Sunday, January 1, 2012

More On What Government Actually Does

I am not a big advocate of the dual positions that 1) our infrastructure is crumbling, and 2) we need to spend more public funds on it.

But, I am cognizant of this fact from Michael Mandel via Arnold Kling at EconLog:

Let me repeat that: Government net investment as a share of net domestic product is at a 40-year low. I had to check this last one a couple of times to make sure it was really true. This is a true failure of national economic policy. Government is punking out, just at the time when a public investment surge is needed to make up for the private investment drought. As a country, we should be investing more, not less.

I see two points here.

First, this is talking about a proportion, so it is not clear that real (gross) government net investment is anywhere near a low.

That may reflect that the government is spending too much on stupid infrastructure, that there is too much nonsense included in the budgets for “infrastructure projects”, or that we are building infrastructure that is luxurious rather than practical (e.g., SUU’s push to build an art gallery before anything else that the campus might need — and I love art galleries and support this one, I’m just grown-up enough to question its priority).

Second, Mandel is emphasizing the point I’ve made in this blog and elsewhere that government has evolved over the last 3 generations or so from an entity that does things to one that sends out checks.

Again, I’m not making a normative judgment about whether that is for better or worse, but a positive statement about the facts.

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