Tuesday, July 24, 2012

This is what I thought about on my commute last week on public transit to downtown Chicago ...

Last week I rode the train from the Northwest Suburbs of Chicago to downtown Chicago to attend the AP US Govt and Politics College Board Summer Institute (AP Econ is next week). It takes about 45-60 minutes. After arriving at the train station I walked 2.25 miles to Northwestern U.

Along the way I see lots of large, abandoned manufacturing facilities and other buildings that were built sometime at the beginning-to-middle of the last century.

I have read lately that this represents under-utilized infrastructure/capital and is indicative of the decline in the US manufacturing base.  "They say" if we could just revive the manufacturing sector we could put these idle resources back to work.

I don't see it.  I see these buildings as "spent" capital/infrastructure.  They served the old way of production---lots of labor relative to capital and technology.  The capital/machines used were large and bulky and required large spaces.  Most of those factories produced many of the inputs that went into a final good.  Today, firms specialize and "out-source" the production of inputs.  Capital/machines are much smaller and more productive.  These buildings will never serve current or future manufacturing of any kind.

It is not under-utilized infrastructure--it is dead infrastructure.

When something dies, it should be buried or otherwise disposed of properly. 

Why not spend "stimulus" funds to eliminate this dead infrastructure to make way for new uses for the land---whether it is for new construction or green areas. It would improve property values and have many other positives consequences for the blighted areas.

I think this is a relatively rare case where you can have addition though subtraction.

Any thoughts?

Note: I am a devotee of Basitiat.  I don't think I am violating the principles of "The Broken Window"--the buildings are not "bringing enjoyment" to anyone, as far as I can tell.  Could be wrong.

Also, I do acknowledge the  "opportunity costs" of using resources for this purpose as opposed to something else.  From a policy making position, I think it can legitimately be on the "to do" list. 
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