The Biggest Economic Time Bomb

“When it comes to roads, bridges, and airports, America is a Third World country.” — Jim Rogers, “Street Smarts”

The August 29, 2015, issue of The Economist lambasted the West, and the United States in particular, for failing to address a ticking time bomb — rebuilding its roads, bridges, airports and other infrastructure when interest rates are low.

The Economist states, “IT IS hard to exaggerate the decrepitude of infrastructure in much of the rich world. One in three railway bridges in Germany is over 100 years old, as are half of London’s water mains. In America the average bridge is 42 years old and the average dam 52. The American Society of Civil Engineers rates around 14,000 of the country’s dams as ‘high hazard’ and 151,238 of its bridges as ‘deficient.’ This crumbling infrastructure is both dangerous and expensive: traffic jams on urban highways cost America over $100 billion in wasted time and fuel each year; congestion at airports costs $22 billion and another $150 billion is lost to power outages.”

According to The Economist, it will take $15 trillion-$20 trillion by 2030 to rebuild the West‘s infrastructure. Right now, we are spending 2.5% of gross domestic product (GDP) on capital investment in buildings, roads, bridges, railroads and airports. We should be spending at least 3.5% of GDP.

Why do we have gorgeous state-of-the-art shopping malls and lousy Third World roads and subways to get to them?

The answer is simple: Blame Keynesian economics. The Keynesians are constantly promoting consumer spending at the expense of saving and investment.

A few countries are doing it right. Canada is spending 3.3% of its GDP on investment in infrastructure. Asian nations in general are investing heavily in good roads, bridges and train systems. The airports in Los Angeles, New York and Chicago can’t hold a candle to the first-class airports in Singapore, Hong Kong, Shanghai, Seoul and even Japan.

Now more than ever, the United States needs a heavy dose of supply-side “Austrian” economics to rebuild its economy and make it more efficient. It is time we shifted resources from welfare transfers to investment in infrastructure.

With Pope Francis’ visit to the United States next week — for the first time — I suggest you read the column by Pat Buchanan on the Pope’s “social” philosophy, which appears to be quite anti-capitalist. Let’s hope the Pope gets a more positive view of capitalism after visiting the center of capitalism — New York — next week.

Among Buchanan’s key points are: Pope Francis seems to have a much less favorable view of capitalism than John Paul II; the new pontiff calls capitalism “idolatry of money” that produces “an impersonal economy lacking a truly human purpose;” and he advocates egalitarianism.

Buchanan disputed that reasoning. He countered that egalitarianism has proven to be the road to dictatorship, which stifles capitalism. Free enterprise has brought millions of people out of poverty, and enabled additional billions of people to live longer, freer, healthier and happier lives, while producing more widespread prosperity, than any other economic system, Buchanan argued.

Buchanan asked whether the 100 million people of Eastern Europe, the 300 million of the late Soviet Union and the 1.2 billion people in China are better off the further they have moved away from Marxism, and the closer they have moved toward free-market capitalism.

The pope is a “saintly man,” Buchanan wrote. But the pontiff has no special understanding of economic systems or of climate change. He is the Vicar of Christ, the Savior sent by God to teach us what we must believe and how we must live to gain eternal life, Buchanan added.

Christ did not come among us to end colonialism, or redistribute wealth, or start a social revolution against the empire of the Caesars, Buchanan continued. He told Pontius Pilate, “My Kingdom is not of this world.”

Pope Francis is the “infallible custodian” of the truths Christ taught, concluded Buchanan, who suggested that the pope leave socialist sermons to politicians such as Bernie Sanders and Elizabeth Warren.