Alex Tabarrok on Infrastructure vs. the Warfare-Welfare State

5 08 2012

Economist and blogger Alex Tabarrok has published an article in The Atlantic in which he alleges that excessive U.S. government spending on the military and social services has crowded out spending on infrastructure. In other words, the U.S. government no longer has the money to spend on the sorts of great projects it funded in the past, such as the Hoover Dam and the Interstate Highway System. Tabarrok is suggesting the unwillingness of U.S. politicians to spend on infrastructure has contributed to the innovation slowdown in that country.

Created by A. Tabarrok

Tabarrok’s piece is interesting. However, I am astonished by the lack of comparative international data in it. Tabarrok clearly doesn’t like the priorities revealed by U.S. government spending. However, he doesn’t say which country has achieved the right balance between social, R&D, defence, and infrastructure spending!!!

I think that many economists would say that Japan goes too far in prioritizing infrastructure spending: some of the money spent on bullet trains to nowhere probably would should have been invested in measures designed to encourage Japanese people to have more children. I think that the Japanese data point could be used to support the thesis that too much infrastructure spending is bad for growth. I would also be interested to learn Tabarrok’s thoughts about Germany’s approach. I might add here that German visitors to the U.S. are frequently appalled by the state of the country’s infrastructure.

In this day and age, a parochial article of this sort is unacceptable. I’m particularly disappointed by Tabarrok’s Atlantic piece because a) Tabarrok is a citizen of one than more country, so you would expect him to be a bit more internationally minded b) he contributes to a blog that frequently contains excellent material about non-U.S. developments c) Tabarrok writes about innovation systems, which are increasingly international (e.g., Apple of California’s products contain components and intellectual property from dozens of countries).





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