Kyle Fitzgibbons

  • About
  • Books
  • Blog
  • Politics
  • My Classes
  • Contact
  • About
  • Books
  • Blog
  • Politics
  • My Classes
  • Contact

Increased GDP from Infrastructure Investment Can Mislead Us

11/15/2016

0 Comments

 
Picture

​According to Tyler Cowen in a new Bloomberg article,
The first principle is not to be fooled by increases in measured gross domestic product. A new Trump stimulus would probably boost GDP, but that doesn’t mean it would be working well.

​​Measured GDP just doesn’t capture the relevant trade-offs for evaluating government spending. For instance, a lot of U.S. workers are producing organizational capital. They work on business plans, building client lists, developing marketing strategies, cultivating customer relations and performing other future-oriented activities common to service-sector enterprises. On any given day, most of us are not churning out additional widgets.

Government stimulus, on the other hand, usually is oriented toward concrete outputs such as roads and bridges or military hardware. It’s more like old-style manufacturing.

​Stimulus therefore pulls workers out of producing organizational capital. In the short run, measured GDP goes up, yet the economy may or may not be doing better overall, especially in the longer run. In desperate situations, it is indeed prudent to emphasize the short run, but that is not obviously the case in 2016, when we are nearing full employment and last quarter’s GDP growth was estimated at a respectable 2.9 percent.

There are valuable infrastructure projects governments could and should spend money on, like road maintenance. But a short-term rise in GDP is not itself an good indicator of quality or success. Even if the Trump administration makes bad infrastructure decisions and wastes a lot of money, measured GDP still is going to rise. Don’t be fooled.

The real danger is that a year or two from now, Trump will be apopular president, pointing to real gains in GDP numbers, even if his policies aren’t better for the longer run.
0 Comments

Let's Invest More in Nuclear

11/14/2016

0 Comments

 
Picture

​Another economist voices support for infrastructure investment. Alex Tabarrok of George Mason University suggests,
We also desperately need an update to our electricity grid. We have more blackouts than any other developed nation. It is a national embarrassment when millions of US residents our thrown into the dark by grid failures.

Improving the grid is not just an economic issue it’s an issue of national security. Our grid is under constant low-level attack, and some of these attacks are likely probes for an attack similar to that which brought down the Ukrainian power grid.

Electricity infrastructure, it’s worth noting, is less amenable to PPPs than airports because it’s more difficult to monetize quality improvements and the grid by its nature involves many externalities so I think Trump is relying too much on PPPs. Newt Gingrich, however, is a big proponent of improving the grid and he may help convince Trump to invest public funds.

An important byproduct of improving our electricity grid would be to improve the prospects for solar and wind power. Solar and wind are intermittent and cost effective in only some parts of the country. The better our transmission lines, however, the more useful these sources of energy become. Indeed, it might be time to begin work on a global super-grid. I could see Trump going for this (just don’t call it a hemispheric open market).

Trump also seems like just the guy to support nuclear energy. Molten salt reactors are very safe and can be much smaller than traditional reactors. These types of reactors were invented in the United States but China is rapidly developing the technology. President Trump don’t let China drink our milkshake! By the way, these types of nuclear reactors pair well with renewables because they can ramp up or down to fill in the intermittent nature of  solar and wind. Nuclear power also pairs beautifully with hydrogen.
0 Comments

$1 Trillion in New Infrastructure Is Realistic, If Spent Correctly

11/14/2016

0 Comments

 
Picture
According to a recent Boston Globe article by Jeffrey Sachs,
A builder-president could indeed restore vitality to the US economy and put millions to work in the process. All the major candidates in this campaign cycle pledged a substantial effort to build America’s infrastructure. Indeed, Trump suggested a hefty price tag of $1 trillion, which is a realistic sum and target for the coming years (roughly 1 percent of national income per year if carried out over 5 years).

How should these funds be spent? The key to success in rebuilding America can be summarized in three words: smart, fair, and sustainable.

Smart infrastructure means to look forward to deploy the best of cutting-edge technology. Our power grids should be smart in economizing on energy use and in incorporating distributed sources (such as wind and solar power) into the grid. Our transport grids should be smart in enabling self-driving electric vehicles within our cities and 21st century high-speed rail between them.

Fair infrastructure starts with Trump’s pledge to rebuild the inner cities. Such a pledge should include affordable housing; efficient transport services for low-income communities; the cleanup of urban toxic dumps; and ensuring safe water for all Americans.

Sustainable infrastructure means acknowledging and anticipating the dire environmental threats facing America’s cities and infrastructure. The collapse of the New Orleans levees had been long predicted by scientists and engineers before Hurricane Katrina. The flooding of New York City had been long predicted before Hurricane Sandy. The risks ahead to the United States in the event of unchecked climate change can be found in countless scientific and policy studies, such as the Risky Business Project and the National Climate Assessment.

Much could go wrong in an undirected building boom that is not smart, fair, and sustainable. Trump’s campaign pledges to restore the Keystone XL Pipeline and US coal production are cases in point. Investing in a boom in fossil fuels would simply be an expensive dead end. Such projects will inevitably be closed soon after they are completed, if not in a Trump administration then in the ones that follow. They are simply untenable environmentally, no matter what their lobbyists assert.
0 Comments

    Issues

    All
    Education
    Environment
    Equality
    Healthcare
    Immigration
    Infrastructure
    Jobs
    Regulations
    Security
    Taxes
    Technology
    Trade

    Archives

    December 2016
    November 2016

    RSS Feed

© 2016 Kyle Fitzgibbons.
​All rights reserved.
HOME
ABOUT
BOOKS
BLOG
EDU21
CLASSES
CONTACT