“This Is A Missed Opportunity”

bridgecollapse2 “This Is A Missed Opportunity”

Some people don’t know how to accept a gift. America has many such people among its government, as apparently do numerous other developed nations. 

One of the few upsides to the colossal downside of the 2008 economic collapse is the rock-bottom interest rates that offer countries the opportunity to rebuild their infrastructure at virtually no added cost. It’s a tremendous immediate stimulus that also pays long-term dividends. But deficit hawks have made it impossible for President Obama to take advantage of this rare and relatively short-term opportunity. While some of it is certainly partisanship, it does seem like a large number of elected officials have pretty much no idea of basic economics.

From the Economist:

IT IS hard to exaggerate the decrepitude of infrastructure in much of the rich world. One in three railway bridges in Germany is over 100 years old, as are half of London’s water mains. In America the average bridge is 42 years old and the average dam 52. The American Society of Civil Engineers rates around 14,000 of the country’s dams as “high hazard” and 151,238 of its bridges as “deficient”. This crumbling infrastructure is both dangerous and expensive: traffic jams on urban highways cost America over $ 100 billion in wasted time and fuel each year; congestion at airports costs $ 22 billion and another $ 150 billion is lost to power outages.

The B20, the business arm of the G20, a club of big economies, estimates that the global backlog of spending needed to bring infrastructure up to scratch will reach $ 15 trillion-20 trillion by 2030. McKinsey, a consultancy, reckons that in 2007-12 investment in infrastructure in rich countries was about 2.5% of GDP a year when it should have been 3.5%. If anything, the problem is becoming more acute as some governments whose finances have been racked by the crisis cut back. In 2013 in the euro zone, general government investment—of which infrastructure constitutes a large part—was around 15% below its pre-crisis peak of €3 trillion ($ 4 trillion), according to the European Commission, with drops as high as 25% in Italy, 39% in Ireland and 64% in Greece. In the same year government spending on infrastructure in America, at 1.7% of GDP, was at a 20-year low.

This is a missed opportunity. Over the past six years, the cost of repairing old infrastructure or building new projects has been much cheaper than normal, thanks both to rock-bottom interest rates and ample spare capacity in the construction industry.•

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