Friday, April 18, 2008

Investing in the future

In political sleight-of-hand, transfers are promoted as wealth creation. Building new highways creates wealth only to the extent that it enahnces economic productivity. It is supply-side, not demand-side. "Creating jobs" in construction or operations is really no such thing, as has been recognnized by economists since at least Bastiat's Negative Railroad (the more stops, the more jobs "created").

In fact "transfers" is too benign a term because it costs taxpayers more than a dollar for government agencies to spend a dollar. Heritage has just made some of these points in a response to the latest U.S. Department of Transportion claims re the "job creation" effects of highway spending.

The candidates love to talk about "investments in infrastructure." Unless the productivity effects are significant, these are poor investments. If I have to raise $1.25 (or more!) to spend a dollar, how could it be otherwise?