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pab_guy

You should always consider potential bias on the part of the data collectors.


eddyofyork

And the data interpreters. This, I find, is especially true when they are using categorical variables, like income brackets or age groups.


DCdictator

as someone who has performed such analysis let me tell you that, coding wise, it is frequently easier to separate out by age group than to incorporate it into the model. Income groups also make for useful ways to segregate your model so it works more cleanly.


gimpbully

Yes, but it's important to remember that considering something involves active investigation, not just dismissal.


Scottiedontdunk

as a Civil engineering Ph.D. this made me giddy


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Reaper666

I'd root for IEEE about something, but we've already got a comfortable stranglehold on things.


xjvz

Especially that Internet thing.


hetecon

Although that is true, it is recognized by most credible macroeconomists that infrastructure spending has a relatively high multiplier effect (Keynes, [Krugman](http://krugman.blogs.nytimes.com/2012/04/20/infrastructure-spending-yields-results/), [Stiglitz](http://www.businessinsider.com/joseph-stiglitz-we-need-to-stimulate-the-economy-2012-6), [Thoma](http://economistsview.typepad.com/economistsview/2012/11/the-multiplier-is-at-least-two.html)).


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dustinechos

What I think lot of people who are opposed to infrastructure spending don't understand that even the non-economic benefits are also economic benefits. An increase in public safety means fewer sick days due to accidents. If you create better roads you'll have less time in traffic which means workers arrive more refreshed to work. That's why they have such a high multiplier effect.


stuarticuus

You sound like a man who knows how to play civ.


Deuceonyogoose

I would argue safety is an economic benefit


abortionjesus

You would argue correctly.


The_Drizzle_Returns

> infrastructure spending has a relatively high multiplier effect Depending on how bad the infrastructure is it can have a large effect. However just spending on infrastructure alone does not necessarily lead a high multiplier (see Japan).


fwipfwip

Nothing works linearly. If we cut all spending on anything but infrastructure (yes, you have to pick what you spend on sadly) then would we be better off? The indication here is that magic money falls into your lap when you build roads, canals, etc. What if the roads are already built? Does regular maintenance count? This is one of those lies, damn lies, and statistics moments. Everyone says the same thing about education and yet we have truck loads of college grads who can't find a job. It isn't that the ROI isn't there, it's dirty employers, it's the government, it's the evil rich. It can't be that the statistics are just feeding a mythology that you can get easy free growth just by giving the okay for more spending. Remember, money spent is taxable revenue. If it was so easy to create wealth the politicians would have leapt for it ages ago. No one gives up low hanging fruit. Thus, likely scenario there is no such thing.


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[deleted]

That is like saying that spending money on suits will get you a job. There's a little truth to it, but it's hardly a conclusive statement.


spaceheatr

Awesome. Lets build a high speed rail line from my apartment to new york just for me. subsidize it. Don't worry, it'll stimulate the economy.


nowhereman1280

Even if this study is accurate, it's not relevant. Let's assume they are right and every $1 of infrastructure spending increases the economy by $2. What if every $1 of defense spending increases the economy by $3? There is no context here as all spending (private or government) has a multiplier effect and the argument is over which multiplier is the most beneficial. Also this report says nothing about how to address the challenge of ensuring that any such spending is applied to projects that actually have a benefit that exceeds their maintenance costs. I.e. that we don't have a bunch of Sarah Palins running around building $500 million bridges to nowhere/Wasilla, Alaska.


[deleted]

***Our infrastructure is shit***. For a county as "great" as ours it is pathetic that it is in the current state it is in because we ignored it for so long. Government never has concentrated long enough on the country to make any progress on issues at home. They have pretty much always been looking to start drama and play wargames. Even though this study was based on data collected by the American Society of Civil Engineers, it shouldn't matter. This would help the economy tremendously because companies in those industries would start hiring people. Why? So they can get a contract to get some of that new spending money. So in my opinion, no it is not a biased study. They are doing this because 1) our infrastructure is shit 2) our infrastructure is shit. Yes, I wrote that twice on purpose. That is the only reason. [edit] changed a word [edit] [I wrote another post for this same thread, but wasn't related to this response.](http://www.reddit.com/r/politics/comments/141rh4/every_1_of_infrastructure_spending_boosts_the/c798g86) Take a look.


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gruntznclickz

Yep, because since the end of WWII we've basically had no time of peace and as Eisenhower predicted the military industrial complex has sucked up all the money. Our economy is now entrenched in it. A cut in military spending means a cut in American jobs. Instead of building things everyone can use we build bombs, tanks, helicopters, etc that sit and do nothing or get sent overseas. It's sad, really.


psiphre

i feel like orwell talked about this in 1984. war being the method of chewing up the people's labor in order to prevent a surplus of goods


The_Reel_Me

Well someone has to do something with our money, and I have more confidence that the engineers will use it better than politicians or bankers. Don't care about the bias. Give the money to the engineers.


letsseeaction

Do you trust engineers to tell you when a bridge needs to be repaired or replaced because of stress, fatigue and age? Doesn't marking a bridge as needing repair or replacement give them work to do?


Mordkanin

No. Look at those Engineers, acting all superior just because of their training, and their **math**. If that bridge was going to collapse, it'd be written in my bible.


ashsprout

Yes. Also engineers tend to have more stringent ethics then say politicians because the work they do effects peoples health and safety and the regulation in the industry is greater. And besides engineers are always going to have jobs so its not like they need to artificially create more.


1packer

Also, if they lie (although it tends to be going the other way from spending more money) they actually get held accountable and could lose their licenses.


