As I noted previously, I just started reading the classic “Economics In One Lesson” by Henry Hazlitt. Although it was originally written in 1946, the subject matter seems to be torn from today’s headlines. Chief among these are the many “make-work” projects being advanced by the ruling Democrats.
Not to be outdone by President Obama’s national public works plan, our own Iowa Governor Chet Culver has trotted out his own $700 million infrastructure plan. "In an effort to stimulate economic growth during this recession, create good private sector jobs, and address unmet infrastructure needs, I propose the creation of the Rebuild Iowa Infrastructure Authority," Culver said in his recent Condition of the State speech. "But when I say infrastructure, I’m not just talking about bridges and roads. I mean all infrastructure: rail, trails, public buildings, water and sewer treatment facilities, the utility grid, and telecommunications, too."
After the 2008 floods and tornadoes, there is definitely no shortage of infrastructure that needs fixed. But what about the two primary goals, stimulating economic growth and creating jobs, that Culver listed even before “address[ing] unmet infrastructure needs?” Culver boasted that “for every $100 million spent on highway construction alone, more than 4,000 new jobs are created!” He predicts that if the legislature spends as much as he hopes, 28,000 jobs would be created.
Will any bill like this really “stimulate economic growth” and “create good private sector jobs?” Economist Hazlitt would say, “NO.”
In the chapter “Public Works Mean Taxes,” Hazlitt uses the erection of an otherwise unneeded bridge as his example of a typical government make-work project. He writes: “It is true that a particular group of bridgeworkers may receive more employment than otherwise. But the bridge has to be paid for out of taxes. For every dollar that is spent on the bridge a dollar will be taken away from taxpayers. If the bridge costs $10 million the taxpayers will lose $10 million. They will have that much taken away from them which they would otherwise have spent on the things they needed most.
“Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.”
In other words, if you need a bridge (or park or community building), then build it. But do so because you need it, not to “stimulate” the economy or create jobs. It will do neither.
The necessity of many of the projects covered in Culver’s plan is unquestionable. Iowa’s infrastructure took a pounding last year. But some of the projects should give taxpayers pause.
Mass transit projects such as “light rail” are often expensive boondoggles for governments that build them. (This fact was even lampooned in an episode of The Simpsons wherein an unscrupulous traveling salesman sells the gullible Springfielders on the idea of building a monorail.) I don’t know if Culver is referring to light rail when he mentions rail, but it wouldn’t surprise me. There's been talk about it.
Even Iowa Public Radio would get some of Culver’s $700 million largesse, as would the governor‘s residence.
Culver pointed out that “unlike the federal government, [Iowa] can’t deficit spend. And, we’re not going to tax our way out of this, like California or New York." Culver instead proposes to fund the $700 million by selling bonds. That means $700 million in state debt that will be need to be repaid over 20 years. So Culver does plan to “tax our way out of this,” although through delayed taxation rather than immediate taxation. Thanks, you Big Lug!
We have $620 million in “rainy day funds” and now is obviously a good time to use some of it. Governor Culver proposes taking $43 million from the fund: $20 million for property tax replacement, $10 million in "Jumpstart" assistance, $5 million in non-profit assistance, $5 million for individual unmet needs, $2 million for the Rebuild Iowa office and $1 million for skills training. Why not withdraw a little more and skip the bond debt?
I don’t doubt that Iowa needs to spend a lot of money to rebuild. I just hope that the Iowa legislature spends that money carefully and wisely.
Sunday, January 18, 2009
Subscribe to:
Post Comments (Atom)
Post Topics
10 Questions with...
abortion
ACLU
alcohol
Alzheimer's
Ames Straw Poll
armed self defense
assault weapons ban
Audit the Fed
Austin Petersen
Barack Obama
Ben Lange
Beth Cody
Between Two Rivers
Bill Weld
Bob Barr
Bob Cashner
books
Bruce Braley
Bruce Hunter
Candidates
Carl Olsen
Cedar Rapids Gazette
charity
Chet Culver
Christopher Peters
Clel Baudler
communism
Confederate Flag
Constitution
Constitutional Convention
Corey D. Roberts
Crime
Cristina Kinsella
Dan Muhlbauer
debt
Declaration of Independence
Democrat Party
disasters
Donald Trump
drones
drugs
economy
education
elections
Eric Cooper
events
Facebook
Fast and Furious
First Amendment
food freedom
foreign policy
free markets
freedom
Gary Johnson
gay marriage
Glenn Beck
gold
gun control
Gun Owners of America
guns
health care
Hillary Clinton
history
Honey Creek Resort
Iowa
Iowa Caucus
Iowa City
Iowa Firearms Coalition
Iowa First District
Iowa Freedom Report
Iowa Gun Owners
Iowa Right To Life
Jake Porter
Joe Bolkom
John Boehner
John McAfee
John McCain
Judge Napolitano
Keith Laube
Lake Delhi
law
Lee Heib
Lee Hein
liberals
Libertarian Party
libertarianism
marijuana
Me
media
medical marijuana
memes
Memory Walk
Michele Bachmann
military
Mom
Nate Newsome
Nick Taiber
NRA
NSA
Obamacare
police
policy
politics
President Obama
primaries
privacy
property rights
Rand Paul
religion
Republican Party
resistance
Rick Santorum
right to carry
Rob Petsche
Rod Blum
Roger Fritz
Ron Paul
Rush Limbaugh
Ryan Flood
Sandy Hook Massacre
Sarah Palin
Second Amendment
smoking
Social Security
spending
Star Wars
State Defense Forces
Steve King
Steven Lukan
taxes
Tea Party Movement
Tenth Amendment
terrorism
Terry Branstad
Tom Harkin
traffic cams
TSA
TV/Movies
war
Wayne Jerman
weapons
Will Johnson
Yuri N. Maltsev
Zach Wahls
No comments:
Post a Comment