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Michael Hiltzik: Jeff Bezos likes Biden's infrastructure plan because he knows it's worth the money

Michael Hiltzik, Los Angeles Times on

Published in Business News

The truth is that all Biden's ideas fall squarely within the traditions of American public spending, and the benefits are incontrovertible, as are the drawbacks of disinvestment. Without government financial investment there would be no Hoover Dam today and no interstate highway system.

Federal investment as a share of the economy has collapsed since the early 1960s, when it accounted for more than 7% of GDP. Today it's about half that.

The U.S. was once a global leader in scientific research spending. R&D accounted for as much as 12% of the federal budget in the 1960s; by 2019 had fallen to 2.8%.

As a result, according to a 2015 report by MIT, of four landmark scientific achievements the previous year — the first spacecraft landing on a comet; the discovery of a new fundamental particle, the Higgs boson; the development of the world's fastest supercomputer; and research pointing to new ways to meet global food needs — not one was a U.S.-led program.

Many business leaders like Bezos have learned their lessons from the earlier phase of government investment. Government-funded projects eventually yield profits for the private sector and benefits for society as a whole.

Individual companies would never have taken on the task of building a nationwide highway network. But the interstate system, begun under Dwight Eisenhower in 1956, has cut travel times coast-to-coast — and therefore the cost of shipping — by more than one-third.

 

According to a 2016 report by the American Society of Civil Engineers (which admittedly has a vested interest in public construction) the interstate system, which cost $500 billion in 2016 dollars to build, has produced $6 in economic gains for every dollar spent.

Development of the internet was hobbled by the communications monopoly owned by AT&T, which refused to allow data to pass through its phone lines. That prompted a visionary official at the Pentagon's Advanced Research Projects Agency named Bob Taylor to take matters into his own hands. Taylor funded a computer data network initially known as ARPAnet, the offspring of which is the internet.

Pundits like Williamson mock Biden for listing broadband access as crucial infrastructure, but that's a pronouncement from a privileged rooftop. "By industry estimates," he writes, "about 93 percent of Americans have access to a broadband connection, and those who don't mostly live in remote and rural areas."

This is an old industry scam of playing with the definition of "access" — those homes may theoretically have access, but monopolistic pricing keeps it out of their hands. Williamson's argument that those who want better service can just move to the cities doesn't warrant serious consideration.

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