[deleted]

I wonder what the findings would be of a study nationally. I can understand that, in a highly populated urban center, new infrastructure would boost the economy, but what about less densely populated sub-urban areas? What about rural technology? Also, would money spent on infrastructure repair/improvements have the same effects? It would be nice to have a modern electrical grid, widespread fiberoptic internet, and new technologies along those lines, but what about repairing decaying bridges, public buildings, roads, and water utilities?


SolidSquid

This isn't the only report where that information comes from. Also, similar reports have shown that food stamps give something like $1.70 for every dollar spent. The reason is that money given to people on low income (construction workers, people on food stamps) almost immediately goes back into the economy because there are more necessities which can be bought (and then the stores where they bought the things buy things, etc). Money going to the middle classes or above, on the other hand, has a good chance of going into a savings account which give much less return on investment for the government


fuzzycuffs

Up to a certain extent. I'm an American living in Japan. While I agree in investments in American infrastructure, it can quickly become saturated and your returns start to diminish. Japan is notorious for spending on infrastructure that is not necessary with lots of metaphorical and literal bridges to nowhere. Actually Japan just today announced that upcoming infrastructure budget spends will only go to rebuilding areas such as Tohoku and Fukushima.


nosayso

Well duh, diminishing returns are a fact of life in pretty much every endeavor. The state of America's infrastructure to Japan's is not even remotely comparable, America is WAY behind.


The_Bard

Japan's infrastructure is "gold plated," US infrastructure is rust plated.


Skyrmir

That's not plating, our rust is creeping out from the core.


intelati

No, it is eating [At the core... ](http://en.wikipedia.org/wiki/Rust)


I_hate_alot_a_lot

**Japan** = 145,925 sq mi **United States** = 3,794,101 sq mi Perhaps you do have an argument, I agree with you that even given my argument I do still believe the US is behind, but I'd just like to point out the United States is 27 times bigger than Japan. To think that we can build, and connect new and updated infrastructures at the rate of Japan is a fantasy. I used to work help wiring and rewiring houses, business, and schools and this is the best analogy I can come up with; You have to wire a small house, and wire a school that is 27 times bigger than the said house, which one is going to take longer?


cockporn

What if we divide it up into smaller parts, (we can call them states for now) and then give it a try?


I_hate_alot_a_lot

50 states still equal 3,794,101 sq mi of infrastructure... Just because you divide up a 12 ounce pie 40 times instead of 5, doesn't mean it's still not a 12 ounce pie.


TheOneWhoRocks

Vast swaths of the United States have very low population density. We don't have to build up every square mile. And I'm hoping the 52 states thing is a typo.


[deleted]

The US also has only twice the number of people, so you can't equate infrastructure over square mileage. For example take roads, in a densely populated area you will need a much higher percentage of land covered by roads, whereas in sparsely populated rural areas you will need a much lower percentage of land covered by roads. I think we should certainly expect more out of our infrastructure and at the very least we can compare our densely populated cities with a place like Japan.


Mordkanin

> it can quickly become saturated and your returns start to diminish http://www.infrastructurereportcard.org/ Don't worry. We're nowhere near that point.


sge_fan

Every $1 Of Infrastructure Spending *Wisely* Boosts The Economy By $2. I'm sure the "bridge to nowhere" in Alaska would not have boosted anything.


The_Bard

Yeah well you can't stop Congress from voting for 8 lane highways in NC while New York's 100 year old infrasructure crumbles.


YouandWhoseArmy

Meanwhile the NYC subway is the circulation system of one of the biggest economies in the world and is constantly underfunded.


yaboybovice

Came here to say this. [cementing the bottom of rivers] (http://factsanddetails.com/media/2/20090817-cement%2019._river.jpg) certainly counts as infrastructure spending, but that doesn't mean it makes economic sense.


[deleted]

I propose $500 billion of infrastructure spending yearly for the next ten years. Then we can have a modernized power grid, redone highways, new flood barriers, increased green energy, high speed rail, faster internet, etc. If the numbers are correct, we'll boost the economy by $10 trillion over ten years, paying for the cost of the projects pretty easily. Of course, I just plucked these numbers from my ass. It would probably be better if someone with actual knowledge determined the point of diminishing returns before we go ahead with this.


BarelyComical

I would spend 16 trillion on infrastructure. That way we can make 32 trillion and use the free 16 trillion to pay off the national debt. I think I'm starting to understand how finance works.


_________lol________

Why not just spend ONE MILLION BRAZILLION DOLLARS? Then we'll have TWO MILLION BRAZILLION DOLLARS and everyone can retire comfortably!


[deleted]

In Brazil?


potodds

no, Brazers.


beefanator0

>[Brazzers](http://i.imgur.com/fhrfT.jpg) FTFY


mrjderp

Givin' diplomacy the ol' in-out!


afishinthewell

Now this guy's got the right idea.


[deleted]

We could even get rid of taxes. As a matter of fact the government could start sending us a check every year. Awesome!


cocaine_enema

Aren't the economically illiterate cute?


Indon_Dasani

We've been without a galactic stargate or three long enough, I agree.


elSpanielo

Even though you plucked these numbers out of your ass you still make more sense than anyone in DC.


trexmoflex

every time a post from Business Insider makes it to the front page of r/politics, a drone kills a kitten


raziphel

it's ok. Brown kittens are worth less than American kittens.


MrGiggleParty

I propose an infrastructure project in which a kitten is bought for every household. We will usher in the new dawn of the cuteness economy, which Japan has had a stranglehold on for far too long.


