No, it wouldn’t, at least not in the timescale covered. The studies cover several decades, more than enough time for negative effects to occur if they ever will.
You miss the point. If the government spends enough money, even the worst depression could simply look rosy according to GDP, meaning the government that stops spending money (the right wing government) will be the one that “appears” to have suddenly screwed things up. You can slightly see this effect during the Great Depression, where increased government spending and new laws basically did jack all to stop the depression, but showed a GDP increase (similarly, during WW2 there was massive GDP growth, but that came from building tanks etc while the people were living off of ration tickets).
That’s a better example. However, the gain in GDP from the war was very temporary, and total factor productivity growth during the war was very poor, lowering GDP for years afterwards. Over the long term, there was not a net gain in GDP from the war.
Paying attention to where resources are going rather than just current aggregate GDP is important. However, unlike military spending, what I’m currently talking about (public investment and infrastructure spending) don’t crowd out private spending or consumption by any means. Rather, these programs increase private consumption. And one can have the benefits of roads and libraries without ration cards or war.
Ummm yes it could be included, because although the study covers several decades, the overhaul and maintenance of this new national road system could have begun toward the end of your study, so discounting it on those grounds is a cheap sleight-of-hand. More importantly though is that even if it took place at the beginning of the study’s period, how could you calculate that my national road network overhaul wasn’t beneficial when you clearly said:
So there’s no way my national roadway overhaul could ever, according to you, crowd out private spending or consumption because it is, in fact, infrastructure spending.
This is why I consider Keynesianism just another socialist free lunch scheme. They seem to think that somehow scarce resources can be used up by the government without being less available for other uses. Hence government spending created a free lunch out of thin air!
The question is, if the government can use those resources without opportunity costs, what would have happened to those resources in a free market? Since the government doesn’t produce anything these resources must also exist, but they also have to be available for government projects without being taken away from other projects. We can only conclude that these resources would pile up somewhere in the absence of government coming in and spending them for us. So then, in a free market, there would be all those resources piling up that could be used for infrastructure, and there would be need for infrastructure to increase private consumption, but for some reason nobody would use one for the other.
The reality looks differently of course. All resources in the free market are put to their most efficient uses. If that is infrastructure, then the market will build infrastructure. When government comes in and uses up some resources, it necessarily takes them away from other uses, that the market would have deemed to be more useful. These infrastructure projects may increase private consumption, but whatever the market would have done with them would have increased private consumption even more.
According to the empirical evidence, usually not. If it did, that wouldn’t necessarily mean public investment has a lower return than private investment.
Are you taking that single paper as constituting all of the empirical evidence obtained thus far? (Since there’s never any limit to empirical evidence.)
Ah, so now you’re claiming that NEPHiLiX’s point isn’t “serious”. Nice try. But why don’t you go ahead and explain to us just how his point allegedly isn’t “serious”?
Mustang19, because you continue to point to such papers, I can see that the lesson of Bastiat’s parable of the broken window is still lost on you. Maybe I can explain this better:
Empirical economics would take the broken window as a given and ask whether it generates economic activity. After some period of time has elapsed, it would look at the economic record and conclude that, yes, the broken window did generate economic activity. In other words, it only takes into account what is seen, i.e. what is directly observed. It does not take into account what is not seen, i.e. what can’t be directly observed but can nonetheless be logically inferred. Bastiat’s whole point, then, is that empirical economics misses half of the picture.
I suppose the real question is: are you willing to accept that through public investment in infrastructure you necessarily destroy the possibility for a more efficient private investment of another kind?
Note that not all private investments work out. Trial and error is part of the market.
“What is there to fear?” is another way of putting it.
I am not willing to accept the destruction of more efficient investment. However, the studies cited find public investment returns much higher than private investment returns in most cases.
No. The papers cited cover recent American history.
If you just believe that central planning is more efficient than markets, how do you explain that North Korea has less economic growth than South Korea?
What’s not the point? That public investment has registered a return two or three times higher than public investment for decades, and continues to do so? Alright, well I guess that’s it for the thread.