Some skepticism about infrastructure spending

Massive infrastructure projects are being sold by the administration as a way to provide jobs in the short-term and invest for the long-term economic growth of this country. With so much money being spent at once and a belief by many that the current government will make the right decisions, we are setting ourselves up for a "lost decade."

In 1990, Japan's "bubble economy" collapsed. Like our recent economic troubles, it started in real estate. Japan's case was much more extreme in degree. In the Ginza district of Tokyo, some property went for $139,000 per square foot in 1990. Japan propped up existing banks, and banks did not recognize defaulted loans. They created "zombie banks" propped up year after year by the government and pretended they were solvent.

Japan's fiscal policy was to spend on massive public works projects to keep people employed. Airports with no airliners wanting to fly there, concrete tetrapods to prevent beach erosion that actually do the opposite, roads and bridges to nowhere, and countless other projects that did not bring Japan back to prosperity.  

Creative destruction was not allowed to work in Japan. Older firms that were no longer productive were propped up by banks, and Japan's economy was frozen. To show for itself, Japan has the highest national debt as a precentage of GDP in the industrialized world, 170%.   To think that it can't happen here is to disregard the record of inefficiency and contradictions of the US government and governments in general.