Second Stimulus? Just Say No; Most Economists Do

So says a survey by the Wall Street Journal. Only 16% of economists in the Journal's periodic survey favor a second stimulus package.

While I strongly opposed the first stimulus and even more strongly oppose a second, I'd like to weigh in in favor of increased infrastructure spending. Well, sort of.

Spending money on infrastructure projects right now would not necessarily be a bad thing. If there are projects that are necessary and are going to be built anyway, now is a terrific time to undertake them.

You get a lot of bang for the buck in construction right now. Locally, public works projects are currently contracting for around 30% below estimate. Construction costs are down, building materials costs are down, labor costs are, um, well 2 out of 3 ain't bad. Because of prevailing wage laws labor costs for public works projects remain artificially high - even more so than in normal, non-recessionary, times. If these projects were to use market-based labor pricing, they could probably shave another 30% or so off the overall costs, more in some cases. But that's a subject for another day.

The problem arises when the politics (and politicians) become involved. Instead of spending money on necessary improvements, inevitably tax dollars are wasted on projects that are frivolous or redundant or both.

Instead of road repairs and bridge renovations, we get new City Halls, when there is already a perfectly good one in place, and Mob Museums that will not only not pay for themselves but will be a continual drain on taxpayers for decades.

In essence, all that ends up happening is money is taken from one group of people and given to another. This is true of all public spending but at least money that is spent on needed bridge repairs can possibly avert a tragedy and add some value to a city. Not so with Social Security checks for dead people.

As construction costs have declined substantially, there's no better time than the present to begin necessary infrastructure projects. Unfortunately, when we leave the politicians in charge that's rarely what we get.