Harold Meyerson explains why it hasn’t been possible to use public works to counter massive unemployment in construction, and wouldn’t have been even had more funds been appropriated:
What happened? Big government — spending, that is — ran into good government — regulation, competitive bidding, environmental safeguards, the works. “To be shovel-ready is much more complicated now than it was in 1933,” says Laura Chick, the former Los Angeles city controller (and a liberal Democrat) whom Gov. Arnold Schwarzenegger appointed as the state’s inspector general of stimulus spending. “Environmental-impact reviews, historic-preservation safeguards, unionization of government workers — these are good things, but they’ve changed the way government can operate. Plus which, the federal government said, ‘We’ll give you a ton of money, and we want you to spend it faster — and better.’ There are no exemptions from regulations that came with the stimulus funds. They didn’t waive the requirement for competitive bidding; they stressed competitive bidding.”
She continues, “You can’t just build a new bridge. You’ve got to do environmental-impact reports, you have to open up the decision to community input, you face potential lawsuits. I’m not saying concern for environmental impacts should go away, but it makes it harder to deal with an economic crisis.”
Two lessons from this. One is that I think we need some more real talk about environment-impact reports and community input—it’s good that we no longer do infrastructure projects with a total disregard for these things, but there’s a real need to transform these processes into something more streamlined that takes a finite and knowable amount of time.
The other is that we need to work much better on our automatic stabilizers. The paradox of ARRA is that even though the stimulus package was sort of enormous, in the aggregate there’s been no net public sector stimulus whatsoever once you take state and local government into account. What’s needed for future downturns is some kind of fairly automatic mechanism to prevent this state and local contractionary impact. Recall that this was also actually the big problem with the Roosevelt administration’s policy—for all the WPA-nostalgia that exists in some quarters there was almost no aggregate public sector stimulus until the World War II defense buildup.