Incredibly Short Memories

Apparently, Congressional Democrats are angling for yet another big stimulus spending bill.  Forget for a moment that the last one did nothing for the economy.  There still seems to be a mythology that infrastructure projects can rapidly be green-lighted.  For example,

"The American people, while concerned about the deficit, place much more emphasis on job creation, and they see a role for the government," Rep. Raul Grijalva (D-Ariz.) told The Hill. "A fast injection of job stimulus on the public side would help tremendously. … It [the job report] helps our argument about investment."

This notion of a "fast" injection of job growth is just absurd.  We can leave aside dueling economic models, and just consider for a moment what it takes to get an infrastructure project, say a bridge replacement, going.  In short, it takes years of design, planning, vendor selection, and permitting.  The protests from losing bidders and environmental opponents in the courts alone can take years.  That is why most of the first stimulus just was handed to state and local governments to help defer bureaucrat layoffs, rather than going to all those supposedly "shovel-ready" projects.  The only thing that turned out to be shovel-ready was the US debt ratings.

Here is an article I wrote in January, 2009 on why infrastructure projects can't be done quickly.  By the way, I tell a story from my own experience in Ventura County, CA, and all the time spent to date trying to get a minor building improvement permitted.  To this day in mid-2011, it STILL has not been fully permitted.  Every time we think we are done, a new division of the County pops up with its hand out for a check.

Update:  The main reason such stimulus spending does not work from a macro standpoint is that one is taking money out of private hands (either through taxes or crowding out private borrowing) which have strong incentives to employ the money productively and putting it into government hands that has strong incentives to employ the money politically.  Here is a Forbes article I wrote on the problem, and here is an interesting example of incentives problems related to the stimulus.

  • Ted Rado

    Non-engineers have no conception of what it takes to design and build something. By the time you do the layout studies, engineering design work, obtain quotes from suppliers, get suppliers' drawings approved, and do the construction, a couple of years go by. I once had a chemist argue with me that, to change a chemical plant design where the machinery delivery time was six months, only a six months delay would ensue. Foundation design, structural design, piping design, instrumentation, etc must be redone. New quotes must be obtained, etc.

    Moral of the story: leave engineering to the engineers and let the politicians stick to their lying and screwups.

  • Mark

    I agree with the reasoning, government is just slow. but even if we could get the shovel ready projects going they won't work.

    We have a perfect example with Japan, which actually managed to build bridges and roads and rail extensions, etc, to improve their economy, and they ended up with the lost "decade" which has now spanned some 20 years.

  • Noah

    How much of the "stimulus" from extending the Bush Tax Cuts has gone for higher gasoline prices?

  • rox_publius

    silly right wing radical.... the only problem with the stimulus was that it wasnt big enough. if it had been 3x GDP, we'd have full employment now and be snapping up new Chrysler-Fiats by the dozens.

    you really need to stop watching faux news.

  • marco73

    The first stimulus did a great job of protecting state and local government employees from layoffs. With recovery still just around the corner, they need another stimulus to protect those same state and local government employees until about November 2012. "Shovel ready" is just code for "full employment for government lawyers, bureaucrats and consultants", not actually getting something built.

  • Noumenon

    one is taking money out of private hands... which have strong incentives to employ the money productively and putting it into government hands that has strong incentives to employ the money politically.

    The private hands also have incentives to save the money until better opportunities arise, which can be the exact wrong thing to do. Not sure that outweighs your basic point though.

  • Another guy named Dan

    Another thing that gets overlooked about the 1930s-era government make-work projects, such as the CCC, were that they were deliberately designed to be innefficient. They included maximum manpower and minimum automation, and this was seen as a feature, not a bug (in modern parlance)

    On a recent documentary about a project near where I lived, one of the employees spoke of spending long days moving rocks from a stream bed to a building site with a wheelbarrow. Thus any time anyone talks lonignly about the enduring benefits of the CCC and other agencies, you have to remember that the same benefits could have been provided at lower cost if private contractors were used tu do the same work, and the industrial sector could have been stimulated with the demand from the extra construction machinery.

    Of course this would have meant that factory owners would have made money, which was an outcome that had to be avoided for political reasons.

  • Henry Bowman

    Coyote, you don't seem to understand the Dems. Stimulus spending has nothing whatsoever to do with improving the job environment in general. Instead, it is a way for CongressCritters to send money to union-dominated public employees (largely teachers), who then send a percentage of it right back to the Dem campaign coffers. Really, it is that simple.

    @Another Guy named Dan:

    Milton Friedman, while visiting another country and seeing a government construction project in which the workers were building a roads using shovels and picks, asked his host "if you want to maximize jobs, why don't you just issue them spoons?"

  • I'm for another stimulus plan as long as it comes from a tax on useless federal employees.

  • Watchman

    Learned it in the garden many years ago...animal output "fertilzer" is ALWAYS shovel ready...