Tuesday, February 01, 2011

Leftist job creation

The Hill details a wishlist of measures from certain Democrats in Congress to promote job creation:
Specifically, liberals are pushing for “Buy American” provisions that would require the federal government to buy goods and materials from domestic suppliers.

They also want President Obama to insist on export parity with China to balance the national trade deficit.

A third idea would be to set up a national infrastructure investment bank. Under this plan, the fed would pump money into the economy by buying infrastructure bonds that would guarantee federal money goes to infrastructure construction and job creation.
A few points:
  • Buy America provisions mean that the federal government must either purchase fewer goods for the same amount of money, the same amount at higher cost or settle for inferior quality. After all, if domestic products were available at the same price without a trade-off in quality such Buy America provisions would be superfluous. Either way the taxpayer suffers through reduced quantity, higher cost, lower quality or some combination thereof.
  • Buy America provisions are nothing more than vulgar economic jingoism. One can be a self-styled cosmopolitan internationalist, and one can embrace the mantle of economic nationalism, but you can't do both.
  • The easiest way to place achieve export parity with China is simply to limit Chinese imports. However, besides depriving US consumers of access to products made in China the other problem with such an approach is that a limit on imports means a reduction in exports.
  • Every dollar spent by the federal government in a national infrastructure bank is one less dollar available to be spent by the private sector. As the misbegotten stimulus package of 2009 has demonstrated, this is not the path to economic revitalization.
  • More broadly, this illustrates how utterly bereft of ideas the left is when it comes to job creation. This is no surprise as leftists have long concerned themselves far more with wealth redistribution rather than its creation. To the extent ideas exist they typically consist of increased government spending. Given that increased spending has already been tried, and a gaping deficit makes further such initiatives nonviable, the cupboard of leftist ideas is largely bare.


Plans to Prosper said...

A national infrastructure investment bank could be a good thing (or at least better than the status quo), if it's funded through cuts to other programs rather than more debt or higher taxes. Of all the things the federal government does, investing in infrastructure is one of the more benign.

Colin said...

I agree that infrastructure is a legitimate government function, but I would argue that the federal government has overstepped its bounds in this area. While it may make sense for the feds to fund the interstate highway system, much of what is spent goes for distinctly local projects such as bike paths and dog parks that are a function of local and state government. Indeed, amidst the debate on earmarks, and whether funds should be allocated by bureaucrats or politicians, we lose sight of the fact that much of this earmark spending on transportation projects shouldn't be the responsibility of the federal government in the first place.

Also, suffice to say the odds of Democrats agreeing to fund the infrastructure bank through cuts elsewhere are about nonexistent.