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Keynes was right of course, but there is one teensy-weensy problem with his daring, visionary approach on economics.

Large public projects paid for with borrowed investment capital or fiat money have to be governed well to have the desired effect.

As recently seen in the mobbed-up, bribe-heavy scandal around the EXPO exhibition due to start in Milan in 9 months, it doesn't matter if the intention is noble (an exhibition that concentrates on world hunger) if the bids are greased with envelopes full of cash and the pols get to play favourites with backscratching construction firms hungry for millions of OPM.

So regulate them better, you'll say, but look how easily regulators are captured! We'll need regulators to check on regulators ad infinitum, offering more and more challenges for organised crime to capture.

How many layers of regulation will it take? Is that the solution, just making it more expensive to corrupt?

Something recently dawned on me regarding a connected issue: What if the reason so many projects in Italy financed by the EU remain blocked from beginning is that the pols know that if they say yes to the mafia they have to say no to the camorra?

To pick up a bribe from one may lead to stopping a bullet from the other(s).

While the longer they sit on the fence, the bribes offered get larger.

Lot of incentive to slow things to a halt, eh?

It would explain certain er, conundrums...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Thu Nov 27th, 2014 at 10:19:50 PM EST
You don't need large public projects and "the desired effect" is just to put people to work. So, modern advocates of employment guarantees always insist on state financing but local community definition and management of projects serving local community needs.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Nov 28th, 2014 at 05:57:17 AM EST
[ Parent ]
FDR's New Deal was a successful run of large public projects, wasn't it?

I am all for smaller, local-chosen and controlled projects. If done nation-wide, these can nibble at the unemployment problem and take significant chunks out of it.

But large projects such as retrofitting houses, solar rollout, broadband fibre rollout, national cultural/artistic patrimony management, better public transport and the like surely demand a less piecemeal approach?

Corruption remains a hellish problem whichever way is chosen.

Total transparency on all bidding programs could be transformational in this regard.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Nov 28th, 2014 at 06:42:26 AM EST
[ Parent ]
FDR's New Deal was a successful run of large public projects, wasn't it?
No, it wasn't. Or not exclusively: Works Progress Administration
The Works Progress Administration (renamed in 1939 as the Work Projects Administration; WPA) was the largest and most ambitious American New Deal agency, employing millions of unemployed people (mostly unskilled men) to carry out public works projects, including the construction of public buildings and roads. In a much smaller but more famous project, the Federal Project Number One, the WPA employed musicians, artists, writers, actors and directors in large arts, drama, media, and literacy projects.
But
Full employment, which was reached in 1942 and emerged as a long-term national goal around 1944, was not the WPA goal.
And already
The WPA was a national program that operated its own projects in cooperation with state and local governments, which provided 10-30% of the costs. Usually the local sponsor provided land and often trucks and supplies, with the WPA responsible for wages (and for the salaries of supervisors, who were not on relief). WPA sometimes took over state and local relief programs that had originated in the Reconstruction Finance Corporation (RFC) or Federal Emergency Relief Administration (FERA) programs.


A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Nov 28th, 2014 at 09:11:27 AM EST
[ Parent ]
New Deal programs were insufficient in scope to really pull the nation to full employment, but they were hugely ameliorative and created public infrastructure that we are still using - the state parks in California, for one example, and a good number of the county court houses, public hospitals and school buildings in the USA. I have done work in more than one high school in LAUSD that was in part financed by the WPA.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Nov 28th, 2014 at 10:15:12 AM EST
[ Parent ]
I thought it included the TVA and a huge dam.

Less labour to put up a slew of turbines strung across the great plains.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Nov 28th, 2014 at 08:01:28 PM EST
[ Parent ]
Both the TVA and the Rural Electric Commission were New Deal programs, but Hoover Dam was started under Hoover. But the Army Corp of Engineers has been overseeing US dam construction at least into the '60s.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 29th, 2014 at 01:36:54 AM EST
[ Parent ]
That being said, I'm pretty sure you'd run out of unemployed before you ran out of sensible large public projects.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Dec 2nd, 2014 at 01:23:32 PM EST
[ Parent ]

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