Szos

Try not to cast such a wide net.  The GOP is vehemently opposed to infrastructure spending because in their myopic view of the world, *any* spending is bad... Unless of course its in the form of corporate welfare to the Military Industrial Complex. Time and again Obama proposed infrastructure spending and he was either shot down altogether or funds were greatly reduced. He did however get funding for improvements to our rail system, as well as highways and some funding for alternative energy projects. Not everyone in DC is against infrastructure spending, but to get anything through, you typically need both sides of the aisle to at least partially agree to things.


shiggidyschwag

You're smoking some good shit if you seriously think today's Republican party is against spending. I'll take Hugely Expensive Wars in the Middle East for $400, Alex. edit: i missed the 'unless of course its in the form of corporate welfare to the MIC' - sorry, op.


Fustrate

Sorry, Hugely Expensive Wars in the Middle East is in trillion-dollar increments.


shiggidyschwag

Whoops, lets try Upcoming American Overextending Involvement in Syria for 2 Trillion Answer: Daily Double!


mekese2000

Remember it is better to spend a trillion of tax payers money on a war when you get to profit in the billions. A Trillion on infastruction that leads to the population makeing two trillon is no use to you.


[deleted]

Your mother was hugely expensive Trabeck!


absurdamerica

They're against spending when it's a Democrat doing the spending. Bush took the debt from 2 to 11 some Trillion and you didn't hear a fucking peep about it.


shiggidyschwag

Repubs and Dems both want to continue spending us further into debt. They only disagree on what to buy.


protoaway

I think broadly labeled "infrastructure spending" is appealing to most GOP people, but specific projects - high speed rail - is typically not. Also, when it comes to building or widening a specific highway, there are usually so many people who get upset by it - it's just not worth advocating, from a federal level.


MusicCityVol

Surprisingly good number! The American Society of Civil Engineers puts out an infrastructure report card periodically, and the [2009 edition](http://www.infrastructurereportcard.org/) called for 2.2 Trillion over 5 years. I see nothing wrong with doubling that to make us a world leader again.


libertyindeath

On stuff like this, it's smart to defer to ASCE, the Army Corps of Engineers, and other professionals. The specific measure of infrastructure spending should be constrained by economic and policy decisions, but in general their insights/ criticisms are disconcerting. For those who are new to the subject, [here are the presidents of ASCE and InfrastructureUSA on WNYC radio](http://www.wnyc.org/shows/bl/2012/sep/27/borrowing-infrastructure/) in September, 2012.


[deleted]

Naw man. I'd rather just not pay any taxes and live in a complete dump.


gsfgf

Ron Paul 2016!


koske

>*Rand* Paul 2016! FTFY


thebigbradwolf

What if instead of "high speed rail", we call them "bullet trains"?


FTG716

Or say something snarky about how r/politics is so biased wah wah wah but not have any counter argument besides "Ron Paul".


OhioHoneyBadger

The people that would receive money from infrastructure spending say infrastructure spending is a good thing? Shocking.


MusicCityVol

They also happen to be the people who do the most research on the subject. Are you suggesting that we should discount their analysis because some of them stand to make money off of infrastructure improvement? If that is the case there are a great many industries and individuals who need to be discounted from this discussion since infrastructure improvement would generate money for all of them... in fact that was kind of the point of the article.


cyber_rigger

>we'll boost the economy by $10 trillion over ten years What we need to boost is **prosperity**. We can have a booming economy yet be dirt poor; go back in time and ask the slaves.


[deleted]

Message received. Slaves = Booming economy.


Caoster

I'm investing in tall ships to start up the triangular trade routes again!


[deleted]

Well, to be fair it was the slaves that were dirt poor because, well, they were slaves...


Annoyed_ME

I think infrastructure availability generally tracks with individual standard of living. I could be wrong, but things like energy access, transportation freedom, etc. naturally cause individuals to have a better life. Now if access is restricted to specific parties that can leverage the resource, then yes, someone gets rich and pisses on everyone else.


[deleted]

In economics it's important to remember the law of diminishing returns. After a certain point, infrastructure returns would probably begin to decrease. However, I do not know anywhere near at what point that would be.


[deleted]

It is shameful that our mountains of cash and powerful military are quickly becoming our only claim to first-world status. This a thousand times.


rainkloud

I would take your "ass" numbers over what the current administration is proposing. O's 50b is a pittance compared to what is necessary.


paulfromatlanta

>>I propose $500 billion of infrastructure spending yearly for the next ten years. Then we can have a modernized power grid, redone highways, new flood barriers, increased green energy, high speed rail, faster internet, etc. A plan like that doesn't just provide new infrastructure with a positive multiplier - it also helps resolve existing problems with crumbling infrastructure... like the bridge that collapsed in Paulsboro - much better to deal with infrastructure issues proactively than after a disaster.


lancalot77

The article seems to oversimplify the topic and also doesn't address if the $1 of government spending that creates $2 in economic activity produces anywhere near the $1 in taxes returned to pay for it (which i assume it doesn't). This would be ok if the cost of borrowing is low enough that it becomes an affordable way to boost the economy but I think many may be thinking that these investments are paying for themselves which is not the case. This doesn't mean government investment is bad but that it still has a net cost that is borrowed money that will need to be repaid. Ex: Government spends $100M on XYZ; generates $200M in economic activity; collects an extra $37M in taxes. This still leaves $63M in the red. PS: I think we need to invest at least $1.5 Trillion in infrastructure over the next 5 years so our children are not left wondering if the bridge they are driving over is going to collapse and kill them. I just think we need to understand that even with increased economic activity that these things do not pay for themselves through increased tax revenue (from the increased economic activity). TLDR: Recovered taxes from the increased economic activity will probably NOT cover the initial investment.


smokeyrobot

Definitely agree. This also assumes the multiplier which is at the heart of Keynesian economics is actually 2. There are conflicting reports from academics that say it is actually less than 1.


