I have a crazy idea: Big Dig spending was a major contributor to the boom and bust business cycle we’ve gone through in the last decade and a half. On the upswing, construction spending boosted local employment - as Tyler Cowen notes, multiplier effects are easily overstated but for something this large, some multiplier effect seems possible. More to the point, the Project combined infusion of Federal cash with borrowing on the scale that would mean post facto fiscal policy. On the downside, the costs and associated taxation became a drag just as contracting work began to slow down. OK, it’s a simplistic understanding of things, but if remotely true would suggest that the graft and the overruns boosted the heating economy on the upside but meant a greater drag on the down. If it had been one or two billion instead of fourteen, we wouldn’t have felt its impact nearly as much.
No comments have been added to this post yet.