The Washington Post seems to be coming around to this opinion: Highway bills pitched by lawmakers as job generators, but are they really? Economists say no.
The lure of roads, bridges, buses and trains isn’t enough anymore to drive an expensive transportation bill through Congress. So to round up votes, congressional leaders are pitching the bills as the hottest thing around these days: job generators.
But do they really create more jobs? Not really, is the answer from many economists. The bills would simply shift investment that was creating jobs elsewhere in the economy to transportation industries. That means different jobs, but not necessarily additional ones.
This speaks to a longstanding flaw of highway spending arguments. Proponents argue that this spending creates tens of thousands of jobs, and they are half right. The other half is the tens of thousands of jobs not created (or saved) by shifting spending to highways from other areas in the economy. The valid argument about infrastructure spending is: If done right, it will lift future productivity growth, not current job growth.
The central failing—the essential fiscal alchemy of Keynesian stimulus—is the belief that government can increase total spending in the economy by borrowing and spending. What Keynesians ignore is that we have financial markets whose job in good times and bad is first and foremost to shift funds from savers to investors, from those who have money they do not wish to spend today to those who have a need to borrow to spend as much as they’d like, whether on new business equipment, a home, or a car.
There are no vast sums of “excess funds” just sitting around in bank tellers’ drawers waiting for government to borrow and spend them. Government borrowing means less money available to the private sector to spend. So government deficit spending goes up, and dollar-for-dollar private spending goes down. America’s resources are generally speaking spent less wisely, and the federal debt is unequivocally higher.