Spending on “Infrastructure”

In one of his Carpe Diem blog posts today, University of Michigan econ professor Dr. Mark J. Perry discusses one of the problems with Obama’s stated intentions of refueling the economy by pumping money into infrastructure projects.  “One of the key reasons why infrastructure gets neglected in the first place, is that there is very little political pay-off to filling potholes and repairing bridges.”  However, there is significant political advantage to putting money into new infrastructure, preferably projects which will involve some sort of free positive publicity, like a ribbon-cutting ceremony.  Because the infrastructure-building process is “biased toward doing new things,” and because new things take much, much more time than simply repairing old things, government funding of infrastructure improvements often results in unnecessary projects spending money long after they were supposed to go into effect.  In other words, taxpayers’ dollars are spent both where and when they do not need to be spent, kind of like getting new deck chairs on a sinking ship.

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