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Posted at 2:34 PM ET, 12/29/2010

A grim lesson from the stimulus

By Ezra Klein

In the post below, Gary Burtless explains that fairly little of the stimulus was devoted to actually building stuff because the government (correctly) assessed that it couldn't build stuff quickly enough to make building stuff a good use of stimulus funds given that the stimulus funds needed to be spent quickly. The question is "why?"

As Harold Meyerson notes in his column today, FDR "authorized Harry Hopkins, his jobs-wizard, to create a four-month-long project (the Civil Works Administration) that would employ 4 million people. Beginning operations on Nov. 9, Hopkins had 2.6 million Americans on the job by Christmas and 4.3 million by February -- this in a nation of 125 million. In their four months on the jobs, they built or improved 40,000 schools and 998 airports." So what happened? Why are we so much worse at direct employment today?

Part of the answer is technological: Most WPA and CWA workers were employed on pick-and-shovel jobs long since replaced by labor-saving (and job-reducing) machines. Part of the answer is that big government (the stimulus) was slowed by good-government requirements (environmental impact reports, competitive bidding and the like) that didn't exist in the '30s. Also, strapped state and local governments laid off many of the workers needed to approve the stimulus projects. Layoffs and furloughs in California's Office of Historic Preservation, the state's inspector general told me this summer, created a 60-day bottleneck for even routine structural improvements.

Infrastructure projects remain among the most stimulative forms of anti-recessionary activity - so long as the projects actually happen. That's one reason liberals like me have enthusiastically supported them. It's now clear, however, that unless presidents, governors and mayors appoint their own Harry Hopkinses and create fast-track procedures for construction, stimulus projects will be no more than a pale ghost of their 1930s' predecessors, unemployment will remain outrageously high and the politicians who backed the stimulus will be left scrambling for explanations. These are among the grim lessons of our mega-recession, as many of those swing-district Democrats can sadly attest.

If anything, I think Meyerson is too optimistic: There's no Harry Hopkins -- or fast-track procedures -- on earth who can turn back the clock on how we build stuff such that we need more people with shovels and fewer guys who know how to drive tractors. Of course, the fact that infrastructure investment isn't going to be a mass employment program that can be rolled out and completed inside two years doesn't mean it's not a good idea that would employ a lot of people doing useful things at a low cost.

By Ezra Klein  | December 29, 2010; 2:34 PM ET
Categories:  Infrastructure  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Gary Burtless on the stimulus
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So a lack of workers killed some stimulus spending? Well hire more workers. There is nothing that can't be overcome but the administrations economic policies have been terrible and the stimulus administration is just part of it.

Posted by: endaround | December 29, 2010 3:08 PM | Report abuse

"Layoffs and furloughs in California's Office of Historic Preservation, the state's inspector general told me this summer, created a 60-day bottleneck for even routine structural improvements"

I imagine it was frustrating for federal officials to experience delays with state and local officials. Somehow, I don't think people are going to be too sympathetic.

Posted by: NoVAHockey | December 29, 2010 3:32 PM | Report abuse

We have to find Harry Hopkins because tax cuts are proven to not help.

Posted by: goadri | December 29, 2010 3:56 PM | Report abuse

As someone who had these thoughts in January 2009 about "shovel-ready projects", I find this post pretty depressing. I had desperately hoped that it would cause some sort of a Nixon-to-China moment on all the good government stuff; I mean, we can walk back the regulations just a little so that we can employ people, right? Right?

P.S. Yes, I know -- this is basically the Friedman "China-for-a-day" theory.

Posted by: Klug | December 29, 2010 5:07 PM | Report abuse

Do a Race To The Top for infrastructure projects.

Put the money out there, define the projects (i.e., power distribution upgrade, delivering X specifications, completed by Y), and whoever is ready to accept gets the money for their state. If you can't get out of your own way to get the project done, you don't get the money.

In other words, make the states find their own Harry Hopkins'.

Posted by: BHeffernan1 | December 29, 2010 5:47 PM | Report abuse

Even Harry Hopkins hired more workers than were needed, given the technology of the time. Those excess jobs were called, "boondoggles". At least they gave some men pay for work that put food on tables.

Posted by: ixam | December 30, 2010 9:00 AM | Report abuse

seems like building highspeed rail would take a lot of man power for sure.

Posted by: SnowleopardNZ | January 1, 2011 4:55 PM | Report abuse

If we can suspend bidding rules for a war in Iraq and Afghanistan why can't we suspend them for a stimulus in this country? BTW we might have avoided the fight over extending unemployment insurance had we had a jobs program to employ people instead of handing them a check.

Posted by: lew55 | January 3, 2011 1:00 PM | Report abuse

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