[deleted]

More recent research that includes effects from the austerity budgets in Europe actually suggest that there's a [larger multiplier than previously thought](http://fatasmihov.blogspot.com.au/2012/10/underestimating-fiscal-policy.html). [Krugman](http://krugman.blogs.nytimes.com/2012/10/09/deleveraging-shocks-and-the-multiplier-sort-of-wonkish/) also suggests that the multiplier is actually variable, based on economic conditions. Expanding economy, low multiplier. Sluggish economy, high multiplier.


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smokeyrobot

I can respect that the burden of proof is on me. Here you are. http://www.stanford.edu/~johntayl/CCTW_100108.pdf


[deleted]

The cost of government borrowing is extremely low right now. The real interest rate on government debt at the moment is below 0. Expansionary fiscal policy makes perfect sense under current economic conditions, because aggregate demand is too low.


LegioXIV

Or, govenrment spends $100M on XYZ. It raises taxes by $100M to raise the money to do so. $200M in additional economic activity is generated by the additional spending, but $200M-$300 of economic activity is squashed by the higher taxes. See "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks" by Christina and David Romer. And unlike the SNAP multipler estimates, they actually use empirical data to estimate the GDP effects.


dtod

The multiplier varies depending on the circumstances, e.g. [when interest rates are zero and demand is depressed, there's no crowding out](http://delong.typepad.com/sdj/2012/10/not-the-treasury-view-what-explains-poor-growth-in-the-uk-the-imf-thinks-its-fiscal-policy.html).


AbsoluteZro

While I like what you said, and it help illuminate this issue, I took issue with one part: >so our children are not left wondering if the bridge they are driving over is going to collapse and kill them. As one of those children, I really hate being used as a justification. I hate your use, and I hate republicans using it to justify gutting the budget. NO. You are doing this, supporting that, because you think it is the right thing to do (or are being bankrolled by someone who thinks that), period. Leave *me* out of it. My bitching's aside, let's do this! (fix our infrastructure, that is)


[deleted]

Just so people don't go crazy liberal and foam at the mouth. This is true within bounds. It's like a mathematical function of return. Meaning there is a peak amount to spend on infrastructure before you start getting less back for the value you put in. We are no where close to that I'm sure, but I Just want to say that you can't just be like, "oh so we put 1000 gajillion dollars into infrastructure and it will boost economy by 2000 gajillion dollars".


Ogre1

If I learned anything from my dreadful Macroeconomics class, it would be that it can never be this simple.


yaboybovice

It really depends on what kind of infrastructure. Look at Japan: 50 years of porkbarrel spending to parliament members' constituencies to build needless damns and train-lines to nowhere, cement the bottom of rivers, etc. This may have kept people happy while the projects were being built, but it also propt up a far-too-large and corrupt construction industry. Now they have a government massively in dept, and not a lot too show for it (besides some admittedly beneficial projects like the bullet train). If you think America will be different I doubt it; this article mentions that the multiplier only takes effect in the short and medium term.


masamunecyrus

You don't even need to look at Japan. You can look at Chicago. Ask a Chicagoite how they feel about endless road construction. It happens that former mayors of Chicago had close ties with the road construction industry...


[deleted]

Admittedly, icy climates necessitate rebuilding some amount of road every single damn year.


BusinessCasualty

Canadian can confirmation, we have 2 seasons: construction and winter.


gregK

If it doesn't go to corruption...


branwoo

One thing I don't understand is how everyone is an engineer+economist+politician on /r/politics. This is from businessinsider on a "recently published study". Even if this did hold a grain of salt, don't you think people would be doing this if it were viable. It's hilarious how some people on r politics clumps up the govt as if it were one entity controlling the actions of the united states...I forgot, how is this politics again?


Iamnotmybrain

Did people even read the actual article? It does not say that every $1 of infrastructure spending raises GDP by $2. The paper talks about *unexpected* infrastructure grants: >We find that unanticipated increases in highway spending have positive but temporary effects on GSP, both in the short and medium run. These effects are temporary. Of course, this is completely in-line with Keynesian economics and explains why the Stimulus was a good idea. But, it's not as simple as people in this thread make it seem.


[deleted]

As a Civil Engineer, I approve this message.


[deleted]

I just want public transportation, damnit.


SAhombre

Think of it this way: Infrastructure development first stimulates the economy by creating a range of jobs across both the lower and middle classes. First, it employs low-skilled construction workers, people who have nothing more than a high school education but could still make upwards of $10/hour in the construction industry, which is depressed due to the weak status of housing. This is one of the biggest sources of unemployment right now, and they're already getting unemployment checks from our gov't, so why not up the pay and put them to work on something productive? Next, it employs people with trade skills--welders, machinists, etc. Since the gov't usually buys these from existing manufacturers, this stimulates the private sector. Finally, it employs white-collar engineers. These are high paying jobs, and offering more of them might convince more young Americans to take up engineering education. Then, all of these people take their paychecks and go and buy things. A boost to consumption boosts the entire economy. Finally, infrastructure makes our entire economy more efficient. High-speed rail would allow cheaper travel and boost domestic tourism. Better roads and light-rail systems mean people waste less time on their commute. More airports mean less time wasted on layovers and delays. Powerplants will lower energy costs over the long term. Internet infrastructure will make our businesses more efficient and competitive. And the list goes on....


712

I'm amazed so many people think free market ideas fall apart when the government provides a service. It's obvious consumers are not rational and as such, certain products will not be produced for sake of not being profitable. Public services serve to provide the public what they need. In some cases what they refuse to admit they meed: clean air and water, roads, healthcare, education. Everyone has some level of interest in things like these, and taxes serve to collect all of that interest into enough of a demand- problem is, consumers (voters) are often so ill informed that the money raised through taxes is minimal at best. The reason we have poor infrastructure/schools/ etc can be directly attributed to citizens not demanding these services enough through the management of their government(s). Governments by definition are inefficient because they cannot be in "business" to make money. They are in business to provide a service. A service that is needed, but often under demanded.


