Ah yes, everything is absolutely crystal clear now:
(1) your methodology is laughably flawed
(2) your conclusions do not follow if you recognize those flaws
(3) if you gloss over or ignore those flaws: welcome to the Keynesian School of Economics!
And now the long-awaited 3-point-pseudo-witty-counter-bullet-point-retort from Mustang in 3…2…
(Am I ruining it pre-emptively by writing this? Only time will tell…)
Take a statistics course. It’ll broaden your horizons.
Take a logic course. It’ll broaden your horizons.
Like MTH 557? Don’t need to retake it. Already got my A.
I don’t believe you. Not at the rate you use logical fallacies.
wow got an A? An we wonder if kids are really learning anything in school…
Throwing around obscure econometric terms does not constitute a coherent and powerful argument. Any professor that tells you otherwise is not a logician; he’s a fraud and you should demand a refund from your university and ask them to apologize for wasting your time.
Either way, we’ve already explained why the GDP figure fails as an accurate measure of economic performance (does not distinguish between investment and malinvestment; arbitrarily rewards regimes which pursue expansionary/inflationary, bubble-inducing, unstable growth patterns; can be arbitrarily elevated at will by political authorities; etc) and you have chosen to ignore our arguments entirely. Additionally, you have failed to demonstrate how taking from A and giving to B (which is not bound by any checks on inefficiency and is held captive by special interests) in order to help C yields any sort of net social benefit.
Thus, at this point, it’s rather unclear where you would like this “argument” to go. You refuse to respond to our positions, and you refuse to formulate your own.
[edit] I also find it very funny how Mustang continuously ignores Bloom’s very specific questions regarding the actual content of the papers cited in the OP.
There’s little evidence that any of those things result from public infrastructure that reduces purchasing power and product choice on the net. For instance, a main effect of public infrastructure found in the studies is to decrease product costs- it’s actually deflationary.
Already been discussed. For instance:
Bloom, I apologize for missing your previous request to cite the claim that returns on public capital exceed returns on private capital. I’ll fix that.
http://epi.3cdn.net/2b3f77046b614d1cde_ikm6b41nb.pdf
Apologies for the PDF formatting.
This implies that there’s an objective standard for “economic optimality”, which you earlier conceded does not exist. If you expect to be the “last man standing” in this thread, guess again.
I think that in light of this paper your statement about the value of public investment in infrastructure becomes more clear to me.
Peterson seems to be saying that public investment in infrastructure can lead to increases in private productivity that similar private investments would not lead to primarily because the infrastructure investments are being paid for by the sale of bonds and tax revenue.
In other words, the private parties are benefitting from getting to use something they haven’t had to actually build or finance by themselves. In this case, the paper seems to focus mostly on roads and highways but also things like land development and telecommunications projects.
There is no question in my mind that private businesses can absolutely benefit from government aid whether it be infrastructure spending or whatever. Businesses are in it to make money first and foremost after all.
"The jurisdictions that have achieved the most dramatic turnarounds
in infrastructure investment are those that have managed to forge a
business-taxpayer alliance to take the case for infrastructure spending to
the public. Business typically has taken the lead in organizing and
financing these alliances, and sometimes has accepted a mix of general
taxes and fees that falls more heavily on the business community, in
order to increase voter support. In effect, some of the producer surplus
generated by higher levels of infrastructure spending is spent on the
campaign to achieve that investment. For example, in Cleveland, Ohio,
the business community took the lead in demanding higher levels of
capital spending, in order that the region could restore its business cost
competitiveness. Business leaders organized the voter campaign in
support of an increase in the local income tax rate, once they were
assured that one-half of the increased revenues would be earmarked
exclusively for capital reinvestment and they were guaranteed a role in
identifying specific project priorities for future investment."
Now I’m not saying I’m not on your side on this, I am. But let’s not imagine this to be about left wing/right wing whatever. This is about money and power.
Unfortunately, this is how politics works. Pretty much every public investment project could be considered what Paul supporters call “corporate welfare” if it helps private companies in some way. It’s always a matter of choosing the less bad alternative. At least in many developing countries, public health and infrastructure investments have done a lot to reduce severe poverty, even when enacted by parties that have the specific goal of sabotaging development.
