Another Bridge to Nowhere?

It looks like both the White House and Congress are set to adopt the economic recovery package sometime next week, sending nearly $900 billion into the economy with the Keynesian hope that federal spending will propagate economic activity. 

Most of the critics’ dialogue on the package so far has been over the issue of pork-barrel spending, like the proposed $1.5 million to reduce prostitution in Dayton, Ohio, or the $20 million for a proposed minor league baseball museum in Durham, N.C., or my personal favorite, a $4.8 million polar bear exhibit in Rhode Island. 

And while I sympathize with the point these critics are making – that a president who promised to go “line by line” through the budget and to eliminate any wasteful spending is actually going to permit wasteful spending in his first project – I can’t help but think that pork, in this case, is being overblown in discussion, compromising only a fraction of the total cost. 

Instead, what discourse on the topic I’d prefer to see – if not the economic theory behind the matter – are investments that aren’t considered pork aren’t considered entirely necessary either, and that will cost quite a lot.

Among them is the $9 billion broadband Internet expansion that the New York Times reported earlier this week.

The intent of the expenditure is to expand broadband Internet service to rural and underserved areas. This has actually been a campaign promise of Obama’s, to bring the Internet to every corner of America. And while I think this idea is rooted in good intentions and theory, it won’t serve the purpose of stimulating the economy or developing businesses. 

The idea of the package is that it seeks to borrow money to spend on facilitating business development by improving infrastructure. The Internet certainly is infrastructure; like roads or bridges, you cannot make accessible some things – in this case information – without the underlying framework: Coverage. 

But, according to industry analyst Craig Settles, who was interviewed by the Times, there is a possibility that in this case “you will spend money for things that people don’t need or can’t use.”

 After all, there’s a reason Internet service providers haven’t entered into the underserved and rural areas yet. When thinking of what the Internet has done to business in recent years, one seems quick to jump to the conclusion that it will do a great job at bringing about new growth regardless of circumstance.

However, the businesses in underserved or rural areas aren’t likely to be the type to benefit from the Internet. Small-town groceries or inner-city convenience stores aren’t likely to get more customers through Internet expansion.

So although it sounds nice to expand infrastructure to these areas, it’s probably not going to promote economic growth, which is what the stimulus package is intended for. But at the least, there’s no reason to believe that it will work.

Overall, it seems just a hair above very expensive pork.