Grassy Highways

Everyone points to the Interstate system as the ideal infrastructure project. Sixty years ago, America was choking on roadway bottlenecks. Dwight Eisenhower once oversaw a coast-to-coast army convoy that took three weeks. As president, his highway initiative cut that time from weeks to days.

Now our highways facilitate commerce from around the world to every part of the country. Most places can be accessed in a matter of hours. This is an example of a productivity-enhancing government program. It’s what economists mean by a multiplier.

But imagine that money being spent 50 years earlier. Without a fleet of road-warriors to use them, those highways would have gone to seed and rotted away. The multiplier would have been zero. That’s why the kind and timing of infrastructure spending is so important. Ten years ago Japan tried to stimulate itself out of its funk, but it spent the money on wasteful projects like redirecting rivers and paving over mountains. No multiplier there.

So the stimulus money had better be spent right. Or we’ll end up with a lot of grassy highways.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

direct: 603-252-6509
reception: 603-224-1350

www.chartertrust.com • www.moneybasicsradio.com • www.globalmarketupdate.net

Leave a Reply

Your email address will not be published. Required fields are marked *