The New York Times reported on Monday that 4,400 U.S. dams are considered dangerously susceptible to failure, but then implies that we are unable to afford fixing them: ?But repairing all those dams would cost billions of dollars, and it is far from clear who would provide all the money in a recessionary era.? This is bizarre. Right now, fixing them would be free?while waiting until they fail requires a shocking disregard for life and property.
In a recession, people and equipment are sitting idle, producing nothing. Since they are currently doing nothing productive, we can put them to work without taking them away from anything else. Unemployed workers returning to the workforce, and their families, would not only be happier but be able to spend more, pulling yet more people into the workforce. Unemployed capital equipment would be used instead of rusting into scrap. And, of course, the infrastructure itself would improve people?s lives and increase their ability to spend, invest, and create.
But how do we pay for it? There are two easy ways. First, the United States could borrow, just as private companies and individuals borrow to finance investments. Since working dams and other infrastructure will increase future economic growth (especially relative to the alternative of floods and disintegration), the loans can be paid back with the increased income they will generate. Indeed, the depths of recession are an unusually attractive time to borrow. Interest rates are near zero precisely because private industry, unlike the government, has nothing productive to do with the money. (Low interest rates, incidentally, are one reason why we can safely ignore the gold standard nuts and deficit panic mongers: the bond market is quite aware, even if they aren?t, that the only reason the United States would default is if Tea Party?influenced politicians chose to engineer the default for their own purposes. As current interest rates suggest, the federal government isn?t even remotely close to either its borrowing or its taxing capacity.)
Second, the United States could simply print dollars. Usually, we?d worry that too many dollars chasing not enough goods would lead to inflation, but right now we have too many goods and not enough dollars: we have 9 percent unemployment and even more underemployment because companies can?t find customers to buy the goods they can make. There is no point paying real costs today?or forgoing real opportunities?due to entirely imaginary fears.
The recession gives us that most unusual of opportunities: the free lunch. The United States should take this opportunity not only to fix our dams but to begin the larger and more important process of converting our infrastructure to new energy sources that will reduce our climate impact and our dependence on oil, rebuilding our transportation system to further future growth, and laying the groundwork for new economic successes. The only costs of putting idle resources to work would be higher growth, greater efficiency, and putting the lie to false claims that government cannot create jobs.