Gone4Good
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Sep 9, 2005
- Messages
- 5,381
I don't know much about sea levels, but spending money on infrastructure contributes to higher growth.
This sounds a bit like the parable of the broken window where higher growth is assumed to come from breaking, and then replacing, store windows.
In the case of building dykes to protect a city it seems pretty clear to me that activity won't make us richer. They don't increase productivity. They don't enhance the city versus what was there before. Sure, they prevent us from becoming poorer by protecting the city from destruction. But they don't make us richer than we already were. All building dykes does is consume resources that could have been spent on something productive.
Building new power plants is similar, but more complicated. If all we're doing is replacing one power plant with an economically identical power plant we end up no richer for the effort.
Now there's a fair argument that replacing a coal plant with solar plants might make us richer. Solar might be a worthwhile investment regardless of environmental issues because we get zero marginal-cost power thereafter. But it's still hard to see that spending resources replacing existing infrastructure makes us richer than building new, productivity enhancing, infrastructure would.
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