Wednesday, December 01, 2010
It's the spending stupid
Last weekend, I was driving through a local park in the city and I noticed a plaque on a shelter house acknowledging the WPA.
Now we can debate the propriety of the WPA's, CCC's, et al, impact on the economy during the depression. But what we can't debate is that through many of those works, we still have functioning projects that have paid extended dividends to society well after their original construction.
Hoover Dam, the TVA, etc. are all projects that continue to provide value for their tax dollars.
Fast forward to the fifties and sixties where we have a great interstate highway system that provides Americans with prosperity via increased productivity. The space program provided all kinds of technological advances that have progressed to this day.
You can even move ahead to the 80's when Reagan's SDI ("Star Wars" to his haters) has paid dividends through the development of GPS systems and satellite & laser technology. You could argue that the development of those technologies is what fueled the tech boom of the '90's.
But as I was looking at that shelter house, I started to wonder. With all the trillions being spent by governments of all levels, what will be the recurring dividend to the public who had to dole out those trillions?
In other words, 30 years from now, we be able to say, "Wow! For 20 trillion dollars, we got.........."?
The fact is, this is what the masses are pissed about. We are effectively spending trillions of dollars for all kinds of shit and we have nothing to show for it. No damns, no nuclear facilities, no new transportation systems (that work). Hell, we don't even get a nice pyramid out of the deal.
In fact, here in Cincinnati there are at least four significant bridges/via ducts within the city that commuters get to watch crumble before their very eyes and there's yet no plan to replace these.
There is absolutely no economic multiplier effect if all we're doing is taking money from person X, borrowing from country Y, and giving it to person Z.
And it would be one thing if we could say that for 4 trillion dollars we wiped out poverty, or for $100 billion we reduced crime, or we've spent trillions on education and now our kids are the smartest in the world. But we've spent money on these things with absolutely no visible and/or tangible results. In fact, I would offer that the spending of these funds have been counter productive.
I went to this site to check the state of government spending since 1980. Since 1980, government spending at all levels has an inflation rate of 5.7% (the rate of growth is about the same for federal spending alone). When is the last time you got a 5.7% raise?
It doesn't take an awesome mathematician to figure out that if wages are only growing at 1-2% a year but government grows at 5.5-6% per year there will be a breaking point at some point in time.
And despite all that spending, in the end, we'll have nothing to show for it.
So when the Obamunists keep saying the government can't afford tax cuts for families over $250k a year (forget for a moment the assumption that it's the government's first), I have to ask "to do what?"