Does the Federal Government Need to Increase its Investing in the US Economy?

Interesting extract from David Leonhardt’s new book on the negative consequences of reduced Federal Government spending on R&D and infrastructure since 1960. Biden has somewhat reversed the downward trend but the author is concerned about a less prosperous future as a result.

Difficult time to contemplate increased spending due to the current large federal deficit?

I have several problems with that article:

  • It focuses on the “speed of travelling” for the rich for its comparisons. Totally neglects improvements in transportation ability for those of more meager means that have developed in the last 60 years.

  • In a related vein, a lot of the problems of “longer commutes” is the result of more traffic (autos on the roads along with more people trying to fly) rather than any real lack of “progress.”

  • It ignores improvements made in safety of travel that has occurred in the last 60 years as a measure of “progress”.

  • A lot of the “improvements” made in the “speed of transportation” was done by the private sector; not by extensive federal government spending. If you want to see the proof of this, consider who is spending the money to develop new means for space flight. I do not believe that it’s the US gov’t providing the bulk of that funding.

  • The article ignores improvements in other forms of communication that now supplants the need for “in-person visits” that existed in the last quarter of the 20th century as a means of making “progress”.

  • Should the people of North Dakota (or any other “fly-over” states) help fund “progress” that benefits only those who live in CA or the Eastern Seaboard? That is my take away from the last two paragraphs of that article.

Bottom line: Federal spending on “R&D activities” should be focused on things that would generally benefit all of its citizens (like medical research); not funding “progress” in a few places (like improved commute times).

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Imo, that should not be their ONLY reason for increased spending.
AND, itshould spend more to help little guys, not the big guys.
Trickle-up always happens.

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I’m not sure how R&D at a government facility gets into the commercial market. In the section below, I have an example for O O O Ozempic.

VA researchers discovered a new diabetes drug from an unusual source. In the mid 1990s, Drs. John Eng and Jean-Pierre Raufman found that a hormone in the venom of the Gila monster—a large lizard native to the southwestern United States—stimulates the body’s insulin production. The hormone, exendin-4, works similar to another hormone called GLP-1 found in the digestive tract in humans that regulates blood glucose. But exendin-4 degrades in the body much slower than GLP-1.

Eng licensed the discovery to an outside pharmaceutical company so it could be developed into a drug. A synthetic version of exendin-4, called exenatide, was approved for medical use by the FDA in 2005. Exenatide, sold commercially as Byetta or Bydureon, is taken as a shot by people with Type 2 diabetes. It is used as an add-on to other diabetes drugs to avoid or postpone the use of insulin injections when diabetes is not well-controlled by the primary medicine. More than 2 million people now use exenatide worldwide.

I wonder if changes in intellectual property rights over the past 30 years are a factor. This guy worked at the VA and apparently “owned” the patent rights. How’s that work?

A cross-country trip today typically takes more time than it did in the 1970s.
How do we know this?

I made 660 mile round trip in the last few days. I traveled on roads that have been upgraded since the 1970s. I didn’t see anything that suggests it would have been faster 50 years ago. (I’m so old, that I was driving some of that route 50 years ago.)

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His book, from which this article is extracted, talks more about government investments that benefit most citizens.

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I think I have commented on this before but labour mobility in the US has actually gotten worse in the last 30 years.

So a cost effective federal investment is to improve the transport links (trains and roads) between the various key cities so that people can more easily (and cheaply) move around.

That should provide a net economic benefit to the country as a whole.

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A better comparison might be intercity train times and the failure to implement faster rail transport? It takes about three hours to go from NYC to Washington by train, about the same as 50 years ago? In contrast, between major cities in Europe, it would now take half that time to go the same distance because of their rail investments.

Having said that I have become a bit disenchanted with rail investment simply because it seems to be horrendously expensive for the resulting benefit. A better investment in the US economy might be subsidized day care? That has been shown to more than pay for itself with higher labour participation rates.

I feel like the voter’s sentiment is moving in that direction. You are starting to see more free pre-k than in prior years and hopefully that will continue and eventually include all child care.

Until they start building inexpensive housing, ain’t nobody moving no where.

