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Saturday, December 20, 2008

It's not 1930 (and it's not 1950, Either)

Obama's massive stimulus bill is being described as an investment like it's going to pay some kind of dividends. It's not. Consider these two facts. The public works programs of the 1930s built things that did not previously exist. Dams and buildings and so forth. Eisenhower's Interstate Highway system was similarly new in the 1950s. Both paid dividends because they provided new capabilities to the nation. Repairing roads and bridges does not. It's important, but it's not new.

On most of the econ blogs, there are analogies to the past and charts and models and graphs, but none of them take into account how different the infrastructure of the country is compared to 1930 or 1950. We're pretty well built out right now, so those analogies fail.

Related post: Over at Marginal Revolution, they question the entire premise that lavish government spending has ever worked.

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