Letting a Crisis Go To Waste

A lot of the discussion about “stimulus” during the Great Recession focused on infrastructure spending.  The suggestion was that direct government spending on dams/railroads/bridges would drive direct employment.  The newly employed workers would then fritter away that money on trivialities like food and healthcare, creating even more jobs.  This in turn engendered great debate over the “multiplier effect”; that is to say, how fast the money deposited into those worker’s pockets would flow back into the broader economy.

Totally independent of this “stimulus” argument, the last few years would have been a great time to spend some money on this sort of thing.  Thanks to the depressed economy and the interest-rate-depressing policies of the Federal Reserve, it has been extremely cheap to borrow money.  The government should have jumped at the chance to borrow vast quantities of money at low-to-negative interest to plow it into dams/road/bridges and what have you.

However, this window of opportunity seems to be closing.  Bond rates are rising, which means that the real cost of public works projects is also rising and will likely continue to rise.  Predictably, the government has completely squandered the opportunity to prevent America crumbling around us.  Or at least to buy some shiny new weapons!

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