“The Single Simple Secret of a Successful Society”
Ooh! Is it alliteration? Just kidding. I enjoyed the article.
I agree that it’s very silly for the government to not take advantage of negative interest rates to build things that will grow the economy, but I don’t think they even have to issue debt (or collect taxes) for this.
It’s become increasingly clear to me that useful infrastructure pays for itself. Obviously, a bridge to nowhere doesn’t help anybody, and a billion dollar bridge connecting two hamlets is probably not going to provide as much growth as it cost, but anything the government pays for or maintains that allows the economy to grow more than the cost is a good thing to do (subject to environmental and other constraints, but those should be accounted for as part of the cost).
In short, the government can literally print money to buy infrastructure that helps improve the economy beyond the cost of that infrastructure. For starters, as the economy grows, so must the money supply, or else we would have deflation. Creating new money as the economy expands is not really optional.
But also, if the government prints money to pay for an asset, but then retains ownership of that asset, what has it really lost? We’ve been calling this sort of thing debt if we buy infrastructure without paying for it in tax revenue, but it’s not clear to me who the government owes for anything when we do this.
Nobody really needs or expects to be “paid back” in this scenario. The people who built the infrastructure have already been paid with the printed money. The money wasn’t borrowed from the people, so they don’t need to be reimbursed. The government has a shiny new asset, so the net worth of the United States has increased.
I don’t think this is a shell game. I think this is a reflection of the fact that money isn’t wealth. It’s just how we keep track of wealth, how we count it.
Furthermore, public health and education are infrastructure. Educating anybody helps everybody. Restoring or maintaining a person’s health helps everybody. Geriatric or terminal illness health spending is different, because we wouldn’t expect people at the end of their lives to be restored to a productive capacity, but being a compassionate society is certainly an intangible benefit to everybody, and if we stop pretending that infrastructure is just too expensive to bother with, we’ll have plenty of money to pay for end-of-life care.
And the internet is definitely infrastructure. It’s basically the infrastructure of the 21st Century. It is our town square and our public market. It belongs in the commons, not in private hands. As does all infrastructure.