Tuesday, January 13, 2009

It's not the Size of the Stimulus, it's what's in it that counts

One of the aspects of President-elect Obama' stimulus plan that seems, to me at least, lacking, is vision. Debate seems focused on size, as in $s, or locale, as in which elected official gets to bring home the bacon. I wonder what would be done with the money and more importantly how these public works will improve efficiency. That is, what returns are we expecting from these expenditures.

Although my view is not as dire as that of my friend, James Howard Kunstler, I agree with him that we need to retool our economy for a world with less available petroleum for us. Public works without vision become Keynes' nonsensical notion of virtuous hole digging and refilling.

One needn't believe in Peak Oil to envision a world with less oil available for US consumption and use that vision as basis for infrastructure construction. Yes, I've read Obama argue for the need to wean ourselves from foreign oil dependence and even the need for high speed rail service but the arguments seemed to me more like talking points cobbled together rather than a vision of the future.

Contrast the debate of Obama's stimulus plan (the language of which speaks to a very financially centric view of the world) with that of Eisenhower's push for an Interstate Highway System (yes, I'm aware that the latter created the mess we are in) or even the Clinton Era vision of the "information super-highway."

Section 108 of the Federal-Aid Highway Act of 1956 states: It is hereby declared to be essential to the national interest to provide for the early completion of the "National System of Interstate Highways", as authorized and designated in accordance with section 7 of the Federal-Aid Highway Act of 1944.

Returning to the notion of our, in my view, overly financial perspective on economics, contrast the above quote with recent economic issues considered "essential to the national interests" such as recapitalizing the current banks (whose wisdom, in part, led us to this impasse) or maintaining a strong dollar. Economics ain't just finance, indeed the former exists without the latter, while the reverse isn't true.

It seems to me time to return to a more "bricks and mortar" (remember that snide view of the old economy our Finance fueled Tech gurus gave us) view of economics. To paraphrase Marie Antoinette- let them eat (alternatively) integrated circuits or dollars!

Alas, a return to a more bricks and mortar view of economics brings us to the problem Kevin Phillips explained in American Theocracy. Adopting a new vision for the future means hurting certain vested interests (and creating new ones).

One of the causes for America's rapid ascent on the world stage was its new-ness. Unlike Europe, where cities are often many hundreds if not thousands of years old, America was, in a sense, a blank slate. Had the World Wars not been so destructive in Europe, thus erasing some of the slate, if you will, Europeans' adoption of efficient rail transport et. al. would have been much slower.

Perhaps we could add an addendum to Bastiat's views on the broken window- breaking a window as a stimulus does make sense if a door would be more efficient and there is reluctance to part with the window.

I'd love to see Obama roll out a vision of an energy efficient America based on a much increased railway system for both goods and human transport in the same mode as Eisenhower's embrace of Highways. Let the auto companies go bust, re-employ their plants and people making rail cars, roads and stations.

Of course, this means the value of the stock of automobile centered suburbia will crash, but that will likely happen anyway.

Alternatively we blow a bunch of stuff up like the Europeans did by having the next war in our backyard.

I'd prefer the former approach.


Jamie said...


I thought you might get a kick out of this: http://ca.youtube.com/watch?v=dnT21hmlT4o