I’m on vacation this week, but I can’t resist bringing a little local Maine color into the Moneybox world. So I was interested in this piece out of Brunswick where land that was formerly used for Brunswick Naval Air Station is now a bonanza of affordable housing for seniors and young families in the area.
This is a reminder that excessive attention to accounting often leads to a misleading view of the “costs” of this or that undertaking. The budgetary cost of running an airbase is only the beginning of a conversation. The real cost is the real resources involved. Land and supporting infrastructure that could provide local housing is used for an airbase instead. The cost of a white elephant construction project isn’t that money is spent, it’s that the people and machines involved in building it could have built something else. That’s why even though getting public works done on an accelerated scale during a recession is hard, it can be very valuable. When demand for building residential and commercial structures plummets, the real-world cost of spending money to employ workers in public infrastructure projects is very low. Conversely, the standard pro-cyclical spending cycle of state governments where they bump up infrastructure spending at the peak of a boom is exceptionally wasteful because it crowds out private sector work at precisely the time the private sector wants workers.