If we were to believe most politicians, we’d be under the mistaken impression that government not investing today does future generations a favor. Leaving communications systems underdeveloped, road and transport networks crumbling, education and public health systems deteriorating, our cultural institutions eroding, developments in science and technology stagnating, and so on, will supposedly free future generations of any burden that might otherwise be imposed upon them.
If we set aside the politicians’ Orwellian Newspeak, it is obvious that investing in infrastructure today helps future generations, and not investing in it leaves future generations in a worse state. It is also clear that this investment for the benefit of future generations requires no reduction in our own current levels of consumption when, as now, many unemployed and part-time workers want full-time jobs and there are plant, machines and other equipment being left unused.
Politicians claim, of course, that if we refuse to invest today, governments of the future will have a greater capacity to do so. But this makes no sense at all in the case of a currency-issuing government. Such a government can never have any more, nor any less, capacity to purchase what is available for sale in its own currency. A currency-issuing government can always initiate production when there are people keen for more working hours and there is productive capacity lying idle. When government fails to do this, the missed opportunities are gone forever. Those hours of lost employment and forgone production are not saved up for the future. They simply lapse.
All that government achieves by not investing now is a future shortfall in infrastructure, knowledge and culture to match the unemployment and underemployment experienced today by those who could be designing and building the infrastructure. With many people desiring more employment, and available plant and equipment lying idle, it also means that we miss out on what economists call the ‘multiplier effects’ of the infrastructure investment. Put simply, the people paid to build the infrastructure would have higher incomes to spend, which would then encourage additional production, employment and income creation elsewhere in the economy to meet the higher demand for output.
Public infrastructure investment is a win-win. We enjoy higher living standards today and our children and grandchildren inherit better infrastructure in the future.
But politicians apparently want us to embrace a lose-lose: lower living standards today and impoverished generations tomorrow.