Saturday, September 7, 2013
Paul Krugman’s “Tragic Waste” for the Economy is also a Tragic Waste for Transportation
Paul Krugman writes eloquently (here) of the “tragic waste” we have subjected ourselves to over the past five years through a weak response to the economic disaster – a waste of human resources through unnecessarily high unemployment and a waste of opportunities for higher production and growth.
I would just add that we can see that waste in high relief in the transportation sector.
Krugman notes the “could have beens” that would have flowed from a vigorous federal spending program – essentially an ongoing Stimulus over five years. Just consider the “could have beens” if the Transportation Stimulus had been carried forward each year! The construction sector would be in full recovery, the general economy would be reinvigorated, and think of what could have been built! We could have made a serious dent in the backlog of deficient legacy infrastructure and even made a good start toward building a 21st century transportation system. (Remember how cheaply projects could be built at the bottom of the economic slump?)
And – as I have often noted (see my 2010 presentation on the subject here) – significantly ramped up transportation spending doesn’t have to be a long-term deficit inducer. The trick is to ramp up motor fuels taxes (that’s right) after ramping up spending, at a rate linked to economic recovery. In the long run, higher motor fuels taxes don’t burden the economy that much, and if applied correctly, can encourage beneficial transportation decision making while funding more transportation options for people.
As Paul Krugman notes, the political ingredients have not been in place to support the kind of Stimulus that would have gotten us out of the hole in a timely manner. The same is certainly true of transportation spending, where even the meager amounts of investment we are making now are funded on a hand-to-mouth basis. But, hey, we are still in the hole, so why not start climbing out now?