ends up financing boondoggles. The real test comes when questions are asked about the need for a certain project and the quality of the vision on which it is based. We must also take a deep look into how we set priorities and the payback or savings that will take place over time as a result of our investment. When looked at closely this is where large public or government building projects often fall short of our goals. It is not uncommon to find poor decision making and corruption creates projects that are overbuilt, expensive to maintain or have a lifespan far too short to afford a reasonable payback on the funds spent. Worse yet the cost of poorly planned projects can haunt us for years or decades.

The reason infrastructure spending can sometimes be considered part of a false economy is the number of jobs we claim are created from such spending are often only temporary and can be easy to overstate. While infrastructure spending brings the illusion of solid growth it is generally a long-term investment financed by creating debt, this debt often lasts for decades and long after the project is completed. Often the jobs such projects create quickly fade away. This makes it important the money is well spent or the bill will come back to haunt society and the economy over time.

See. This is Third-World Infrastructure!

Those promoting such massive spending often claim America has a third-world infrastructure which is poppycock. While things may not always be perfect, it is far from what much of the world has to deal with. The picture to the right is reflective of such an infrastructure. When things don't work as planned in America, a lot of other factors are often involved such as a lack of accountability or the people in charge having no skin in the game. As stated before, solid growth is often the result of a slower well planned approach. This means creating clear smart prudent well defined goals and long term strategies on how to meet them. In the long run, a country's economic policies and its system of taxation are far more important to the economy than government spending.

It is pure folly to think in our age of crony capitalism that infrastructure spending that tends to be poorly spent during the best of times, will be able to rapidly transform our economy in a positive way. Sadly, many people and politicians who devise such projects are more interested in a quick fix today or spurring growth rather than focused on building a better future. Any illusion all this is simple should be dispelled by those already lining up to steal this money. In the current environment, the one thing we can count on is that when all is said and done, the family members and friends of government officials and business leaders will pocket a good share of this money.