“We’re bored” argument for stimulus

This Lessig comment sounds like he’s wanting the fiscal stimulus because he’s bored by the old way of doing things:

If we’re lucky, we get the chance for this kind of transformation once a generation. It would be a scandal on the scale of the last 8 years to fritter it away.

New, hip things like broadband are cool. Let’s not fritter away the chance to force the whole economy to transition to these technologies.

Don’t get me wrong. I’m a total geek. I DO think broadband, smart grids, high speed railroad, online medical records, etc are cool. Its just not clear to me that these are efficiency improving technologies and even granted that, its not clear why these have to be public investments.

Larry Lessig and Will Ambrosini want these technologies therefore everyone else has to pay for them?

11 thoughts on ““We’re bored” argument for stimulus”

  1. I wonder if similar debates went on in Parliament before London installed the first modern sewer system. It’s not clear to me that funds must be dispensed from public coffers to help one pee. Surely the private labor force of night soil men is up to the task! I say, defecate on your own shilling! Perchance I can get a harumph?

  2. Because one project had a good cost/benefit ratio, all do? Because one project had larger social returns than private returns, all do?

    Is it too much for me to ask for more than the “that’s cool” test to determine if a project is worth public investment or not?

  3. Ok… Arpanet, interstate highways, public education, railroads (originally at least), bridges, the space program, the original electrical infrastructure…

    I brought up the example of sewers because private industry was in a poor position to create a similar system. I’m pretty sure the British Parliament’s test was a little more sound than “It ift of cool temperament to relieve oneself upon a tube inftead of yon bucket.”

    That’s not to say that all projects have a good cost/benefit ratio. Project housing comes to mind.

    Medical records seem like a no-brainer, and I’m puzzled as to why the health care industry hasn’t even settled on using electronic records yet. I’m with you on high speed rail. I’d rather see some antitrust action taken against certain ISPs on the broadband front.

  4. Arpanet – Yes, government has a role in basic research… today’s internet is NOT arpanet remember.

    Highways/bridges – I’d actually be curious to see if anyone has studied the benefits of these versus their costs. This paper, hosted on a DOT-related website, claims there were big social returns when the highway system was first built, but those returns have petered out in recent years. And shouldn’t we include the environmental costs subsidized highways create?

    Railroads – Weren’t built by government. At least in the U.S.

    Space programs – Other than their basic research function, I’m not sure they pass the cost/benefit analysis.

    Electricity – Not sure, but I suspect these were built privately.

    This is an interest list of infrastructure histories.

  5. Arpanet -> Internet through a symbiosis of government and private institutions. I suspect there wouldn’t even be broadband but for the development and widespread adoption of Internet Protocol. Imagine trying to do everything through the original AOL, Compuserve, and Prodigy. Forget Google.

    Railroads: Pacific Railway Act. The related articles for the Central Pacific and Union Pacific Railroad companies contain some fascinating bits about how the federal government helped them secure financing, land grants, and right-of-way. I suppose the money touched private hands on the way out, though, so perhaps it co-mingled with some entrepreneurial mojo.

    Space: GPS and weather prediction come to mind as early applications. Telecommunications later, developed by private industries, based on government groundwork in fields like ballistics, radio, rocket science, integrated circuits, etc. DirecTV did not start from scratch.

    Electricity – Here’s a nice platter of copypasta from an abstract in the link provided: “From experience with both water and gas, which predated the Civil War (1861-1865), it was obvious that municipal franchises, which implied a degree of regulation, would be necessary to obtain access to rights-of-way within which to construct the conduits.”, also “It is, however, evident that federal intervention, in particular, was instrumental in expanding electric power to underserved, predominantly rural populations through the REA and other New Deal and Truman-era programs.”, although it also says “Interproduct competition from gas and oil for heat (if not for interior illumination) as well as the specter of public regulation or even public acquisition became powerful incentives for cooperation with regulatory agencies as well as for price discipline by the utility companies themselves.” Though I haven’t read the full release.

    So in many of these cases, the government broke trail and private industry later did much of the work. But… public programs broke trail first. Not that every public program returns miraculous dividends, or that private companies can’t introduce or develop infrastructure. Look at Western Union and the telegraph.

  6. Yep, you’ve done a thorough cost/benefit analysis… no wait… you’ve actually just listed some benefits. I guess there’s no costs? no trade-offs?

  7. Of course there are. I just object to the idea that the only thing holding us back from a glorious blossoming of prosperity, science, technology, and culture is government, and if we abolished government we could reap the benefits of this golden age.

  8. Damn, you’re quick today.

    I’m not really set up (or, uh, properly qualified) to do an academically rigorous cost-benefit analysis on, say, the initial public investment in Arpanet versus, say, the annual net income of Amazon.

    I’ve seen apocryphal figures stating something like a 7:1 return on aerospace research. Assuming this is true, I understand your initial point – if private industry could have done 8:1 on the same path, we’d have been better off.

  9. Yes. One would need to be setup to do such an analysis. This is because it takes expertise to do so. Also, it takes time.

    I doubt the government has much of either of these things when its doling out the $850B stimulus. This suggest good cost/benefit analysis will not have been done and there’s little chance this money will have its intended effects.

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