Timothy Taylor rightly takes on stagnationist Larry Summers. Summers points to a slow U.S. economy and suggests more public sector infrastructure projects. This looks fine in the textbooks but what about the reality? What kind of projects do our leaders come up with?
Mary Anastasia O'Grady writes about "Maryland's Incredible Purple People Mover" in today's WSJ. Stuff like this really goes on in the real world. Pure pork projects are easy to find. Marginal Revolution points us to Washington Post coverage of the new Washington Convention Hotel.
Examples like this are everywhere and not at all new. They are not aberrations but they remain magnificently unnoticed by economists and politicians of the left when at their most serious.
If it's a Bootleggers and Baptists world, where does one place the stagnationist economists? It's hard to be sure but the human capital of most economists is tied up in their intellectual capital -- which many have tied up in Keynesian models of aggregate demand. The sunk costs argument seemingly does not come into play when it comes to one's own intellectual positions.
If private investment is lagging (which it has been for some years), it is because of high levels of uncertainty and anxiety among risk takers. What to do? Fewer rather than more pork projects is a good place to start.
If infrastructure is in bad shape, anything that can be metered can be privatized. Metering is now better than ever. The projects that Summers seems to like would be the last resort.