In the current debate about how to build a durable economic recovery, it’s welcome news that infrastructure spending is gaining attention. In a December 8 speech on jobs and economic growth, President Obama called for a boost in public investment in infrastructure—beyond what his earlier stimulus package included—to modernize the US transportation and communications networks. The president’s proposal reflects a consensus among economists that investment in infrastructure is one of the most effective ways to use government spending to promote economic activity. The bad news is that when it comes to implementation, many of the methods revolve largely around the kind of short-term stimulus and Congressional earmarking that are making citizens increasingly impatient and distrustful. If America is really interested in fixing both its unemployment and infrastructure messes over the long term, then it should invest in infrastructure in a different way.
Infrastructure investment is an often-overlooked but crucial way to generate growth and jobs in the United States, even in a global economy with overcapacity in conventional manufacturing.