My exact impression. Made first Chicago-LA drive in 1967. Family camping with a trailer, 5 kids, and a dog.

Speed was great. Distance/day not so much. But that had to do more with how restless the troops were.

There is inexpensive housing, they are just not near any jobs. If you want to find affordable housing and work in a major metro area not named Detroit then you will either

  1. Redefine what you call affordable
  2. Grind in the car for over an hour each way
    If there were more mass transit from suburbs to the cities then people could live 50 miles away from the city and a high speed rail could get them there in 20-30 minutes.

This is the problem. If everyone tries to squeeze into the same dozen major metro areas, the land there will get very expensive. Especially if those cities on on coasts.

There are many cities in the US that are not costal, and also, the jobs are more plentiful in the big cities. This is true for almost any non-agrarian occupation.

i am thinking of starting to scout mid-level cities for my (too far in the future) retirement. thinking a center city of 100k-200k and then the surrounding. enough industry and healthcare and other activity for my liking. reality is I don’t go to that many games/concerts in the major city. I can just pay for the hotel if i want that.

maybe I guess wrong, but it will be worth exploring.

I guess the question is “major” metro. Yep, most jobs are in metro areas. There are some jobs that are connected to certain major metro areas – investment banking, movie production, the very high end of programming. But, other urban places have lots of jobs. Anything in healthcare, k-12 education, personal services (haircuts), auto retailing and repair, general retailing, residential construction and repair, … are all “secondary” jobs that appear anywhere there is population.

“Minor metro” areas also have jobs that bring money into the community. The small city of Cedar Rapids Iowa has Quaker Oats and Collins Aerospace, (happen to have relatives there). There’s always something.

If major metro has outrageous housing prices, do people simply refuse to move their unless they happen to want careers in something that can only be done in that city?

Or, is it that it’s not just jobs, but all the fun stuff. Are there people who wouldn’t move somewhere that doesn’t have the big four pro sports teams, or regular concerts, or a very trendy food scene, … In some cases, the biggest cities have climate or oceans or mountains that draw people.

My sister lives in Marin county. I can certainly see the appeal, but I would need a job that pays a lot more to stomach the housing costs.

It’s interesting to me that big seems to lead to bigger, even when people complain about the high cost of living.

Yeah, before I retired I thought a university city would be interesting. Usually a teaching hospital, the college “atmosphere”. Somewhere not too cold and not too warm. (My wife said “Move???”)

I can see that the US hasn’t upgraded rail travel like other countries. But, to me “cross-country” means coast-to-coast. For that distance, planes are faster than trains. Cars and planes may be no faster than they were 50 years ago, but they are not slower.

All true. But if the convo is about “moving to get work”, then a rapid rail has certain features. Traveling at 180mph is a lot faster than 30 mph. I know that a helicopter is faster than driving. That doesn’t cause me to wonder why everyone doesn’t just use their helicopter. And the point of public transit, like rapid rail, is to make regular, daily travel easier, faster, and cheaper. It’s good for people and business.

In those job creating metro areas, land prices are high. But in locales 60 miles away, the land is a whole lot cheaper. Once upon a time we laid track and created towns out of vacant land. A sort of public/private combined effort. ( the state would exterminate the Native Americans and the Capitalists would be in charge of rounding up immigrants to do the work) It’s not that crazy of an idea. Today, lord knows we have the immigrants and the capitalists, and I guess the current property owners will have to sit in for the Native Americans. We did it before, we can do it again!

I’ve been in Lawrence, KS for three years now. The University of KS is here, about 90k residents plus like 30k college kids when school is in session. The weather does suck from time to time but otherwise it’s been great, I live near downtown so I’m a mile from pretty much everything. We lived in the Denver suburbs before, and don’t get me wrong there’s a lot I miss about Colorado. But we rarely went into the city - traffic, parking, no thanks. There is less to do here but we are constantly going downtown, bike infrastructure is pretty solid, I can walk to quite a bit from my house.

The University provides a lot of diversity - people, food, music. And of course jobs. We also looked a bit at Columbia, MO, I’ve spent time there and it’s great. I think a mid-sized college town is a really nice option for some.