Karl W. Smith, Columnist

Invest in Public and Private Infrastructure Right Now

The federal government can help fund all of it, at very low cost.

June 25, 2020 at 12:30 PM UTC

Karl W. Smith is a Bloomberg Opinion columnist. Previously, he was vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina.

Smart economic stimulus.
Photographer: William Thomas Cain/Getty Images

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As part of their plans to support economic recovery from the Covid-19 crisis, both the White House and congressional Democrats are working on major infrastructure packages. This makes good sense, even though infrastructure programs used as stimulus have an uneven history, because at the moment interest rates are near rock bottom. To get the most bang for the buck, however, policymakers should support private as well as public infrastructure.

Shovel-ready projects are an economist’s textbook example of effective stimulus. John Maynard Keynes once quipped that the UK could stimulate its way out of the Great Depression by burying bottles of cash in abandoned mineshafts, so that private businesses would pay workers to dig them up again.