Friday, February 11, 2011

Doing what comes naturally

The New Yorker's James Surowiecki is optimistic about President Obama's Sputnikonomics. He is optimistic about federal spending that is not simply "stimulus," but rather serious investment in education, infrastructure, research, etc. He does stipulate that, "Of course, when government is involved, there’s a danger of political considerations trumping economic ones, but our track record of using public money to foster innovation is good." Not sure where high-speed rail fits, but I have my suspicions. I have also blogged about the fact that Californi'a pavements are worse than I have found in some Third World countries.

And Michael Boskin reports the following in this mornings WSJ:
The strongest case for stimulus is increased military spending during recessions. But infrastructure spending, as the president proposes, is poorly designed for anti-recession job creation. As Harvard economist Edward Glaeser has shown, the ARRA's transportation spending was not directed to areas with the highest unemployment or the largest housing busts (and therefore the most unemployed construction workers). Indeed, last September Wendy Greuel, the City of Los Angeles controller, shocked the country when she revealed that the $111 million in ARRA infrastructure money her city received created only 55 jobs—that's a whopping $2 million of federal stimulus per job created.
And the WSJ also reports "Pentagon Loses War to Zap Airborne Laser From Budget" which documents the various weapons systems that three Republican Defense Secretaries had tried to end, but which hang on via Congress and friends doing what comes naturally.

I had previously blogged that I was worried that there were no constituencies in the world for austerity. But many of the Europeans as well as several U.S. governors (Cuomo, Christie, Brown and others) have seemingly proven me wrong. Now it's the U.S. Congress (and friends) that are the problem.

Several economics bloggers have recently mentiond that public choice economics remains underappreciated. How about ignored?


I should say ignored by the many stimulus optimists.