I would actually be fairly relieved if the money was spent on needed repairs, as it wouldn’t be fueling the infrastructure/sprawl feedback loop by creating more infrastructure that would need repair in the future.

It’s almost like there’s an infrastructure bubble. (maybe I should write on that) There’s so much infrastructure, it cannot sustain itself without massive infusions of cash for repairs, which politicians have little incentive to spend. If I could, I would tell states, no new infrastructure money until your existing infrastructure is in good shape.

Unfortunately, the political forces are too strong to be overcome by rational people like you. Politicians will always favor new projects, and Obama’s trillion dollar plan will attract pork like Kermit the Frog in a tuxedo. (sorry, that’s the best analogy I could think of)

Worst of all, I don’t think repairing infrastructure will spur a recovery or many create jobs, except in certain sectors. Sure, engineers and contractors will do well, but how will they spur a recovery? (Interestingly, those are all male-dominated jobs. What about the ladies?)

And the repairs won’t improve productivity, which would bring a sustainable recovery. For that reason, if I believed in stimulus, I’d spend on technology, research, and education that would enable a more robust recovery that doesn’t shift as much burden to future generations.

If we just focus on repairing the infrastructure we already have that everyone can agree is worth keeping, we can avoid waste, create jobs quickly, and in the end be proud of the results. Moreover, with their repair backlogs reduced, states and localities can focus their own nonfederal resources on more innovative and potentially transformational projects like transit starts.

I find this phrasing kind of interesting, because to me a bridge is a durable good, and as the writer goes through these other unbuilt goods, they seem to get more consumable, and less lasting or valuable.

Hazlitt is not distinguishing among goods to assert whether one is better than another, but it does seem that as he lists goods they are more essential to human existence in order to make a point. He is simply stating that there are opportunity costs to the construction of the bridge. The private production of many goods and services was sacrificed for the construction of the bridge. Whether they are more durable or less durable is irrelevant in my opinion. To argue that a durable bridge is inherently more valuable than consumable human necessities such as food, shelter, and clothing would be a tough argument to make in a less abundant society.

The other thing this analysis ignores is the time value of money. Over its entire life cycle this bridge may (or may not) gain in value, whereas the unmade dresses, had they been made would have been consumed and possibly end up in a landfill in a year or two.

I don’t see how the time value of money works in favor of the bridge. According to the time value of money, the future value of an investment is discounted over the years of its useful life. Basically, it means you’d rather have something today than something tomorrow, and the the future value of something like a bridge is more uncertain the further into the future you look. If anything, the time value of money argument works against long-term investments such as infrastructure, in favor of shorter-term returns on capital. (especially when trying to recover from a recession)

Also what if they are made in china, then the value is not captured locally anyways.

The anti-foreign argument goes into a whole other discussion on trade and economic fundamentals such as competitive advantage. It is beyond the scope of this blog, but I’d be happy to refer you to some resources on that subject, starting with the Hazlitt book in the post.

However, one who favors locally produced products and services should reconsider supporting over-investment in infrastructure that subsidizes transport of things not produced locally.

“They can see the bridge. But if they have taught themselves to look for indirect as well as direct consequences they can once more see in the eye of imagination the possibilities that have never been allowed to come into existence. They can see the unbuilt homes, the unmade cars and washing machines, the unmade dresses and coats, perhaps the ungrown and unsold foodstuffs.”

I find this phrasing kind of interesting, because to me a bridge is a durable good, and as the writer goes through these other unbuilt goods, they seem to get more consumable, and less lasting or valuable. The other thing this analysis ignores is the time value of money. Over its entire life cycle this bridge may (or may not) gain in value, whereas the unmade dresses, had they been made would have been consumed and possibly end up in a landfill in a year or two. Also what if they are made in china, then the value is not captured locally anyways. I always go back to the great transit systems of Europe, that are expensive to maintain, but would be economically impossible to build from scratch.

It doesn’t look like a fair portion will go to cities under the current Obama plan.

http://www.chicagobusiness.com/cgi-bin/news.pl?id=32113

Unfortunately, politicians regularly defer maintenance. It’s not politically expedient to maintain a bridge, when you can use those funds to gain political support by building new roads and bridges. The problem isn’t the funding, its the political incentives.

The first project I worked on as a Structural Engineer was repair work on the Chicago Skyway, which is a huge bridge built in the 70s between Chicago and Northwest Indiana. Investigating the bridge, I realized it had NEVER been maintained. Had it been painted every few years, as proper maintenance would require, it would have been in great shape. However, it had fallen in such disrepair that you could put your entire torso through the webs of rusted out plate girders.

Now, is this a symptom of not enough “stimulus” through spending? Or is it a result of reckless spending decisions of politicians? During the 30 years span before I designed repairs for those plate girders, the City of Chicago and State of Illinois had spent billions of taxpayer dollars on building new highways, but barely a cent on the Skyway. Spending a few millions every few years to give the Skyway a fresh coat of paint would have been worth every penny for the safety of drivers and life-cycle of the bridge. However, politicians had no incentive to spend a few bucks on the low-visibility maintenance of the bridge, and spent on the vote-earning, new projects that future politicians could neglect and rebuild 30 years later.

I would expect nothing less from today’s politicians when they cash their “stimulus” checks. The cycle perpetuates itself.

Maintenance of bridges is a good thing for public safety and fiscal responsibility, and agencies should prioritize it as a prudent move, not as “economic stimulus”.