September 2 2011

Why Federal Infrastructure Projects Are a Bad Idea

Hadley Heath

On Townhall.com this week, I have an oped about youth unemployment.  While young, inexperienced workers are struggling in the job market, they are not alone.  The August jobs numbers are out today, and employment rates remain too low for every age or education group right now.  I'm sure President Obama is under great pressure to "fix" the situation, and it is rumored that, in his jobs speech on Wednesday, he might suggest federal infrastructure projects as a means to renovate some of America's worn roads, bridges, or facilities while putting Americans back to work at the same time. 

To many people, this might not sound like a terrible idea.  After all, it's hitting two birds with one stone, and compared to other uses of our tax dollars, nice new bridges sound like an important public good.  Furthermore, the government has done stuff like this before, right?  Many Americans think positively of the Works Progress Administration, or the Civilian Conservation Corps.  Like workers in the 1930's, many unemployed people today are willing to work for a living but have found no options in the job market.  So should infrastructure projects be a part of the solution?  For several reasons, the answer is no.

Surprisingly, the National Organization for Women (NOW) - usually supportive of bigger government - wasn't thrilled the last time President Obama mentioned infrastructure projects.  After all, WPA-type jobs are usually hard labor-intensive.  These kinds of infrastructure projects might serve to temporarily occupy and pay certain workers (read: men), but many other Americans (women, or men with college degrees) aren't looking for this type of work. 

NOW is right to acknowledge that government intervention in the market usually favors some groups and disadvantages others.  But there's an even more important reason we should forget about federal infrastructure projects: They are rarely economically efficient.

Government-run projects are notoriously wasteful and typically come in way over-budget.  Money meant to employ new workers is channeled through agencies in Washington, D.C., which take their cut, and then it trickles through state and local governments, before reaching workers on the ground.  And since government overseers lack the same bottom-line pressure of private sector bosses, workers don't face the same level of accountability for their work. 

And that's just the inefficiency that starts once the projects are picked.  Needless to say, one can hardly expect politicians to prioritize projects on purely objective measures, which is why taxpayers end up funding reconstruction projects at airports with no passengers and of course bridges to nowhere. 

A better solution for both unemployed workers and the economy as a whole lies in the private sector.  The market forces of supply and demand (rather than political forces of government) can point businesses to the most valuable projects, and more efficient job creation can employ workers with various skill and educational levels in various fields.  Sadly, government infrastructure projects would only skew incentives and make it difficult for businesses to pursue more useful projects, while incurring a huge cost to taxpayers and further limiting private-sector job creation.  These are several good reasons to look elsewhere for solutions to the jobs crisis.

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