New York Times: “ Japan’s Big-Works Stimulus Is Lesson for U.S. ”
Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.
“It is not enough just to hire workers to dig holes and then fill them in again,” said Toshihiro Ihori, an economics professor at the University of Tokyo. “One lesson from Japan is that public works get the best results when they create something useful for the future.”
*That might lead one to ask, what possible reason would we expect bureaucrats to know better than investors and consumers what is “something useful for the future”? And if it’s indeed “useful for the future,” why undertake it only because of an alleged need for “stimulus.” It either adds value, or it doesn’t. It doesn’t add value “and stimulate” the economy; it subtracts, or “de-stimulates” the economy, as well.
Hat Tip: Jude Blanchette