Governor Carney, Borrow and Built the Economy Don’t Cut and Crater it
Carney inexplicably STILL wants to cut the state budget, not grow it. In spite of all of the evidence to the contrary, he still views debt as an anathema, and growth killing austerity as a virtue. He basically still believes in the utter failed Republican economics of trickle down. It makes no sense, and in the era of very cheap borrowing, it is the exact opposite of what we should actually be doing.
And what’s worse, the markets have taken notice. [See Swiss Negative Yield Bonds]Smart money is beginning to adjust to the new normal and accept the fact that deficit hawks and austerity evangelists like Carney are determined to strangle economic growth with their wrongheadedness – which would be simply goofy at this point, were it not so pernicious. Here is Paul Krugman on the topic:
Cheap Money Talks
So what’s going on? I think of it as the Great Capitulation.A number of economists — most famously Larry Summers, but also yours truly and others — have been warning for a while that the whole world may be turning Japanese. That is, it looks as if weak demand and a bias toward deflation are enduring problems. Until recently, however, investors acted as if they still expected a return to what we used to consider normal conditions. Now they’ve thrown in the towel, in effect conceding that persistent weakness is the new normal. This means low short-term interest rates for a very long time, and low long-term rates right away.
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Many people don’t like what’s happening, but raising rates in the face of weak economies would be an act of folly that might well push us back into recession.
What policy makers should be doing, instead, is accepting the markets’ offer of incredibly cheap financing. Investors are willing to pay the German government to take their money; the U.S. situation is less extreme, but even here interest rates adjusted for inflation are negative.
Meanwhile, there are huge unmet demands for public investment on both sides of the Atlantic. America’s aging infrastructure is legendary, but not unique: years of austerity have left German roads and railways in worse shape than most people realize. So why not borrow money at these low, low rates and do some much-needed repair and renovation? This would be eminently worth doing even if it wouldn’t also create jobs, but it would do that too.
I know, deficit scolds would issue dire warnings about the evils of public debt. But they have been wrong about everything for at least the past eight years, and it’s time to stop taking them seriously.
They say that money talks; well, cheap money is speaking very clearly right now, and it’s telling us to invest in our future.
Agree in principle, but I’m not sure Delaware knows how to spend borrowed money on anything that would actually produce an eventual return, and taxpayers would just get stuck paying back the wasted money – again. I’m all for raising taxes to fund social services, but not on borrowed money.
Fiscal stimulus and investment is great at the Federal level, but is not likely to be effective at the state level, and not in tiny Delaware.
Probably the two greatest state-level investments Delaware could make are in education and gun violence, to make Delaware someplace where businesses might actually want to locate their people.
The money is virtually free. If we can’t think of 20 infrastructure projects that could mark Delaware as a entrepreneurship magnet, we are a pretty dull witted state.
Also – I agree about raising taxes.
The money isn’t free; it’s “interest-free” or nearly so. Principal still has to be paid back later. If that borrowing hasn’t produced sufficient growth, we are stuck paying back the principal in addition to our other competing priorities.
As far as infrastructure projects, I think what most of America wants from Delaware is a faster way to drive through it.
Yep. We should invest in the port. We should invest in mass transit (hey Elon Musk, you need a small scale hyperloop trial, we need to get people from Middletown to Wilmington. Let’s talk.) Also, let’s cover all publicly-owned buildings in solar panels. We can start with schools.
What the hell is in Wilmington that Middletown people need to get to so fast? You might say “jobs,” but jobs are now in office parks scattered all over NCC as well as Wilmington. How would you get people from the Wilmington hyperloop terminal to their job?
The idea of Wilmington as a jobs hub is long past. It could be, but we are far from the policies needed to restore it.
If your kid suddenly needs to be picked up from school, or you need to leave early one day for an evening meeting, do you really want to wait for the next hypertrain on its infrequent mid-day schedule?
