So short-term job creation is not, they argue, automatically a good thing if we judge investments by their long-term value.
“Simply assuming that any transportation investment will have positive stimulative effects and will produce long-term gains for the economy is not a sound basis for investment.” The two authors basically call for a form of lifecycle cost analysis of any transportation investment, ending with the selection of those projects that promise better “returns” on the investment.
One of the problems identified by the authors is the uncertainty of the “multiplier effect.” Estimates of how much a given project or investment means to long-term economic success, how many ripples it sends out over the economic pond, how many jobs it creates, tend to “carry substantial uncertainty,” to use their words. “Generally they are not purely data-driven; rather they rely on judgments and assumptions, and may not take into account aspects of the structure or timing of an investment that would have an impact on its actual multiplier effects.”
This uncertainty about how many jobs will actually be created by a specific transportation investment too often muddy the waters when it comes to assessing the long-term value of the investment and make it difficult to compare to other possible transportation uses of the funding involved.
Cited examples of long-term benefits from transportation infrastructure investment include improved efficiency and productivity brought about by reduced costs associated with congestion, environmental damage and accidents on our roads.
But the authors make it clear they believe you can have your cake and eat it too. Short-term job creation can be a part of long-term economic recovery if it’s done right, and that is the core of their case. But to achieve both goals, we must approach transportation spending in a fundamentally different way than we have in the past, they say. To do this, they recommend these policy changes:
1) Borrowed funds should not be put into existing channels for transportation spending in an effort to increase short-term employment. We should not put any money — much less borrowed money — into programs that provide questionable job-creation and long-term economic benefits.
2) Funding for transportation infrastructure that is intended to create jobs should focus on investments that are “shovel-ready” and provide long-term benefits. These are the investments that can immediately help ease unemployment while also building our economic future.
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