Sunday, December 7, 2008

Investing in America

A huge sinkhole, already one of the largest on record,
near Daisetta, TX, May 2008.

James Nielsen/Houston Chronicle, via Associated Press

In the comments threads for the next article down, we've got one trollish commenter who rejects Keynesian theory, and insists that the only way out of the current mess is to tighten our belts and balance the budget.

Several of our regulars, once they got the coffee drained back out of their noses, have been more-or-less (mostly less) gently pointing out that Friedmanism is dead, and another approach -- like, oh, say, the one that got us out of the last Depression -- is necessary. They're also pointing out the essential difference between frittering away public money on things like defense spending (use a bullet once, and it's gone forever) and real, enduring investments like the ones Obama is proposing.

It turns out that I'm working on my final semester project today -- a presentation on infrastructure, due Wednesday -- and happen to have the ROI figures on public investment right here to hand. Rather than post these figures in the comments thread, I thought I'd put them right out here on the front page, because we're all going to need to know this stuff cold when the right wing starts squealing about how we can't have that nice shiny new future until we first pay off the bills that they ran up on our credit card.

The figures below were pulled together by my esteemed colleague Eric Lotke, the research director at the Campaign for America's Future. His full report was presented at a conference in DC two weeks ago, and is available here. (Click to this page, then click "Read Full Report" to download the PDF.) It's very readable and informative, and I'd highly recommend taking a half hour to read the whole thing.

In the meantime, here are some examples of what it really means to invest in American jobs, American infrastruture, and a better American future.

Highways -- Every dollar invested in highway construction generates $2.50 of GDP in the short run, and much more in the long run. Also: every billion in federal funding spent on roads generates 47,000 jobs.

Transit -- Every dollar invested in mass transit (including both short-haul and long-haul railroads) generates $6 in economic returns. We also get 19,795 new transit jobs per billion spent.

Air Traffic -- Domestic flight delays in 2007 cost the industry and passengers nearly $41 billion, according to Senate figures. That's not counting over $9 billion in negative economic impacts on the nation as a whole.

Energy -- The Apollo Plan (first developed under the auspices of CAF) would invest $500 billion over 10 years in greening the economy. This plan would create over 5 million high-wage jobs that cannot be exported. It's also projected to create $953 billion in new personal income, $324 billion in retail sales, and add $1.4 trillion to the GDP. Add that up, and it's about $5 of benefit to the economy for every $1 invested.

Water -- Right now there are about 40,000 discharges of raw sewage in the US each year, which result in upwards of 3 million swimming-related illnesses and 1,000 deaths every year due to contaminated water. This problem creates an estimated $2 billion per year in economic losses, not counting the loss of fish and wildlife.

In many major cities that rely on water pipes up to a century old, as much as 25% of the water supply is lost due to leaks. This also causes sinkholes, like the one above, which in turn can damage gas pipelines and create horrific explosions.

Every $1 billion spent on improving our water infrastructure creates 57,000 construction jobs. $40 billion invested in water system upgrades will support a $50 billion-per-year water recreation industry, a $300 billion coastal tourism industry, and manufacturing industries worth countless hundreds of billions besides.

Internet -- The US is 15th in the world in broadband penetration, and 18th in the world in cost per megabyte. The average download speed in Japan is between 10 and 32 times faster than it is in the US. This is seriously affecting our global competitiveness.

Child Care -- The Perry Project found that every dollar in investment in high-quality Head Start-type preschool returned $7.16 by the time the child was 27; and $16.14 by the time the child was 40. Head Start, in particular, has one of the highest ROIs of any government program in existence.

Schools -- The EPI estimates that a $20 billion investment in rebuilding America's schools would generate about 250,000 skilled maintenance jobs, and circulate $6 billion spent on materials and supplies.

Yes, making these investments will create more debt, which in turn will cast a shadow on the health of the American dollar for the next few decades. But if we choose our projects wisely and well, they will create more -- much more -- than enough wealth to enable us to pay those bills. After all, the infrastructure and education investments of the 30s and 40s were the foundation of the tremendous prosperity we saw in the 50s and 60s, which more than enabled us to discharge the debt.

Free-market fundamentalism was wrong in the 1880s, wrong in the 1920s, and wrong in the 1990s, too. Anybody who's still hanging onto that 30-year-old conventional wisdom -- or who thinks balanced budgets are so important that we should sacrifice our entire economy on that altar -- is not only admitting that they're incapable of rational, objective thought; they're also demonstrating that they're too ideologically addled to understand the clear lessons of history, let alone understand what's going on around them now.

It was Keynes's theories that got us out of the last depression; and if we're betting our futures on this (which we are), we'd be wise to follow that course again. Our choice here is clear: Invest in America and get our people back to work; or shrivel up and allow ourselves to become a third world country. At this moment, it's a stark choice, and the space between those two choices is rapidly starting to look like that sinkhole in the picture.

Doing more of what created that pit in the first place is not going to fill it back up.