MyATMPinIs1234

"We'll create two million new jobs by rebuilding our crumbling infrastructure and laying broadband lines that reach every corner of the country."

- Barak Obama, WSJ, Nov 3, 2008

You probably are thinking that this guy has some good ideas. New jobs, repaired infrastructure, and broadband for all... who could be against that?

Me.

Because it demonstrates that Obama is either happy with shamelessly spouting populist nonsense, or completely ignorant of economics. Either way it's not good.

For one thing, rebuilding infrastructure and laying broadband lines is either the most efficient use of our scarce CAPEX funds, or it's not. Building infrastructure is not the worst thing that we could do, but when you spend money on it, you are reducing the amount you can spend on the private sector. So you are in essence trading 2 million (Davis-Bacon) new jobs in public infrastructure for >2 million jobs in the private sector. This creates a NET JOB LOSS. That's fine if society wants to pay those costs for better infrastructure, but don't tell me you are creating jobs! It is the most simple economic theory, very well described by Henry Hazlitt's Broken Window fallacy (con'd).

As for laying broadband lines to every corner of the country, that pretty much ensures a sub-optimal use of funds, and by extension, us getting worse broadband service than without intervention. Have you ever noticed that in many developing nations most people still do not have reliable land-line service, yet they prettty much all have cellphones? That's because the market decided the most efficient way to get these people connectivity was NOT to dig trenches and run lines to rural and sparsely populated places. In our country, and with the rapid pace of innovation in telecomm, it is just a boneheaded idea to run lines to every corner. We have Satellites, WiMax, and other new technologies coming very soon that makes laying broadband lines a very expensive, broken window, method of getting people high speed connectivity.

And BTW, I chose that sentence from Obama's op-ed because it was one of the least egregious examples of his distrust or lack of understanding of free markets.

Not like McCain understands it either. They both seem to know very little. The difference is that McCain admitted he didn't understand it well. On the other hand, you get the sense that Obama and his followers (especially the college students) (and journalists) are so damn sure they know everything. A quintessential Dunning-Kruger effect if I ever saw one. And there's nothing in the world more dangerous than someone unaware of his shortcomings. Just ask my ex-girlfriends.