Spitzer Op-Ed: Robots, Not Roads

By Eliot Spitzer
Posted Monday, Jan. 5, 2009

The incoming Obama administration and Congress are planning a huge fiscal stimulus package. They hope that such a stimulus will catalyze an economic turnaround and be a cornerstone of a "New New Deal." If the early reports are reliable, the stimulus will include a huge tax cut and will fund projects like road-building and bridge repair, laying the infrastructure foundation for the economy of the future.

Yet two huge problems with this approach must be confronted. First, the capacity of even the U.S. government to affect the overall global economy is limited. Suppose the package is $800 billion over two years: $400 billion is less than 1 percent of the global economy and a mere 3 percent of the U.S. economy. In relative terms, $400 billion isn't all that much more than the $152 billion spent on the 2008 stimulus, which had nary an impact on the economy.

Here is where the New Deal analogies are instructive. The New Deal probably didn't pull us out of the Depression; World War II did that. What the New Deal did was redefine the social contract—perhaps just as important an outcome. The ultimate significance of the Obama package may be not its short-term demand-side impact but rather its capacity to transform our economy and, in turn, some of the fundamental underpinnings of our society. This introduces the second major problem: The "off the shelf" infrastructure projects that can be funded immediately and provide immediate demand-side stimulus are almost by definition not the transformative investments we really need. Paving roads, repairing bridges that need refurbishing, and accelerating existing projects are all good and necessary, but not transformative. These projects by and large are building or patching the same economy with the same flaws that got us where we are. Our concern should be that as we look for the next great infrastructure project to transform our economy, we might rebuild the Erie Canal and find ourselves a century behind technologically.

This moment presents the administration with what is likely to be its best—and perhaps only—opportunity to have essentially unlimited capital (both fiscal and political) to spend on a transformative economic agenda. It is a unique moment to build a new foundation. It would be wise to ensure that a significant portion of the stimulus package is spent on new investments that may not be quite as ready to go but are surely more important to our long-term economic viability. There are many such critical investments, but here are a few for consideration. These are not, of course, the only ideas, and they may not be the best ideas. But they should spur discussion of how to use the fiscal stimulus not just to put people to work but also to build the over-the-horizon projects that will set the stage for the next great American economic miracle.

Read on.