Maxine Udall, Girl Economist, (love that blog title) has an excellent short rif on the topic of “make work” projects. Tea Partiers, Conservatives, Republicans, radio talk-show hosts and many right-leaning economists (politically right, not as in “correct”) frequently attack the idea of government stimulus spending as being simply on “make work” projects. The implication is that money spent on such activities is wasted because nothing “productive” or “constructive” comes of it.
Like most economic arguments, things become much clearer and less susceptible to error if we clarify the assumptions.* The underlying assumption behind these attacks is that “anything private ownership does is necessarily productive” and “anything government does is necessarily wasteful and useless”. Such an assumption is ludicrous, of course. Governments can, of course, waste real resources (think war or the TSA, anybody?) But government spending also gives us lots of valuable, productive resources and services that the private sector wouldn’t or couldn’t: the first demonstration of telegraph, railroads in the West, Interstate highways (heck most highways), airports, fire departments, schools for everybody, sewers, clean running water, healthcare research, the Internet, and on and on. But just as important is the fact that the private sector can and does waste money and real resources on useless, wasteful projects. And despite the theories of their apologists, the private sector rarely pays the full bill for their errors (that’s left for government!). BP anyone? the wasteful expanses of never-occupied condos and houses in NV, CA, and FL that government will probably have to tear down?
Maxine says it better than I. Read her here.
* what I offer here is by no means the only reason why such anti-stimulus arguments are wrong-headed and mis-guided, but alas, scarce resources (time today) and I can’t explain it all.