The current presidential campaign has so far failed to provide something we badly need: a discussion of what government should and should not do in a modern industrial democracy. The recent events in Los Angeles have shown that government must be much more active in dealing with social problems such as public education and health care, drugs, housing, unemployment, and public safety. Government, in my view, must also be much more involved in stimulating economic growth if the American tax base is to be sufficient to support the social services we need, and if revenues are to grow at a rate that will enable us to reduce the deficit.
The need to define the government’s part in the economy is long overdue. If we observe our competitors abroad, whether in France, England, Germany, or Japan, their governments are more active than ours in encouraging investment in infrastructure and new technology, in supporting joint ventures, and in financing primary and secondary education.
By contrast our own efforts at public investment have been relatively feeble. The administration and the Congress recently came up with a five-year, $150 billion transportation plan. It is a step in the right direction but it is still inadequate. Taiwan, approximately the size of Pennsylvania, has announced a six-year plan for investing $600 billion in public infrastructure. West Germany will have invested $1 trillion in East Germany, a country of 17 million people, by the year 2000.
The federal government should commit itself to providing up to $1 trillion over the next ten to fifteen years to supplement existing state and local government spending for infrastructure. The actual pace of the buildup will depend, in part, on the capacity of the construction industry to keep pace with new projects, as well as the overall demands the government will make on the financial markets. However, the fact of a sizable long-term commitment to infrastructure on the part of the federal government is more important than the exact amount to be invested or the precise period during which investment would take place. Such a commitment would involve partnerships of public and private investors to build new airports, new air-traffic-control systems, and rapid rail links, as well as more traditional public investments, in roads, bridges, new schools, mass transit, and the other basic requirements of an urban and suburban society. The need for such investment should no longer be a matter of debate. As a recent study put it:
Public investment in infrastructure has dramatically declined. Over the last two decades, non-military public investment, as a fraction of GNP, was only 65 percent of its average level during the preceding two decades, falling from 3.7 percent to 2.4 percent. When depreciation is taken into account, the rate of non-military public investment in the 1980s was only half that of the 1970s and just one-fourth that of the 1950s and 1960s.
The same study estimates that:
a one percent increase in the level of core infrastructure will increase GNP …