Posted Wednesday, Aug. 15, 2012, at 10:15 PM
The headline here is about economists who previously endorsed the Cameron/Clegg/Osborne austerity agenda in Britain changing their minds, but this statement from Kenneth Rogoff strikes me as actually quite stingy and odd:
I have always favoured investment in high-return infrastructure projects that significantly raise long-term growth.
Many economists seem to be so fearful and fussy about endorsing public spending that they find themselves retreating into odd rhetorical corners. Suppose I brought to the table a smorgasbord of meh-return infrastructure projects, each of which is likely to provide a small increase in long-term growth. Wouldn't that be awesome? Is the United Kingdom in such amazing shape that it can sneer at modest increases in long-term growth and hold out for only things that "significantly" improve the outlook? Is America? Is anywhere?
In ordinary times, you don't necessarily want to fill the tree of useful infrastructure projects because you might be crowding out even more useful private-sector investments. But when borrowing money is cheap and resources are idle, why not settle for good enough?