The Good: The former Lazard Freres exec argues government should take a big role in building the economy.
The Bad: Fails to advocate for specific infrastructure improvements.
The Bottom Line: Strongest in arguing that projects we now take for granted faced fierce opposition.
Bold Endeavors:How Our Government Built America,and Why It Must Rebuild NowBy Felix RohatynSimon & Schuster; 259 pp; $26
Funny thing, this economic stimulus effort. When the U.S. was flying high, the country couldn't afford to maintain highways and repair bridges. Now that it's in crisis, we've got plenty of money to pay for highways and a whole lot more. The mayor of Las Vegas even suggested Congress could help pay for the city's mob museum, dedicated to Al Capone and other luminaries of organized crime. (Congressional Republicans seem to think there's a problem with that.) Who says the good times are over?
Felix Rohatyn's ideas are quite a bit bigger than an earmark here and pet project there. In his new book, Bold Endeavors: How Our Government Built America, and Why It Must Rebuild Now, the former Lazard Frères managing director and onetime ambassador to France sketches out 10 examples from U.S. history when the government played a central role in ambitious undertakings that changed the country. These include the Louisiana Purchase, the Erie Canal, the transcontinental railroad, and the Rural Electrification Administration. Timely and forceful, the book uses the case studies to argue that "the federal government has traditionally been the indispensable investor in our nation" and to rebut those who believe that "government intervention in the economy is always wasteful and ill-considered."
BUILDING HUMAN CAPITAL
The examples Rohatyn chooses help make his case. No private enterprise could have played the role Thomas Jefferson did when he decided to open negotiations with Napoleon over a potential purchase of New Orleans. In the end, in 1803, Jefferson agreed to pay 80 million francs, or about $15 million, to double the size of the young nation and set it on a path toward expansion and economic might. It's also hard to imagine any company or collection of states building the interstate highway system with the kind of scope and cohesiveness brought to the project by the Eisenhower Administration in the 1950s.
Rohatyn explains that the government hasn't just invested in the hard assets of land and highways either. In 1944, Franklin Roosevelt signed the G.I. Bill, which allowed millions of returning World War II veterans to obtain college degrees or acquire vocational training. The program, which cost the federal government $14.5 billion, helped boost the U.S. education system and build the knowledge economy we know today. The author admits that government spending can be wasteful at times and gives a couple of examples. But he doesn't explore when and how government programs go wrong.
CONFLICT WITH LEGISLATORS
Bold Endeavors is strongest when it shows readers how investments we now take for granted originally faced fierce opposition. Robert Hutchins, then the highly respected president of the University of Chicago, said the G.I. Bill would turn colleges into "educational hobo jungles." President James Buchanan vetoed the Homestead Act, which distributed thousands of acres of Western lands to settlers, before it was approved by Abraham Lincoln.
Even the Louisiana Purchase, now seen as an historic bargain, faced strong opposition from many in Congress who felt it was too expensive and would dilute the influence of the original states. Rohatyn's point is that these ambitious efforts don't just happen; they take strong leadership and vision.
His book appears to have been conceived before the current economic crisis, but it has many lessons for today. Rohatyn clearly believes the federal government is right to become more active as the economy flounders. He also says Congress should use the stimulus effort to create lasting change. This is a chance to transform the country in ways as profound as Jefferson, Roosevelt, and Lincoln did in their day.
Rohatyn suggests the creation of a National Infrastructure Bank to guide the country's investments in a more coherent way. He says that while the federal government spends $73 billion annually on infrastructure projects, "there is no system guiding these funds toward their most important uses" and much of the money goes to "boondoggle spending." The NIB could prioritize projects on a national scale and help finance those that make sense for the country as a whole. (The states are sure to love this idea.)
It might have been valuable for someone with Rohatyn's experience to advocate for specific projects that he believes the NIB should take on. But the most he offers is a general plea for better roads, bridges, and ports.
Still, you can't help but come away from reading Bold Endeavors with the idea that the country should expect at least one nation-changing project for its $800 billion. It's an enormous sum by any historical yardstick. The price of the Louisiana Purchase in today's dollars would be about $277 million. The Erie Canal would cost $80 million. Even Roosevelt's rural electrification program ran only about $1.5 billion in today's currency—a rounding error in the current stimulus bill. What will U.S. taxpayers have to show for their money this time?