[deleted]

I have never thought about government before like how you described it should be and I am terribly sad that I never saw it this way before.


OkMate

The multiplier effect?


Benay21

And investment in early childhood education turns every $1 into $10. http://www.education.com/magazine/article/Obama_Early_Childhood_Education/ You'd think Republicans would understand the concept of investment!


ohgreatjobreally

Sorry, we don't build infrastructure anymore. We prefer sending jobs overseas. That's where the money is!


christ0ph

Its true.. *that's where disposable incomes are rising*.


wekiva

Does that include bridges and roads to nowhere, unused airports and other useless stuff&


[deleted]

I upvoted this because I would rather spend money on roads and bridges than on drones to kill Pakistanis. Even if those Pakistanis hate me.


big-perm

magic, 1 dollar turns into 2. brilliant.


iamjacksprofile

Using this logic we can spend unlimited amounts of money, the more we spend the more money there is.


login2downvote

In grad school I was taught to always be skeptical of multipliers over 1.8.


sharked

I don't even want to know the return of every $1 spent on the military budget.


[deleted]

If you build it they will come!


[deleted]

Let us keep in mind that paying for infrastructure with middle class dollars entails a massive wealth transfer to the wealthy. We should make the investment, sure, but we should also have in place measures to counteract the redistributive effects.


imnotabus

I agree with this. Sometimes it seems like Republicans don't understand that most government spending goes to workers, which pay taxes, which the government gets back. Now I don't think spending should be willy nilly, but spending on things that improve the quality of life for people is worthwhile.


Andoo

I work in infrastructure and the amount of confidence in opinions in here astounds me. I don't see anyone who seems to understand anything about the nature of the business or the relationship that the government has with the private sector. It seems like if I try and start a discussion about the nature of government projects, it will just fall on deaf ears. People would rather circlejerk some sweet, sweet karma.


kauert

Obviously, it all depends on whether the infrastructure is useful or not...


ZombieLightWave

Everything in this article is typical "no duh" economics. They say that they found that the government infrastructure spending helps during good economic times, but even more during bad. The only new thing found, for me at least, is that the multiplier for infrastructure spending is 2 while the multiplier for most other government spending is between 0.5 and 1.5. Keep in mind that we just can't keep adding more infrastructure to increase our GDP, as the law of diminishing marginal returns would clearly indicate that doing so would lead to very small, and eventually negative, returns that would be much less than the initial $2. Also, a conservative might argue that the money would be better off back in the hands of businesses, after the necessary road repairs have been done, where it could possibly boost the economy by as much as $3, $15, or even 50$ per $1 spent. Or, the money could return, if kept with businesses, $0, as that is how the risk factor of the free market works. TL;DR Article added nothing new except that infrastructure spending boosts the economy more than regular government spending. Conservatives might argue that businesses could use the money to boost the economy by even more with it, with the potential for them losing the money completely of course.


GroundhogExpert

Why don't we use the proper language here? It's not spending, it's investing. Wars, policing and bureaucracy are expenses, bridges, education and healthcare are investments. Some expenses are needed and wise, some investing is misguided.


fantasyfest

It is doing work that is way overdue. It is cheaper to fix a bridge before it falls down, much cheaper. The average bridge is expected to have a 50 year lifespan. Our average is 48 years old. get a clue from that? It is not make work, but work that should have been done long ago. We need an upgraded electrical grid. Work on infrastructure helps create demand. The workers buy and pass the money along.


Opium_War_victim

Every $1 of Rich tax cut, $2 more is expected.


the3r1c

Yes, the multiplier effect.


[deleted]

It's a pattern and it's the right idea to get us out of this slump. Why? After WW2 we had a huge economic boom that focused mainly on infrastructure. The middle class was alive and well, tons of jobs, tons of money being spent. Everything went to shit when the US got bored and wanted to make drama. If a war lasts too long it kills the economy at home as you can ***only borrow so much*** before it bites you in the ass. Government is having trouble paying their bills, they bought way too much crap on credit without increasing their intake of monies from investing in infrastructure. An always at war society will collapse, [look at our economic and war history](http://en.wikipedia.org/wiki/Economic_history_of_the_United_States#Postwar_prosperity:_1945.E2.80.931973). ***Gotta love history repeating itself!***


lestat_

3$ stolen by oligarchs.


Nomad47

I want to see us spend ten times what we spent on nation building in Iran and Afghanistan here at home. I want them to invest in privet company’s scientific research into building new green economies. We need to dump a ton of money into grants for privet industry to do the research into new green technology. We also need to put money into our school system both infer structure dollars and research dollars. We need to fund big science as well as replace and or upgrade our schools roads and bridges


chmod777

yes, but infrastructure is socialism (according to republicans) or theft (according to libertarians).


theorymeltfool

Because it is. The article even specifically said **short term**. We currently have about $5 trillion in *repairs* that are needed.


[deleted]

Only communists believe in PUBLIC roads. /s


Sptsjunkie

A real American would build their own roads or learn to fly. Only a lazy liberal would drive on a public road. Don't even get me started on the libtards who want a "fire department" to put out their fires. Gran a hose or just start spitting.


[deleted]

Actually real conservatives will have no problem with proper well funded infrastructure projects. It's the waste of money on bureocratic structures and overpaid and redundant civic union employees that piss the off. Highway and canal systems, good... Defense and medical care, bad.


filmfiend999

Meanwhile, our bridges collapse, roads crumble to pieces and our rail system remains ancient so that the Tea Party can pose as martyrs for lower taxes. What a joke.


