Monday, December 08, 2008

Return on Investment

In the roiling political soup that is today's America, there appear to be two kinds of people: those who think president-elect Obama is the Antichrist who will bring horror and ruin to the country; and those who think he is the greatest thing since sliced bread, beer in bottles, and edible panties. Well, maybe not the last one. But there's not really much of the Bilbo-style view, which may be summarized as "he's not the best possible guy for the job, but after the stellar performance of the present administration, why not give him a chance to prove himself?"

I got a blast of this divide yesterday when I was talking with my Dad.

Dad is 83 years old, and is the man I respect and admire above all others. We don't see eye-to-eye on everything, of course, but who does? Anyhow, after we'd exchanged the latest jokes, shared the latest news on the family, and discussed the weather, Dad launched into his weekly can you believe what that Obama's doing now? segment. This week, the focus of his ire was Mr Obama's proposal to spend many billions of dollars on a WPA-like program for national infrastructure projects (road and bridge repair, improving the energy efficiency of Federal buildings, expanding access to broadband internet, etc). "Where's he going to get that kind of money?", Dad wanted to know.

Where indeed?

In line with my amazing and well-documented ability to come up with the perfect rejoinder several hours after it is needed, I just mumbled an incoherent question back about where Mr Bush is coming up with the hundreds of billions of dollars to rescue banks, investment houses, and the auto industry. But as I replayed the conversation in my mind later, it occurred to me that - regardless of where the money for infrastructure repairs and corporate bailouts is coming from - we ought to be thinking about what we're getting for it.

When the money has been raised, distributed, and spent, what will remain?

- Money invested in infrastructure projects will help repair aging bridges, fill potholes, build new roads and repair old ones, and generally yield visible, useful results while actually putting people to work.

- Money invested in bailing out banks will yield ... what? The money distributed so far doesn't seem to have loosened up the credit constipation or put anyone to work.

- Money invested in rescuing the Big 3 automakers will yield ... what? Will people actually go back to work? Will the Big 3 start building reliable, fuel-efficient cars that people actually want to buy? How long will it take?


If we're going to throw money at problems, we may as well throw it smartly. Instead of giving it to banks who appear to be recycling it into dividends and corporate salaries, why not use it to put people to work doing things that need doing?

There's no doubt in my mind that there are reinforced regiments of lawyers already preparing the lawsuits to fight any effort to start up a WPA-like program, and that the government will end up spending money that should be used to rebuild the country and put people to work on lining those lawyers' pockets. It's always easier to run down someone else's ideas than to come up with one of your own...or, as Lyndon Johnson once said, "Any jackass can kick down a barn, but it takes a good carpenter to build one."

So let's not kick down the barn just yet. If the government is going to spend hundreds of billions of dollars of our taxes for "economic stimulus programs," let's be sure they invest it on the right things, the things that will yield jobs and visible results. Let's see the return on the investment.

Have a good day. More thoughts tomorrow.



The Mistress of the Dark said...

Amen to the Bill :)

John A Hill said...

What?! Spend money to put people to work and we get something tangible out of it? Sounds unAmerican to me. Must be socialist or communist. Maybe terrorist workers will be panting IED's in the roads they're building or bombs in the bridge structures to be detonated during a future rush hour. Yeah, that's the ticket.

It okay to be paranoid when everybody's out to get you.

John A Hill said...

Or they could be planting IED's...

Anonymous said...

Sadly, most economists now agree that the WPA did little or nothing to spur economic growth. We did at least get some good infrastructure; unfortunately the money spent on that capital investment for the future did not lead to jobs beyond those workers who built the static infrastructure. Replacing a bridge, in particular, makes no contribution in terms of productive capital. Sorry; Obama's plan just won't work. Hopefully he and Congress will realize that, and come up with investment strategies (usually lowered tax liabilities for people who start businesses that hire people now) that will actually kick-start the economy.
Bilbo's unknown friend.

Mike said...

I just read where improved infrastructure leads to economic growth. So abominous must have been listening to a different gypsy fortune teller than I was. And he doesn't realize that all we have to do is suspend the invasion of Iraq for a month and we can pay for everything.

Bilbo said...

Andrea - pax vobiscum!

John - of course, we do need to be careful...

Anonymous - I don't think the real issue here is spurring economic growth, at least directly. The issue is spending money that gets people back to work and generates some definite return on the investment. Your suggestions are good and should probably be part of the long-term recovery plan, but I think the WPA-like plan has a lot to recommend it in terms of getting at least some people back to work, getting some of the infrastructure repaired, and buying some time for the "lowered tax liabilities" (the conservatives' answer to everything) to work...if in fact they do. And as far as I can see right now, the jury's still out on it. And by the way, a replaced bridge may not generate "productive capital," but it probably won't fall down any time soon.

Mike - don't knock gypsy fortune tellers...they've got at least as good a track record of economic projections as the PhD economists and all those Harvard MBAs. And it's spelled "anonymous."

Amanda said...

Ah...I feel so removed from your blog topic today. Cairns has a real holiday atmosphere and the lack of internet has also meant that I have not read the news online (or even on paper).