Radical Right Makes Business and Government Inefficient

The Post-Crescent Highlists Business's Dependence on Investment in Infrastructure

Post-Crescent on July 5, 2013 featured an article about an effort by Congressmen Petri and Ribble to preserve the current weight limits for trucks on U. S. Highway 41 when it is converted to Interstate 41. Today, trucks weighing up to 97,000 lbs. can use Highway 41, but the rules for interstate highways place a limit of 80,000 lbs. on trucks. Mr. Ribble and Mr. Petri are campaigning to grandfather in the old weight limit when the highway becomes an interstate.

Radical Rightist Republicans Are Wrong to Want to Minimize Government Investment

The advantages and disadvantages of the congressmen’s proposal are obvious, and I will not argue one side or the other. What I will point out is that the whole discussion highlights business’s dependence on government’s investment in infrastructure. Radical rightists in the Republican Party like to say that government spending is mostly wasted and that it should be minimized in order to make the money available for private investment. They say that government investment “crowds out” private investment because every dollar invested by government is a dollar that is not available for private investment, but the example of Highway 41 shows that government investment in infrastructure can actually promote private investment. The Post-Crescent quotes the manager of the conversion project as saying,

What it means for the state of Wisconsin is the opportunities for increased economic development along the corridor …. There’s some national operations that won’t consider locating on a highway if it’s not an interstate.

Government Investment and Business Investment Are Complementary

Government investment and business investment are not in competition with one another. They complement one another. Without private investment to develop the economy, government could not operate because the private economy generates the taxes that government needs. On the other hand, without government investment in infrastructure, business could not operate because businesses depend on the infrastructure to get their products to market and to obtain their inventories of raw materials and finished goods.  Modern businesses also need government investment in other areas. For example, they need an educated work force. So, they depend on government investments in education. Law-enforcement and fire protection are other examples.

Radical Rightists Create Inefficiency in Government

Because of the interdependence between business and government, we all want both of them to do their jobs efficiently, but unfortunately, the radical rightists in the Republican Party are making both of them less efficient than they should be.  The radical rightists insist that government investment should be minimized. They oppose practically all proposals for public investment, and their opposition has become a drag on the efficient operation of governments at all levels. Because of Republican opposition, useful investments of many kinds of slowed down and even stopped. Republican intransigence creates uncertainty in funding, and as a result, our governments are much less efficient than they might be.  Many important investments in infrastructure, education and other areas are not made, and our economy suffers as a result.

Radical Rightists Create Inefficiency in Business, Too

The uncertainty created by the radical rightist also reduces the efficiency of businesses. They delay making investments because in a climate of uncertainty, it is hard to know what the costs and benefits of an investment will be. Large companies are sitting on huge piles of cash that could be invested to grow their profits, to create jobs and to grow our economy, but the uncertainty created by the intransigence of the radical is preventing them from making such investments.

We Must Distinguish Between Investment and Other Spending

We need to find a way to bypass the intransigence of the radical right. To do so, we need to do two things. First, in our public discussions, we need to distinguish between “investments” and other spending. An investment is an expenditure that is expected to bring a return that is greater than its cost.  Expenditures in areas like transportation infrastructure and education are investments. They stimulate the economy by improving transportation or by improving the work force.  That does not mean that every investment turns out well. Some investments will fail to produce the expected results. This is true for business investment just as it is for government investment. Businesses sometimes make investments that don’t pan out, and so do governments. Investments are inherently risky because we cannot really know the future, but we have to exercise our best judgment, and we have to take the risks that investments bring in both the private and the public sectors. Cutting back on public investment in order to minimize the size of governments is a recipe for economic decline.

We Must Defeat the Radical Rightists at the Polls

The second thing we need to do in order to bypass the intransigence of the radical rightists is to defeat them at the polls.  If you are a Republican, work to elect moderate Republicans to office. If you are a Democrat, work to elect Democrats to office. Until we do these things, the radical rightists in the Republican Party will continue to create fiscal uncertainty and will continue to make both our governments and our businesses less effective and less efficient than they should be.