If any issue galvanizes free-market and fiscal conservatives, it would be fiscal and monetary policy. Publisher James Preston Allen mentioned the long-term success of infrastructure projects. Federal spending on transportation is a sound investment to most conservative-libertarian (not old!) guys such as myself. A Republican champion of federal transportation projects, President Dwight David Eisenhower enacted the Interstate Freeway system which we have today, a law which had about one hundred pages, as opposed to the monstrously prolix legislation enacted by Congress today. The same President who wanted to facilitate national commerce also warned about the Military-Industrial-Complex, where the increasing amount of our nation’s wealth is being wasted.
However, Allen tricks out the common fallacy used by more “social policy” minded or “progressive” liberals to justify public project expenditures: government spending money creates jobs and jumpstarts the economy.
First, spend and spend some more Keynesian economics has been discredited. US President Jimmy Carter’s “malaise” and Japan’s lost decade debunk the benefits of increased government spending.
A propos, French free-market Frederic Bastiat denounced this “deficit spending” regimen in “The Broken Window” Fallacy. According to modern-liberal assertions, the government can create a job by breaking a window, then hiring a glazier to replace it. However, the economic consequences rest not on the seen, but the unseen, “behind the scene” effects of this policy. The time, money, and manpower spent on fixing the window diverts those resources from other pursuits, purchases, and possibilities. The building owner, for example, could have spent that money sprucing his premises. The glazier could have installed another window in a new business. The government could have allowed the taxpayer to keep their money and spend it as he sees fit.
In short, the problem centers on creating wealth, which then funnels into jobs, projects, and other expenditures. Governments do not create wealth, but they do print money. To the extent that governments print, borrow, and spend currency, they limit expansion, enterprise, and entrepreneurship in the private sector, where jobs are increased, wealth is created, and prosperity is promoted.
Public projects as an end in themselves are dead on arrival. Just consider the 2009 Obama stimulus that did not stimulate, aside from granting salary increases to government bureaucrats or subsidies to non-existent Congressional districts.
For economic recovery, let us instead heed Bastiat’s law: “Markets Correct.” Get the government as much as possible out of markets, and things will work out.