Sunday, December 27, 2015

Notes on Physical Infrastructure

One of the notable government/supply side responses to the Great Depression (in the U.S.) were extensive efforts to improve physical infrastructure in the South. Many who were born in the fifties such as myself, remember older homes from childhood which had only recently benefited from their first electrical installations.

Often, these homes had a single bare bulb in the middle of each room, hanging from the ceiling with a pull string attached to turn on the light. Some of us still have pictures of outdoor bath time (as babies), in metal washtubs! Likewise, outhouses could still be found behind the homes of many a grandparent - many of which were still being used. Generally, it was the new mid century homes of rural areas which came with indoor plumbing - a time when many a dirt road was finally paved over, as well.

Measures such as this, brought the South into the formal economy on far more productive terms than had previously been the case. Even though real progress was associated with the entry of women into the workplace, the importance of mid twentieth century infrastructure can not be denied. While Washington could scarcely achieve a similar feat today, fortunately these are not the kind of physical infrastructure efforts that are most needed. More flexible forms of physical infrastructure could greatly assist those who need broader economic access. Even better, these efforts can be organized without centralized planning.

While today's physical infrastructure network is extensive and in many respects stable, the costs to set up and maintain similar forms of infrastructure, are beyond the capabilities of those with lower incomes. All too often, there is little room in prosperous regions for these individuals, given the fact these areas need higher income levels just to maintain the environments and services they already have in place.

However, these forms of exclusion are beginning to take a toll, as economic output and participation could be lost - slowly but surely at the margin. For instance, the continuing tight money conditions of general equilibrium are representative of this process, as illustrated by the binding output quota recently discussed by Nick Rowe and David Andolfatto.

If the stagnation of supply side limits is to be overcome, new forms of infrastructure networks would be an important part of the process. The good news, is that many possibilities for physical infrastructure need not entail the costs associated with the infrastructure investments which occurred after the Great Depression.

Alternative infrastructure is one of the best solutions possible for inequality, given the fact present day infrastructure tends to isolate the marginalized. In many instances, the all or nothing expectations of traditional settings, translates into all or nothing scenarios for workplace and personal relationships as well. While many among the marginalized continue to live in some form of housing, their lack of ability to share experiences with others on similar terms, prevents them from maintaining strong relationships. Hence a primary goal for alternative physical infrastructure settings, would be to maintain system wide mobility, for all who take part.

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