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TRUMP, GDP AND INFRASTRUCTURE

April 28, 2017

TRUMP, GDP AND THE INFRASTRUCTURE

The economy as measured by GDP for the first quarter 2017 came in at a dismal growth rate of 0.7 percent while the Dow ascended to historic heights, again proving (along with Trump’s promise to reduce taxes and regulations on the rich and corporate class) that there is little to no connection between economic growth and the Dow, a Dow index which does not measure the real economy as it once did but rather one now of expectation of growth in corporate welfare courtesy of the government.

A quarterly GDP of only 0.7 percent is ordinarily thought to be a harbinger of near-recession, but the business page apologists very quickly poo-pooed the first quarter’s GDP number to be a result of unexpectedly good weather in January and February, poor car sales, the wrong way to measure such statistic etc. Trump has told us that his policies once in place will give us a GDP growth rate of 3.0 percent or more. Economists say that is not going to happen, and I agree. On the contrary, I rather look for a recession in 2018 as his lower tax – higher national debt regime takes hold, spending both public and private goes south, and the unemployment rate goes up as demand goes down and jobs are increasingly automated.

About the only bright picture I see in this macro look in the immediate future, and one that if done right could keep us safe from recession for perhaps years, is infrastructure investments in bridges, roads, public buildings etc. Trump has said that he wants to do infrastructure, Democrats agree, and I have been blogging for years that we listen to the reports of the Society of Civil Engineers that some of our bridges are unsafe to traverse (as we saw a few years ago when a Minnesota bridge collapsed and killed a number of people), a disaster we swept under the rug for fear we might have “to raise taxes” or increase our debt (though these same people in the Congress who ignored the Minnesota tragedy did not seem to mind raising our debt with tax cuts for the rich and corporate class in a classic demonstration of favoring profit for their patrons over life itself).

I have blogged for renewal and rebuilding of our infrastructure many times before and after the Minnesota disaster, and nothing happened. Now it appears that, finally, we are going to do something with our public “furniture” and it’s not a minute too soon, right? Wrong. I am now painfully opposed to such repair and renewal, not because it isn’t a first priority, but because of the way Trump has announced he wants to do it. He wants Wall Street to get into the act so as to avoid tax increases and massive additions to our debt which will make him look good politically, but what are the downsides?

One downside, among many others, is as follows: (1) Privatization of our transportation system by corporate enterprise which will cost us fees and charges for using the streets and roads and bridges  whose renewal they have financed from our driveway to our destination(s) and return(s). Think toll roads, bridges, building user fees etc. Wall Street, after all, has to have a source of income in order to retire the bonds they have issued to get the money (plus interest and commissions) they needed to finance our infrastructure’s repair and renewal in the first place, and on the political front, we will have effectively handed over public control of our transportation policies to the rich and corporate class without adequate public accountability, just as we have handed over public control of our economy, our healthcare and soon our educational policies to such profit privateers.

Trump’s proposed use of private enterprise to finance our infrastructure repair and renewal doesn’t save you and me a cent; it merely postpones its collection as we and our children and theirs and theirs pay off Wall Street bonds at interest while simultaneously and perhaps forever losing our public say in transportation policy to the privateers, and as for his argument that we cannot afford such trillions in debt, how is it that it is all right to “afford” trillions of dollars in tax cuts for the rich and corporate class but not for repair and renewal of public infrastructure?

So how to pay for such a gigantic project and keep it away from the moneychangers? One way (and there are many other such means) would be to come up with an infrastructure tax on the rich and corporate class earmarked for the repair and renewal of our streets, bridges, electrical grids, ports, airports and other such public facilities since they have been on the gravy tax train long enough and are, after all, substantial beneficiaries of such improvements since they own the fleets of trucks, airplanes, ships and are otherwise heavy users of public ways and other facilities.

I am very much in favor of the repair and renewal of our infrastructure for all these many years not only from the point of view of safety and efficiency but also from the viewpoint that such a massive Keynesian project would kick-start our economy from its doldrums, save us from recession, and could very possibly result in meeting or exceeding Trump’s hoped-for measure of GDP – but not on his terms. There has to be a cessation in this corporate purchase of America, and I have, reluctantly, drawn a negative line in the sand for this otherwise very worthy investment, and now you know why.      GERALD      E

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