Infrastructure spending will spur growth.
The American Society of Civil Engineers annually issues a “report card” on the condition of American infrastructure. According to this year’s report, we are not in good shape. What could fix our D-plus grade? The society reports that we need to close our “$2.0 trillion 10-year investment gap” with a healthy round of infrastructure spending. According to the Treasury Department, these kinds of investments are important for “spurring growth.”
During the global financial crisis, economists saw infrastructure spending as a better option than “throwing money out of helicopters” — metaphorically speaking — to goose the economy. They may have had a point at the time, but these days, U.S. economic growth is not particularly slow, so speeding it up would probably take more than spending on infrastructure (or throwing money out of helicopters). And though the condition of our existing infrastructure is generally appalling, that’s a repair and maintenance issue, not a result of too little investment to begin with. (If we have gotten to the point of calling filling potholes and repainting bridges “infrastructure investment,” then we have a bigger problem than we thought.)
Finally, it’s not clear that an infrastructure boom would necessarily result in economic growth, especially not in the short term, when big projects can slow things down. For instance, a recent study of Uber trips in Melbourne, Australia, demonstrated that major transportation projects are creating significant traffic congestion. “You’ve got these very large projects . . . that have a shortterm impact on the travel pattern of a city,” Brendan Lyon, chief executive of Infrastructure Partnerships Australia, told a Melbourne newspaper. And since congestion can slow economic growth, big projects shouldn’t be deployed with short-term growth gains in mind.