Practical Austerity

I am skeptical of the "prime the pump" economic theories that emerged from the Great Depression.  Scholars of the history of the time are quick to apply lessons learned then to today's economy.  Without getting into the nuances of macroeconomics, the proposals go something like this.  When the private economy is stagnant or contracting, the government has to step in and engage in monetary policy designed not only to reduce restrictions on credit but to flush cash into the system.  Theoretically, that cash will then be spent and will act as kind of a kick-start to the moribund private economy.

One thing always bothers me about that, though. I agree that governments are the monetary bastion of last resort.  But the projects on which they spend that money and whether or not our larger, global economy of today would respond as it did in the 1940s cast doubt on the theory's resilience.

First, it wasn't, as generally is believed, the Roosevelt Administration's New Deal that got the American economy back on its feet.  The various government spending programs and social safety nets kept us treading water with no or slow growth after the depths of the Great Depression had been plumbed.  However, it was the guns of World War II and the immense investment in the home war industrial complex that really put America and the world back to work.   That doesn't necessarily mean we want to go kicking off a 21st Century war to get things rolling again on the home front.  It seems killing 50 or 100 million people so others can have jobs isn't exactly a fair trade.

But, there are better ways for the government to spend money to get us all back to work.   The example of the Hoover Dam comes to mind.  Anybody who has ever visited that behemoth public works project straddling the Colorado River at the Nevada-Arizona border can literally see jobs and value added services coming from its cement face, it's intake towers and the huge power lines carrying electricity off to nearby Las Vegas and beyond.  Not only is its soaring architecture magnificent but its scope, its concept, its completion in a time when America was down on her knees speaks of the power and ingenuity of the people who built her.   It's hard to get that same sense of accomplishment when some of today's government economic stimulus dollars are spent on rather frivolous purposes such as engorging the bureaucracies in state capitals or in Washington or building temporary new surfaces on interstate highways.   Practical in the short-term?  Probably.  Grand in scope and lasting multiple generations?  Not so much.

Let's take a hard look at where we point tax dollars to help fellow Americans.  Let's stop subsidizing industries that now have taken the subsidy for granted and keep asking for it and getting it out of political convenience.  Let's start thinking about building lasting public works projects like an upgraded and efficient 21st Century energy delivery system.  How about investing in better freight rail corridors that can carry more and more self-produced goods across the vast expanse of our great land?   On certain high density corridors, those rights of way can also be used for passenger rail but only where the traffic and the cost deems in cost-effective.  Let's build more Hoover Dams to capture the power of water for both energy and agriculture while at the same time making those projects as environmentally friendly as possible.

When the sands of time bury America and our civilization is long forgotten, the edifice that sits in the baking deserts of Nevada and Arizona will remain.   But we, the ones who built the thing, will remain enigmatic if we do not ensure that more than just wasteful spending of precious monetary resources is to be our legacy.