Much has been said, perhaps too much, about the effects of the budget cuts championed and implemented by Gov. Scott Walker and the Republican state legislature. However, most of this discussion revolves around the short-term effects of the cuts. And these cuts will have serious short-term consequences, indeed. However, the short-term is just that: it doesn’t last. What’s important – and in this case, even more alarming – is looking at the medium and long-term consequences of these budget cuts.
In a recent interview with the Capitol Times, Laura Dresser, the head of the Center on Wisconsin Strategy, discussed the possible consequences of the Wisconsin government’s failure to invest adequately in the state. In Dresser’s words, “We need to have a conversation about what it means to the long-term future of this state to act as if we don’t have the resources to maintain or enhance that infrastructure that got us where we are.”
Maintaining and enhancing infrastructure, as Dresser puts it, is one of the government’s most important roles. The reason for this is if the government doesn’t provide and maintain these so-called “public goods” – goods like roads, which the private sector won’t produce because there’s no way to stop people from using them for free – then no one will. Why would someone want to invest all the money in building a road if people can use it for free? It just so happens that some of these public goods are vitally important for building and maintaining a sound economy.
After all, if a state doesn’t have adequate transit networks and educational systems, then who would want to bring or keep a business there? Clearly infrastructure investments help to attract business, and thus the much-discussed “jobs” and “growth.” New York Times columnist Paul Krugman gave name to this effect, calling it “crowding in” (as opposed to crowding out, which is the economic term for government borrowing “crowding out” private sector borrowing). By investing in its infrastructure, a state can actually help to crowd new businesses in.
In this context, Walker’s refusal of nearly $1 billion from the federal government for a high-speed rail network looks downright foolhardy, if not plain negligent. Not only did Wisconsin lose out on the immediate benefits, like the infusion of $1 billion into the economy and many new jobs, but we also don’t get to enjoy the long-term benefits of a state-of-the-art public transit system.
Of course, one area of the budget seeing the most significant cuts is education, specifically to the University of Wisconsin system. This is a topic that has been discussed ad nauseum on campus, so I’ll avoid talking about it in depth. Suffice to say that reducing investment in education is not a path to economic growth and prosperity.
Reining in government spending is important, and wasteful spending should certainly be eliminated. Additionally, investments in infrastructure are not unambiguously good – for example, former Alaska Gov. Sarah Palin’s “bridge to nowhere.” And of course, tax breaks are, without doubt, beneficial to the economy. However, they should not come at the expense of infrastructure investment. If we don’t reverse course soon, we may have to learn this lesson the hard way.
Joe Timmerman ([email protected]) is a sophomore majoring in math and economics.
