This is a re-edited and re-titled update to a recent similarly-titled blog post.
Around the world, nations are undergoing various degrees of recovery from The Great Recession of the past decade. America is one of the luckier ones, with an unemployment rate down to a pre-Recession level of five percent. That is, by the way, lower than most other developed economies. Either way, however, if you are one of the multitudes still looking for work, you believe that your local economy is still too weak!
A common problem that is shared by virtually all countries, however, is failing infrastructure: roadways; bridges; tunnels; railroads; air and seaports; and government buildings. Over the recent decades, necessary repairs, updates and replacement have been deferred. Meanwhile, global bond yields are among the lowest in many, many years. And, as governments continue to procrastinate, the potential costs—for increasingly more extensive repairs and re-construction—will continue to grow even more quickly.
Just consider the facts: we have essential needs, which just deteriorate further each year that we wait; the cost of financing these necessary projects is the lowest in many years; and there is a large supply of capable workers who are ready and willing to get started. Equally important, by putting tens of thousands (perhaps even millions) of men and women to work, that would be a welcome boost to any slow-moving economy.
Many countries, developed or not, have embraced Austerity—which reduces government spending in an attempt to help balance the respective budgets. That strategy, however, merely contracts the economies, and reduces employment and tax revenue, all the while it increases the demands on the social safety net. The debt, however, doesn’t contract accordingly. The simple fact is that, if both consumers and businesses reduce spending during tough economic times, the government is the only economic component left to pick-up the slack. What are they waiting for?
Unfortunately, in some countries such as the U. S, balancing the budget has become a political football. The Republican Party, which was not concerned about the Federal Budget during the Administration of George W. Bush, seems to have suddenly found itself to be a bunch of Deficit Hawks during the Barack Obama Administration. Isn’t it also too bad that they could not have also found their way to an Economics class or two, along the way?