Here’s the question: Is all the talk and intent regarding ‘stimulus packages’ more or less an attempt to re-bubblize the economy?
The American economy in particular has gone from one bubble to the next, sometimes overlapping, since the 1980s: S&Ls, dot-coms, subprimes. From Lincoln Savings to Long-Term Capital Management to Enron to the entire financial industry.
Now massive amounts of federal money are being flooded into the system to keep it liquid, to prevent it from seizing up. And then to bail-outs. But to achieve what? Another speculative, debt-induced binge?
We’re hearing some of the right kind of words from the new leadership in the States, and some of the wrong:
President-elect Barack Obama promised Saturday to create the largest public works construction program since the inception of the interstate highway system a half century ago as he seeks to put together a plan to resuscitate the reeling economy…
Mr. Obama implicitly tried to counter such arguments by invoking the federal interstate highway program, seen as one of the most successful public works efforts in American history….
Mr. Obama also responded to criticism of waste and inefficiency in such programs by promising new spending rules, like a requirement that states act quickly to invest in roads and bridges or sacrifice federal money.
Invariably, the reference to the interstate system is brought forward, and “roads and bridges” are usually in every list, somewhat before “green jobs.” As James Kunstler writes today:
President-elect Obama has announced his intention to kick off a massive “stimulation” program when he hits the White House “running” in January. Early indications are that it will be directed at things like highway repair.
If so, we will be investing long-term in infrastructure that we probably won’t be using the same way in ten years. But I doubt there is any way around it. The American public can’t conceive of living any other way except in a car-centered society.
Isn’t America (and hence the rest of the world) in a huge mess because of the wrong-headed belief that everyone, regardless of ability to pay, is ultimately entitled to a McMansion and a three-car garage for the SUVs, in a distant suburb not far from an interstate.
If all the recent panic-driven endeavours are simply meant to re-bubblize the economy so we can all get back to business and consumption as usual, by ‘investing’ in what helped create the problem in the first place, then we apparently have learned nothing from experience.
UPDATE: NewYork Times columnist David Brooks shares the same concern.
But alas, there’s no evidence so far that the Obama infrastructure plan is attached to any larger social vision. In fact, there is a real danger that the plan will retard innovation and entrench the past.
The Americans are looking for the “quick fix” instead of the long term fix (as usual?). While I’m sure some infrastructure desperately needs help or more bridges and overpasses will collapse, much of the spending may result in a third leg of the process of bailing out the suburban way of life.
A couple months ago I noticed two suburban bail out policies (http://allaboutcities.ca/is-congress-bailing-out-suburbia/):
First, they bail out the big three (who in turn lobby against transit spending).
Second, they bail out suburban and ex-urban home owners and builders.
And now third, they will invest more in the single-occupant vehicle transportation system — the inter-states.
This is a bandaid, not a long term fix. Obama may be letting a crisis go to waste instead of taking advantage of a greater atmosphere for change.
Printing and borrowing trillions of dollars won’t fix anything, it is just delaying the inevitable – a complete winding down of the middle class and with it, the tax base that has given America its military power that is able to look after the interests of the elite. I just don’t understand the bailouts, it seems both surreal and insane.
Even here in Canada there is talk / panic / political crisis when our ship is in much, much safer waters.
Anyways – I agree that more visionary spending should happen. The problem is the highways and bridges are all in very dangerous territory due to poor maintenance and a lack of funds, and bridges will keep collapsing.