Saturday, July 27, 2013
Infrastructure skeptics take a hit
Via Barry Ritholtz and Mark Thoma comes the following chart by McKinsey:
This chart simultaneously debunks not one, but TWO of the biggest talking points of the anti-infrastructure derpers:
Derp 1: "It's just civil engineers angling for pork!"
This is one I hear a lot. The American Society of Civil Engineers released an "infrastructure report card" that gave the U.S. a "D+". In response, anti-infrastructure people often throw up their hands and say "Of course a bunch of civil engineers want us to spend more money on civil engineering!" But now McKinsey says the same thing. The chart above cites the McKinsey Global Institute's own in-house analysis. If you think McKinsey itself is in the tank for a bunch of gold-digging civil engineers,you're...well, it sounds pretty silly when you say it out loud, doesn't it?
As an aside, the McKinsey report also cites independent figures from the World Economic Forum, the Army Corps of Engineers, and the Federal Transit Authority. Everyone agrees that the U.S. needs more infrastructure spending.
Derp 2: "Oh yeah? What about Japan in the 90s?"
A lot of anti-infrastructure people bring up Japan's infrastructure splurge in the 1990s. Japan built bridges to nowhere (I drove across one, once; "nowhere" is not an exaggeration), concreted over riverbeds and parks and beaches, and generally committed an epic waste of money, labor, and concrete. We'd commit the same error if we spent more on roads and bridges, right?
Wrong. As the McKinsey report shows, Japan still spends much more on infrastructure than it needs to (and this, btw, is after a dramatic reduction in spending in the '00s). That is in stark contrast to most other countries. So this report clearly says that we are not Japan. We are on the opposite side of the optimal point. They need less, we need more.
In conclusion, McKinsey just killed two of the main anti-infrastructure arguments. Increasingly, all the anti-infrastructure people have left is their derp. At a time when interest rates are super-low and millions are out of work, there is no good case against a big blast of infrastructure spending. Let's do it right now.
Update: Numbers! We need to spend an additional $1 trillion (that's 1000 $billion) dollars on infrastructure over the next 5 years. or about 1% of GDP.