Finding cost-effective ways to stimulate long-term growth and employment in the economy without triggering inflation is the holy grail of macroeconomics. Many policy prescriptions, such as cutting marginal tax rates and eliminating deductions, tend to get bogged down in intense political debates that lead to muted reform or inaction.
But there is one policy prescription espoused by economists that now seems to have support from both sides of the political aisle: higher spending on critical infrastructure that supports the movement of people and goods. These types of investments tend to have two types of benefits. First are the direct benefits associated with the new jobs created to build the infrastructure and the multiplier effect of spending on concrete, steel, and construction jobs. But more importantly, these projects can help make the United States more competitive by eliminating delays, lowering costs, and speeding up innovation.
The Port of Oakland, California is a great example of the role of infrastructure spending on job, as detailed in a recent New York Times article titled, Coming Soon, Economists Hope: Big Spending on Roads, Bridges and Ports.
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