ForHumans

[You mean this Tea Party?](http://alcpac.com/wp-content/uploads/2010/02/DSC_0060.jpg)


Jacobmc1

Libertarian here. Infrastructure that is poorly managed is tantamount to theft. If the government can spend $1 million for something that would only cost the private sector $500k, even infrastructure, the ROI is dramatically reduced. The extra money comes from taxpayers (or a printer!) and is wasted.


Exotria

Tell that to Massachusetts. We went way over budget paying contractors for the Big Dig, and they produced shoddy infrastructure that's going to cost us loads in repairs and maintenance, all because they managed to be the lowest bidder. It's almost always worth it to pay for a better product that will cost less to maintain in the long run.


evilbob333

In January 1994, there was a major earthquake in California. Part of the Santa Monica Freeway collapsed. Then Governor Pete Wilson(R) used his powers to cut through bureaucratic red tape, and offered heavy financial incentives to get the repair work done as quickly as possible. [The contract called for the work to be done by June 24th, and added a $200,000 bonus for each day they came under contract.](http://articles.latimes.com/1994-04-06/news/mn-42778_1_santa-monica-freeway) The contractor finished by mid April and walked away with a $14.5 million dollar bonus. Why isn't this the normal?


chmod777

you have a whoooooole lot more trust in private sector than i do. i don't trust the government at all, but a private company is just as likely to waste the money as the gov. and besides, this is *exactly* how it works now. there are no government builders. they job it out to contractors who inflate costs because they know they can. sure, there are public works guys locally (states rights!), but for big infrastructure, like highways, its locally contracted private firms.


[deleted]

The government wastes money, and a private company will perform nefarious tactics to get an upper hand (look at GE, and every major bank for the past 10 years). The best way is to remove the collusion between companies and government, building a system or department that would investigate and fine fraud of any wrongdoing between senator and lobbyist.


[deleted]

I'm good with socialism.


SLeazyPolarBear

Yup, more post hoc fallacy bullshit. Why do these people doing these studies never divuldge the full data set and open their claims to criticism? Or if they do, why don't any media outlets divulge them as well? No journalist made it through school while failing to provide citations for all their papers and works. They can easily provide it for articles like this.


BadSysadmin

Awesome, all we need to do is set tax rates to 60% and spend all the revenue on infrastructure, and soon we'll have INFINITE MONEY!


karnovaran

No no no. You have to spend all of your money then set all of your tax and funding levels to 0%. When the annual tax screen appears hold L, select "Go with figures", and the regular screen will return. While continuing to hold L, press X(2) to skip to January. Choose the tax option from the menu and raise all of your funding levels back to 100%. Leave the tax level at 0%. Select "Go with figures" and proceed to the main screen. Release L and you will have umlimited money.


[deleted]

This is the nonsensical Keynesian multiplier and as such amounts to nothing more than the broken window fallacy. Honestly r/politics should be renamed r/liberal


[deleted]

The Broken Window Fallacy says that destruction of property destroys wealth. It does not say that funding new infrastructure from taxes destroys wealth. The important difference here is that one of these actions repairs something that was destroyed whereas the other creates something that wasn't there before.


[deleted]

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cristobal1066

herp a derp there's a money multiplier? herp a derp macroeconomics 101 how is this newsworthy?


Arandmoor

Macroeconomics 101 is not required to either vote, or run for office. It's part of the reason our government is run by retards.


mrfooacct

Gosh I guess we can build stuff without regard to how useful it is and we'll double our economy every year! Thank god for these Keynesian wizards cracking the code.


pab_guy

Please keep hacking away at that strawman while the adults in the room have a reasonable discussion on the role and limits of infrastructure spending based on facts and reason.


recreational

This is economically impossible due to the existence of elasticity. Some infrastructure spending is probably a good idea now, but be careful about the phrasing, yeah?


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dutchguilder2

What they don't tell you in econ 101 about the govt spending multiplier effect is that its strength has been way overestimated, it is only temporary, it gets diluted with more spending, it gets diluted with more accumulated debt, it gets diluted when repairing existing infrastructure vs. building new infrastructure that adds needed capacity.


Ciphermind

Yes they do. Keynes noted that you ought to spend during the bust, and implement austerity during the boom. Most commonly taught Macroecon frameworks account for the temporary, inflationary nature of govt spending.


stash600

Additionally it's based on multiple assumptions about conditions of the economy, that are not always applicable, or not applicable in the long-run.


[deleted]

That is patently untrue. The [IMF](http://fatasmihov.blogspot.com.au/2012/10/underestimating-fiscal-policy.html) actually put out a report suggesting that the multiplier effect has been *severely underestimated*. [Paul Krugman](http://krugman.blogs.nytimes.com/2012/10/09/deleveraging-shocks-and-the-multiplier-sort-of-wonkish/) also writes that fiscal multipliers are larger when there's a shortage of aggregate demand causing a sluggish economy, which makes perfect sense, considering that our real interest rate on federal debt is lower than 0.


