PUBLIC-WORKS EXCESSES: A LETTER TO THE ECONOMIST (December 16, 2008)

In connection with Barack Obama’s promised public-works program, you warn that “Japan offers a cautionary tale on the risks of an infrastructure-based stimulus” (“Days of Open Wallet,” December 13, 2008). Indeed, Japan’s construction sector once reached almost a quarter of its total output, which made it politically powerful, inefficient, as well as corrupt. America’s construction sector, hovering under a tenth of its total output, is nowhere as powerful as Japan’s, but the warning is still well taken. The key is in the word “stimulus,” though. Although it can be habit-forming, it must be clear from the outset that its main function is to bolster the national economy rather than the construction sector as such. Of course, it must also be abundantly clear that it is limited in time. That is the only way to avoid Japan’s public-works excesses, which linger to this day.