We have plenty pf roads to Wilmington that are nearly empty most of the day, but employers still stubbornly refuse to allow workers to commute off-peak or work at home.
Wilmington is already full of people Wilmington employers refuse to hire. Start there.
The problem with futuristic transport is only the rich can afford it. Regular commuters don’t benefit. I could commute to DC on Acela like our congressman and senators if my fare were expensed like theirs.
That’s what I’m talking about. This borrowing doesn’t cost money, it makes money.
Plenty of people from Middletown commute into Wilmington. Plenty of people from other places commute into Wilmington. SEPTA goes to Newark — maybe it needs to go to Middletown too.
We should definitely invest in the Port and do it smartly, not matter what Tom Gordon’s deal with his pal is.
We should invest in water quality projects — cleanup watersheds all over the state.
We should invest in education.
Puck is taking the position that Delaware is a pretty dull witted state. I’m typically pretty sympathetic to that point of view, not today though. Maybe because i just read about Paris’ Bike super highway?
Now Puck might say that bike lanes are for the wealthy, but the families of a growing number of dead bicyclists and pedestrians might take exception to that.
http://www.delawareonline.com/story/news/traffic/2015/10/16/danger-do-not-cross-delaware/73444700/
Governor Mark Dayton raised taxes, made some investments and the Minnesota economy is going like gangbusters. Right next door, Scott Walker has been cutting taxes and sending money to wealthy people and their economy is struggling. Kansas and Louisiana and New Jersey have similar problems and it is starting to look like Carney wants to produce the kind of economy that Chris Christie and Scott Walker have been able to destroy their way into.
Dedicated bike lanes are great. Bike lanes that consist only of paint on a busy highway are dangerous. Back to the topic though, let’s not borrow to build bike lanes unless we are also building something that will attract more money than it costs.
I would advocate spending as much as feasibly possible on infrastructure but also look at the current multi trillion dollar budget for reallocatio,n particularly from defense and also getting more money from the piggies in taxes.
DE needs to tap into its connected VP, legislators et al and bring some federal program stuff to DE
Delaware could create a hell of a bikeways system quickly and cheaply by using eminent domain to build bike/pedestrian connectors between adjacent developments. Of course, litigation costs would rule that out. But it could be mandated for new developments.
Puck – I would challenge you to check out Rt. 1 between 7 and 9AM during the week. You could do it from the comfort of your home-office on the DelDot webcam site.
Granted, the hyperloop was sort of a joke. But you would be about 5 minutes from the Middletown station at the Wilmington station. By car, you are 35-45 minutes away. That should allay a lot of fears about distance from your kids.
Connecting neighborhoods with bike/ped paths is a good idea. Lots of large bike projects get a lot of press, but there are also a lot of small connectors have also been completed in the past 7 years.
I’m not impressed by how congested Rt.1 is during rush hour. There are lots of unexplored options to alleviate that, including: commute off-peak, or hire workers who live closer to your worksite. I don’t need to subsidize the arrogant entitlement of employers who refuse to adapt.
When I was house-hunting in the ’90s there were lots of cheaper, newer, and larger houses on the market in Middletown. I chose not to to buy there precisely because of the peak-hour congestion you describe. Many though choose the cheaper option, and now they should be rewarded with a publicly-funded solution?
Even better, let’s make Middletown an employment destination instead of a bedroom community for Wilmington’s white-collar workers. There is plenty of room in the lanes going in the opposite direction.
My comment on the hyperloop were also, er, hyperbole. But the point is mass transit only works in areas of high population density and high employer density like NYC or SF, not a decentralized scenario like NCC.
Just don’t send anyone to eastern Sussex County. The roads are clogged, the flies and mosquitos will eat you alive, the horseshoe crabs will attack you on the beach and there’s chicken litter odor everywhere
The Rehoboth bandstand would make a lovely entrance to a hyperloop terminal.
I’d rather have a national high speed rail network with technology that already exists then wait on the chance hyperloop is feasible