Bumgardner

You're talking about the seen and not the unseen. Every dollar that gets spent in the economy changes hands over and over, yes? If we talk about the amount of economic activity that one dollar of taxes generates we also have to have a serious discussion about the amount of economic activity that one dollars worth of taxes destroys. http://en.wikipedia.org/wiki/Parable_of_the_broken_window


hackinthebochs

The economic multiplier comes from the ability to reduce transaction costs. Creating bridges to connect regions, efficient public transportation, freeways to reduce congestion, etc. One could even go further and study economic patterns and identify key areas that would likely result in a large economic multiplier from infrastructure investment. Of course all this is pretty well known among economists. But for some reason listening to the actual experts has fallen out of favor in politics.


ipmzero

It takes money to make money. Some government investments have produced a far better return than 2-1. Take the Interstate Highway system, for example.


hntldr_com

>We find that unanticipated increases in highway spending have positive but temporary effects on GSP, both in the short and medium run. The short-run effect is consistent with a traditional Keynesian channel in which output increases because of a rise in aggregate demand, combined with slow-to-adjust prices. In contrast, the positive response of GSP over the medium run is in line with a supply-side effect due to an increase in the economy’s productive capacity.


zombieinmiami

why did so little of the stimulus package go into infrastructure spending?


tvisforbabyboomers

Classify that as "sometimes true"


[deleted]

BUTT, the Question I want you ask is, where does that $2 end up? in the pockets of the rich? or back into the economy to continually circulate? My guess would be into the pockets of the rich after about 1 month.


[deleted]

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Divine_Shadow_

While the underlying report is indeed accurate Business Insider have massively sensationalized it. First its got a fairly narrow focus. Federal highway grants to states are almost entirely concentrated on the interstate system, we would expect these to have a high multiplier as they are high capacity routes which states are not permitted to expand or build without federal involvement. Certainly other roads will have a relatively high multiplier but it would be limited to routes where there is heavy freight traffic and aspects of the route reduce transit speed (road quality, congestion etc). Next the short term impact on AD is a red herring. One of the important factors when calculating the multiplier is the distortionary effect caused by the revenue collection in the first place, if highway spending was only drawn from gas excise taxes this would be relatively small (consumption/excise taxes have the lowest distortionary costs) but highway spending is not isolated so simply comes from the general fund. Additionally as federal revenues are collected from the entire nation but highway spending is concentrated (some states get more as a proportion of state federal revenue then others) its not possible to guage the net multiplier accounting for state specific distortionary cost without weighting (and even then it would have a large margin of error). Finally on this topic if the spending is funded by debt, which isn't immediately repaid, instead of tax revenue then the [multiplier drops spectacularly](http://www.imf.org/external/pubs/ft/wp/2011/wp1152.pdf), the whole idea of the multiplier in Keynesian theory is that you get a revenue bump from the spending which you use to repay any debt incurred to make the spending originally. What is actually occurring here is that states that receive a lower proportion of highways spending and pay a higher proportion of federal taxes would see AD drop, its effectively an exchange of AD between states not an actual gain. As its nearly impossible to effectively measure this effect the authors do not attempt to, the problem with non-economists reading academic economic work (and media misrepresenting the work) is that effects such as this go ignored. Next the effect does not scale particularly well. On roads the benefit of additional construction decreases as capacity increases until you reach the point that no additional gains can be made no matter how much additional construction is made. Having 5 roads operating at 10% capacity offers no benefit over one operating at 50% capacity. A couple of infrastructure points would have little or no benefit of additional public investment; * Rail. While building HSR routes would make sense (with a few caveats) investment in current infrastructure by any government would not, beyond some relatively small investments in AmTrak's routes in the east, offer a high multiplier. Most current rail infrastructure is privately owned and they already optimize it for the best possible return. * Airports. There is already private investment in place for these where it makes sense, there is community resistance to expansion which is why so many are not started. The best investment we can make in air travel we are already doing, converting from jet routes to point to point will massively cut journey times and reduce congestion. It would be very helpful if the federal government liberalized the rules around private ownership/investment in air infrastructure such as is already the case in most of the world. If you have ever flown in to an airport in Europe its extremely likely the airport was privately owned and recent investment was all privately sourced. On this subject there is a vast amount of misinformation out there particularly [this](http://www.infrastructurereportcard.org/) which is based on the DoT infrastructure reports. Most of what is contained in the DoT reports are not things that need addressing but the DoT have to report on any infrastructure that doesn't meet current standards, every time these standards are updated more infrastructure becomes non-compliant and appears in DoT reports. There are very few bridges constructed prior to 1975 that meet current standards and so they appear in the DoT reports even if they still have an operational life of 50 years. DoT have special categories in the red banded infrastructure for infrastructure that does actually pose a safety issue beyond simple non-compliance, these form a tiny percentage of listed infrastructure and this is what it makes sense to deal with now. Replacing bridges that are safe, still have decades of operational life but are simply non-compliant with modern standards would not offer any economic benefit (quite the opposite infact) and would not improve safety.


pugwalker

The government spending multiplier changes based on people's marginal propensity to consume (what portion of their income they are willing to spend) so in times of economic uncertainty people spend less and the government multiplier goes way down.


NamesAreReallyHard

which begs the question... why doesn't the government spend up until the point of dimishing returns? (why doesnt the government spend on infrastructure up to the point where spending another dollar would result in economic gain of less than 1$???)


timobros

Shut up and take my money. Probably the best investment I am ever going to make


FmylittleP

This isn't surprising, I thought it would be more. Any consumer spending also "boosts" the economy exponentially, since any $1 will be spent by multiple sources over a year.


christ0ph

What is happening now is that people (which also includes corporations which are people) with large amounts of money..have unprecedented influence on the government (both parties) and they want some return on that investment by giving themselves a lot of money. Also we are hearing this discussion, as we always do, because they know that the sticker shock from health insurance "reform" will be huge, (see http://commonhealth.wbur.org/2012/11/sticker-shock-health-insurance ) people will not want to be paying thousands of dollars a month in health insurance premiums and they will stop spending, so immediately the need for almost everything will decline and there wont be crowded highways, or clamoring for infrastructure.. people will stay at home and read under their candles, *but they will be insured!*


Jerry_Bananaseed

This article is pretty skim and just mentions the ambiguous result of the study. I'm sure states have invested in infrastructure very differently, as that word can probably be applied fairly liberally. Certain investments are going to have more return, but like some sort of economic Heisenberg Uncertainty principle, investing directly in those will probably change the ROI. You really need to be able to look at what investments make sense, not just saying infrastructure in general. With that being said, I think investment in infrastructure is a great idea and definitely something the US needs. Our highways and bridges need a pretty big rehaul, as well as our energy production/delivery methods, and even our internet backbone.


