Infrastructure Spending at Historically Lowest Level

by Bud Meyers, published March 10, 2015

Follow the money…

January 22, 2015 — Wall Street Journal: Qualcomm Gives Top Executives $95 Million in Stock Grants
March 9, 2015 — Forbes: Qualcomm Plans $15 Billion Stock Buyback, Hikes Dividend

Qualcomm is but one of many examples where worker productivity has been going — and where tax revenues have NOT been going. A CEO’s real “fiduciary duty” is to pay themselves first. Meanwhile, Hewlett-Packard will acquire the networking company Aruba Networks in a deal valued at $2.7 billion. (Just as Hewlett-Packard is but one of many examples.)

These corporations have been spending billions of dollars every year on mergers and acquisitions — and stock buybacks to increase the value of their executive stock-options. But yet, very little (if any) of their profits are invested in employees’ wages — because (the CEOs say) raising wages would slow hiring, reduce worker hours, cause layoffs, raise consumer prices, destroy the economy, and end life as we know it on Earth.

But what the “job creators” never tell us is, if they did raise workers’ wages, these CEOs might also have to buy one less beachfront mansion, a smaller private jet or a shorter luxury yacht.

If we tax the capital gains these corporate execs make off their stock-options as regular wages, we can pay for infrastructure. Otherwise, all that cash is going to be sitting idle in the Cayman Islands.

Congress should remove corporate tax loopholes and use the added revenues to invest in infrastructure, which has been falling behind other countries. Because of America’s skewed tax code (favoring the very wealthy and large corporations), it has allowed U.S. infrastructure spending to fall far behind China’s.

Chart below: Net federal government non-defense investment and net state and local government investment (as a share of Gross Domestic Product from 1947 to 2013) is at it’s lowest level since the 1940s. (Source: St. Louis Fed)

govt-spending

According to a U.S. government report, just 2 percent of the U.S. gross domestic product (GDP) goes to infrastructure construction, whereas, Europe spends 5 percent and China 9 percent. Developing countries, led by China, have devoted billions of dollars to the biggest dams, highways, railways, bridges, canals and energy projects. Increasingly, this group of rising economies have been building showcase projects that once were mainly the pride of the U.S., Western Europe and Japan.

China already has the world’s largest building (the New Century Global Center) and soon will have the world’s tallest building (Sky City, at 2,749 feet in the southern Chinese city of Changsha, which was set to be completed last year) and the country’s tallest skyscraper (Shanghai Tower, which has just been topped out and will be completed in 2015). China also has the world’s tallest dams and the world’s fastest bullet train (the Shanghai Maglev). Now the country also has the world’s longest cable-stayed bridge (the Jiashao Bridge, which just opened recently).

shanghai 1990 2010
Shanghai, China – 1990 and 2010

 

When people say neoliberalism is good for growth, they tend to be looking at the stock market and executive pay packages, not GDP or workers’ wages. And they certainly aren’t talking about infrastructure.