In my latest reading of The New American Economy: The Failure of Reaganomics and a New Way Forward,
 Bruce Bartlett critiques public works projects.  This took me aback 
somewhat, for Bartlett (if I understand him correctly) believes that the
 government needs to spend money to stimulate the economy when people in
 the private sector are not spending.  What does he want the government to spend money on, if not public works projects?
I
 thought that Bartlett's critique of public works projects was cogent, 
however.  I didn't really understand his arguments about how public 
works projects impact the business cycle, but he made sense when he said
 that public works projects take a while to get off the ground, that
 they often get off the ground after the economy has recovered and thus 
increase inflation (by increasing demand) when it would be harmful,
 that states spend less on infrastructure when they realize that the 
U.S. government will give them money for it, that many states take the 
stimulus money and use it to create a budget surplus rather than to 
stimulate the economy, and that public works projects mostly 
employ people who already have jobs rather than the unemployed.  These 
arguments strike me as rather contradictory, since Bartlett says that 
public works projects increase spending and demand, while also saying 
that there is not necessarily a net increase in infrastructure spending 
because federal spending is taking the place of state spending, or 
states are creating budget surpluses.  But what he says is worth 
thinking about.
 
 
 Posts
Posts
 
 
 
