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Mohamed A. El-Erian

Infrastructure Plan Opens Way to More Sustainable Growth

A much-needed pro-growth initiative would also most likely limit dividends and stock buybacks.

President Biden’s infrastructure plan takes the right approach.

President Biden’s infrastructure plan takes the right approach.

Photographer: David Paul Morris/Bloomberg

While economists will spend weeks calculating the detailed impact of President Joe Biden’s wide-ranging $2.3 trillion infrastructure initiative, two big takeaways seem clear based on what administration officials have signaled already. First, the initiative should please those hoping that the U.S. economy that emerges from the pandemic is stronger and fairer, both sustainably. Second, it is likely to be less pleasing to shareholders who have become used to windfall cash handouts to companies being passed on to them through higher dividend payments and stock buybacks.

President Biden’s infrastructure approach seeks to make human, physical and technological capital more productive. The traditional emphasis on basic infrastructure such as roads and airports is supplemented by measures to unleash the productivity of a much wider spectrum of the American population and to enhance the use of technology.