American Economic Woes: Failure of investment?

[Jon Miller]

Are you saying that if someone (say a company) could invest in a country with good infrastructure or bad infrastructure... that they will say 'the country with bad infrastructure is doing the best they can, lets invest there'? No, they will invest in the country with better infrastructure because the returns will be much better.

And investments will be returning less in the country with worse infrastructure.

And saying 'what we are doing now is the best we can do' is idiotic.

We should look at how we have changed the last 20 years (I think we have more contractors... it is not that we have more regulations... ) or look at what we could do (like follow in the footsteps of the nations which have been successful).

And before you say that large infrastructure is impossible, this is clearly wrong... a lot of the success of the 50s/60s/etc was based on Eisenhower undertaking the biggest government project that has ever been done (the US highway system).

JM
(Finally, I remember studies which do say that US infrastructure is worse than it was 15 years ago... not just worse comparatively.)

[Tupac Shakur]

This is not where we are losing our competitive advantage.

And even based on your view, it is 'better' now than it was 20 years ago... when we are growing better.

Evidence, please.

Closing your eyes and saying 'it is taxes it is taxes it is taxes' is entirely non-empirical.

I never said that the tax code is the only explanation. What I said is that it's an important one and Zakaria was ill-advised to ignore it.

If you really want to focus on just government investment rather than overall investment as indicated in your opening post and the article you linked to, we can certainly talk about rising entitlement spending and the way in which it's crowding out discretionary spending on infrastructure.

[Jon Miller]

That is another good point, that entitlement spending is crowding out other spending.

He did say that levels of infrastructure spending were similar to what they were 15 years ago but that we were getting less results?

Evidence:
Instead of being in the top 10 of the world for infrastructure we are near the bottom of the developed world.
Drop in numbers of engineers/etc (note that quality engineers are actually in high demand right now, the US is not producing enough of them, and companies start/move to where they are (see the silicon valley/etc effect which the US benefited for a lot of the last 60 years).

JM

[DanS]

JM: You are taking a facile view toward my argument. Do better and rise above it. Not once did I say that the US was doing the best we can do re infrastructure. Rather, I said that we are likely doing well for the level of technology. For instance, it seems daft to me to prefer to build many more freeways when the level of technology can be raised so swiftly (see self-driving cars).

[Tupac Shakur]

That is another good point, that entitlement spending is crowding out other spending.

One also not mentioned by Zakaria.

[Ogie Oglethorpe]

I suppose my exposure to the nuclear industry has jaded me, but the ability to get meaningful and more importantly, timely construction projects completed has deterred much private infrastructural investment and bloated public investments. In a nutshell it seems very unlikely that we can be on schedule and under budget for large projects given the state of our society.

Thus as I said at the time of the stimulus the idea of shovel ready infrastructural projects continues to be a pipe dream.

[Jon Miller]

Evidence, please.

Evidence that our growth was better before and is worse now? (sorry for the typo) I think this is obvious.

Or evidence that we are losing our competitive advantage... the article I linked directly referred to this evidence (an actual drop (not just percent drop, but real drop) of engineers, a worse position in infrastructure)

Or evidence that the tax structure is better now than it was 20-30 years ago. I thought the point was that higher tax rates and capital gains taxes were distortionary? Everyone knows that tax rates for the upper bracket have decreased both due to income and capital gains.

It is nonsense to still insist that the tax code is the most significant explanation (or even a significant explanation). It does not fit the evidence.

JM

[Jon Miller]

I suppose my exposure to the nuclear industry has jaded me, but the ability to get meaningful and more importantly, timely construction projects completed has deterred much private infrastructural investment and bloated public investments. In a nutshell it seems very unlikely that we can be on schedule and under budget for large projects given the state of our society.

Thus as I said at the time of the stimulus the idea of shovel ready infrastructural projects continues to be a pipe dream.

What do you mean state of our society?

There are not many more regulations now than there were 20 years ago?

Please say more, I think that you are much closer to what is going wrong with our infrastructure investment in the US.

JM

[Ogie Oglethorpe]

Litigious society and risk aversion. Whether there are more regs or not ( I would assert there are many more on local and federal levels) management of all sorts has inculcated a risk averse culture. Decision making is a much more laborious process than what was allowed for during the great projects of the 30's and 40's and 50's. The permitting process alone is enough to stop most projects in their tracks.

[PLATO]

Ogie is on to it!

While investment in terms of dollars may have remained the same, the return on each dollar invested (in the form of tangible improvements to infrastructure) has drastically decreased due to over regulation and risk aversion.

Now, the real question is why have these things come to be? What policies have we instituted that have been counter productive? We have mentioned tax policy, but I agree with JM that tax policy is not the real issue (although it would be naive to believe it did not have some impact...positive or negative). I believe that you have to look beyond pure fiscal policy to find the answers......

[Jon Miller]

Litigious society and risk aversion.

I wonder how much of the former is to blame. It was actually amazing being in Sweden... the idea of suing for even big/important/etc things were foreign to them. Much less suing for minor things.

I would have to give more thought to risk aversion and insurance.

It might be that regulations that were created in the 80s and 90s are being felt more now than they were in the 80s/90s.

JM

[Ogie Oglethorpe]

It might be that regulations that were created in the 80s and 90s are being felt more now than they were in the 80s/90s.

JM

I think this is part of it. The inevitable enforcement of the regulations now has rippled through the industry causing any number of object lesson horror stories. That being said the pace of regulation continues IMO.

[Hauldren Collider]

Tort reform

[DaShi]

I suppose my exposure to the nuclear industry has jaded me, but the ability to get meaningful and more importantly, timely construction projects completed has deterred much private infrastructural investment and bloated public investments. In a nutshell it seems very unlikely that we can be on schedule and under budget for large projects given the state of our society.

Thus as I said at the time of the stimulus the idea of shovel ready infrastructural projects continues to be a pipe dream.

It's hard when the government relies too much on rent-seeking contractors.

[MRT144]

Tort reform

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