Presidential candidates John McCain and Barack Obama aren't the only ones with ambitious economic plans out there. My pal CNBC anchor-reporter Erin Burnett has one, too. Burnett wants to stimulate the economy by rebuilding America's infrastructure. (I debated the topic yesterday on her must-watch Street Signs show.) Engineering experts think the nation needs a $1.6 trillion upgrade to its road, water, electrical, and communications systems. Is this a good idea? My thoughts:
1) As a way of immediately stimulating the economy (assuming that's a road you want to travel down, no pun intended), infrastructure spending is too slow compared with merely cutting people checks.
2) As a way of directly boosting economic growth, infrastructure spending has a poor track record, whether during the Great Depression here in the United States or during Japan's Lost Decade of the 1990s. (The Japanese pretty much paved the country over to juice the economy, to no avail.)
3) But as a way of creating a fertile environment for economic growth, infrastructure certainly has a big role to play. Even the libertarian folks at the Cato Institute think Eisenhower's interstate highway system was a good idea. The big questions: How would we pay for it? How much of our infrastructure could be privatized? How would we prevent a nationwide replication of Boston's Big Dig fiasco? Stay tuned.