Thursday, March 15, 2012

Reason TV on why the stimulus failed

Hat tip to Hot Air.

The video notes one reason for the failure of the stimulus bill that I haven't mentioned in my past criticisms:  Local governments used stimulus money to replace local government funds earmarked for infrastructure projects.  The example from the video had the maneuvering of the local government resulting in a net decrease in infrastructure spending.

I'll repeat an argument that isn't mentioned in the video:  Not all infrastructure projects stimulate the economy equally.  The interstate highway system created new infrastructure that private business exploited for profit.  Repaving a road allows for somewhat more efficient use of the same road--after the community pays a price in inconvenience while the work is taking place.  The first project created an unexpectedly strong stimulus for the economy of the 1950s and the 1960s.  The second project does no such thing.  Granted, I'm talking about long-term economic stimulus rather than Keynesian management of the economy.  The video, of course, provides a good number of reasons why the ARRA was a failure as a short-term economic stimulus.

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