What we need in our economy is jobs. We need to have more people working, more people spending, more people planning and innovating and creating yet more jobs.
We aren’t lacking in work, though. We have plenty of things that need doing. So we have no shortage of work, but a shortage of jobs. What do we need to fix this? Someone signing paychecks. And before you whinge about raising the deficit, allow me to quote Mike Konczal: “capital markets are desperate for the U.S. to find something productive to do and are willing to loan us the money to do it at ultra-cheap rates.”
So, if we pick projects with even modest returns on investment, we will be paying off those loans and to spare. If we are smart, we can use spending to stimulate the economy, boost employment and reduce the deficit. The problem? Spending makes people think about the deficit increasing and people have a seriously irrational fear of the deficit.
So instead what we do is try austerity methods, which is in effect punishing the economy for not being healthy by starving it.