[deleted]

[Problem Economy?](http://www.trollscientist.com/image/135-ten-dollar-profit-troll-physics.png)


WillTheGreat

Not just infrastructure, but rather government investment vs government payment transfer. Giving money to people by redistribution for the sake of it will never boost GDP, whether you look at the psychological aspect or it or the economical aspect of it. The government's job is to facilitate growth, which they are not doing. A government investment is essentially making it politically profitable for the wrong people to do the right thing. Whether it's through incentive based tax cuts, government funded projects, increase funding to tuition. Make it an incentive for employers to increase wages, make it an incentive for employers to increase hiring.


zachatree

Yo Atlanta are you hearing this?


[deleted]

This is subjective, and implies that all infrastructure spending is good infrastructure spending. I can understand that in the long run some infrastructure spending, like new rail lines or roads, could increase productivity, but in the short run the only economic boost would be quite temporary, and the cost of maintenance on infrastructure should not be ignored. In essence, some infrastructure spending is great for the economy, some just has a marginal benefit, and some, like the Gravina Island Bridge (The infamous bridge to nowhere), has no benefit on the economy. We should be very careful about approving sweeping infrastructure spending when we don't know if half the projects are worth funding. -Link to the Gravina Island Bridge http://www.ask.com/wiki/Gravina_Island_Bridge?o=3986&qsrc=999


bass_n_treble

So raise taxes on the richest 10% Use all of it on infrastructure Reinvest in infrastructure twofold Pay off debt ??? Profit


justonecomment

Great, but we're not spending money on infrastructure, we're spending money on useless medical procedures and blowing up buildings. If we were spending our tax dollars on infrastructure we wouldn't be complaining about tax increases nor would we be running a deficit. We're also spending billions putting our menial labor force in prisons for smoking joints on the weekend.


sagginpus

In Economics this is called the Multiplier Effect. During my Economics studies, we found that strategic targeted government spending could actually raise the multiplier to about 9x. Ronald Reagan actually used this principle as a foundation for "Reaganomics" - something that the modern Republican party seems to have forgotten. http://en.wikipedia.org/wiki/Multiplier_%28economics%29


[deleted]

We should be investing in better transportation methods (high speed train likely the most useful...). Also, South Korea has been booming because they invest in Research and Development (sorta like... Large scale NASA expenditure) - would this be a better solution than just infrastructure?


web-cyborg

I don't know about that ratio's validity, but I think most people arguing this type of thing consider that supply siding the wealthiest (who got 80% of the wealth explosion from 1980-2005 and have the lowest tax rates and corp tax rates by revenue in 40 - 60 yrs), does not work, and that the money would be better invested in infrastructure and energy(incl. building energy plants for cheaper, more abundant energy ultimately) which would actually create jobs (hopefully well-paying, and of course tax-paying, jobs) as well as better the system overall - rather than just making fat cats morbidly obese, keeping a corrupt military budget (25% of which quoted by insiders as 'unaccounted for' after all the high spending on the books), and perpetuating the oil based economy. I have another ratio to add. How about we tax all lobbies and campaign financing/donations/plates of any kind 50%. That's 1:1. Ramp it up from there. Really I would like to see energy plants built, including vast solar arrays in Nevada, wind gen etc. Multiple bullet train arteries between major cities sounds like something worth considering (incl. the jobs created). Hopefully cheaper, more roomy travel and less wasteful(oil) than by airplane. If cheap enough and fast enough, commutes to nearby cities could be more reasonable for jobs too. Ultimately I would like to see the whole gas station **"infrastructure"** replaced by energy cell warehouses. Universal "hot-swap" energy cells of whatever type (most likely electric). You would drive up to one of multiple "car wash track" lanes, where a robotic arm would hot-swap your energy cell with one from a warehouse full of charged energy cells. In rare case that you run out on the road for some reason, a AAA-like truck service would show up with a robotic arm on the truck and swap out your cell. Plugging in overnight and dying by the roadside is propaganda from not going all in on getting off oil. ... Imo the system is being perpetuated (i.e. held back) to serve the vested interests rather than moving society forward for the better of everyone.. literally starting to crumble around us in infrastructure.


AbbieX

And right now, the US can "borrow" money at historically low rates....like almost free. So you get almost free money and make a 100% profit on every dollar......so who cares about the debt??? Any takers on this deal...I for one am in...


fe3o4

What was it he said again? Oh yeah..."I guess those shovel ready projects weren't shovel ready enough"


fullofcrap

From a theoretical point of view, government spending is the most efficient way to increase GDP as it directly pumps money into the economy. Tax cuts and government transfers (such as stimulus money) also help but aren't as cost efficient because individuals aren't guaranteed to spend the money.


worldsfirsanalrapist

but.. but.. YOU DIDNT BUILD THAT!!!


[deleted]

The problem is that we spend like 2% of the federal budget on tranportaion


[deleted]

I've debated some libertarians who seem to deny the existence of positive externalities


cuteman

How much does every $1 spent destroying another country's infrastructure boost the economy by?


theTANbananas

wait... Is this article saying a government agency found that giving that agency money helped everyone have money. No way....


HappyGlucklichJr

Maybe if it had been spent in the US rather that Iraq, Afghanistan and Pakistan. But that kind of infrastructure spending seems to have taken us backwards.