As the nation prepares for President Barack Obama’s speech on jobs and the economy, SMU’s Collins Executive Education Center hosted a listening session with members of the President’s Council on Jobs and Competitiveness Sept. 1, 2011.
Local businesses and stakeholders joined presidential advisers to discuss public and private sector partnerships that may create opportunity and support job creation.
“The ideas and information exchanged at these events will help inform the future policy work of the President’s Council on Jobs and Competitiveness, which meets with President Obama each quarter to recommend critical steps that both the private and public sectors can take to create jobs and help strengthen the economy,” according to a White House Press Office release. The SMU session focused in the importance of infrastructure investment to creating jobs across sectors of the American economy.
SMU Cox School of Business economics professor Mike Davis was among the audience members during a panel discussion that featured U.S. Department of Transportation Secretary Ray LaHood, AFL-CIO President Richard Trumka and U.S. Chamber of Commerce President and CEO Thomas Donohue. The panel examined the merits of public/private partnerships and federal spending on infrastructure improvements.
Afterward, Davis observed that “today’s grim employment numbers will certainly lead to more calls for massive increases in government spending on infrastructure. Unfortunately, such spending will do little to help the unemployed.”
There are two reasons for this, Davis says. First, “there are very few genuine ‘shovel ready’ projects. Most infrastructure projects take several years to plan and require almost no new workers in the initial stages of development.” Davis cited research by Stanford University economists John Cogan and John Taylor, which found that only 2 percent of the $862 billion in stimulus money spent between 2008 and the middle of 2010 actually went to purchase new public goods.
“The government would have liked to have spent more money and put more people to work, but the projects just weren’t there,” Davis says.
The second problem with infrastructure spending “is that far too many projects are driven by political, not economic, considerations,” Davis adds. “Few politicians want their name attached to a sewer treatment plant – they want a highway or an airline terminal named in their honor.”
According to Davis, “almost every objective expert on infrastructure recognizes that the most valuable projects are often the least glamorous. This wasteful, inefficient spending makes it harder for the economy to recover and create real jobs.”