But let’s not be too cynical. It’s a sunny day outside. Finals are almost over. Usher just released a new album.
Editing to continue with the last discussion:
As a Democrat, I can’t say that lifting the union restriction was a bad thing. Lifting bans on corporate contributions, though, was a lot more significant, with corporate PACs putting up five times as much money as labor.
The Citizen’s United ruling might follow the letter of the law. In the spirit of the law, freedom of speech probably wasn’t meant to ensure that elections were decided by the plaform attracting the most campaign contributions. I’ll trade union contribution bans for no corporate personhood any day.
Nevermind… redundancy.
That some expense of resources is a net benefit does not imply that there arent other uses that are even more beneficial. Thats what economists call opportunity cost - the thing you cant have because you got the thing you got. Your national roads may be deflationary, but that is not enough to justify building them. Whatever the market would have done with those resources would be even even more deflationary, and therefore national roads are waste of scarce resources.
You know this from your private life. Spending your time reading a book might be beneficial, and surfing the web may be beneficial as well, but the question is which is better. There is always more than one project that could be realized with a certain set of resources that would be a net benefit. The question is not which project is beneficial, but which project is the most beneficial. But for some reason people think that when it comes to state spending, mere net benefit is enough. Why dont the same rules apply to private spending?
Watever the Soviet Union did with its resources may have been beneficial, but it was not the most beneficial thing they could have done with them, hence the miserable economic performance. Maybe national grocery stores would be a net benefit as well, but that does not mean we should nationalize them. Because private grocery stores are even more beneficial. The same applies to infrastructure.
Yes, which is why we do empirical research to see how marginal changes in public investment cause changes in output. The investment return is not just calculated as an opportunity cost.
I’d just like to point out a couple of very relevant things:
I read-through the provided article “The Effects of Infrastructure Development on Growth and Income Distribution” and noticed that both the authors and the works they reference therein are MUCH more tentative in their findings than Mustang would have us believe.
A few examples:
Note the “have found empirical support” which simply means “we have SOME evidence to believe that…”
The author goes on to list the findings of other studies in his review of recent literature (which is usually likewise worded) then states:
We CONJECTURE…meaning “a proposition that is unproven but is thought to be true and has not been disproven”.
Then the authors note:
That all seems very heavily tentative, no?
Now again, this isn’t to replace the very serious arguments that we’ve raised here already regarding the impossibility of the econometric enterprise in measuring certain crucial phenomena (which I think are far more important arguments than this point). However, it’s important to note that the aggressive conclusions trumpeted by Mustang are not reflected in the literature he is citing. We’re not arguing with Mustang-defending-these-studies-on-their-own-merits, but rather arguing with a defensive-Mustang-misrepresenting-these-studies-to-justify-HIS-conclusions-that-are-far-too-absolute-in-relation-to-these-studies.
Granted, the Aschauer study (1990) is far more strongly worded, but clearly the much more recent article by Calderon and Servin (2004, and who cite Aschauer) and many subsequent articles cited therein did not find Aschauer’s use of strong conclusive language convincing considering their frequent respective use of conditional, tentative language. So I’m not sure why you’re so upset about our having concerns of our own.
If you were thrown on the defensive we’re sorry that that happened, but your posts from the beginning were very spry. Forum topics are often posted by rival economic schools on Mises.org from people looking to stir up the hornet’s nest without ever having a genuine intention of taking counter-arguments seriously. We are all enriched by taking counter-arguments very seriously and challenging our own perceptions/understanding, so we look forward to a good genuine exchange, if that is your aim.
I appreciate you saying that.
Empirical conclusions are often tentative, but there’s still much less econometric support for the idea that getting rid of all public infrastructure outlays is a good idea.
“That infrastructure accumulation may promote growth is hardly news for…policy-makers”.
That’s how I read that quote. I’m not sure whether it sounds tentative.
As an observer of this thread, no one has said that ‘getting rid’ of all infrastructure is a good idea. Continuing to say so, as you have, is patently dishonest. As if once there ceases to be plans for expanding public infrastructure, all infrastructure disappears…
Welcome to the thread, Jargon, and thanks for bringing that up once more.