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> Already economic growth is basically not capital-constrained I really disagree with this. Consider a simple counter-example. Workers in the Bay Area are subs

> Already economic growth is basically not capital-constrained I really disagree with this. Consider a simple counter-example. Workers in the Bay Area are substantially more productive than the American average. One simple way to use capital to increase GDP is to build more housing and infrastructure in places like the Bay Area. Even if the population doesn't grow, that housing stock will allow future workers to move from West Virginia to San Francisco. By shifting future workers from low-productivity job markets to high-productivity job markets, we can substantially increase total economic. Even with the same population and the same technology base. The only constraint is the tight housing supply in places like the Bay Area. But we know how to build more housing, all it takes is a willing political system and capital investment.

ThrustVectoring 7y ago
The housing supply in the Bay Area is politically constrained, not capital-constrained. It does not matter how much money you have; if you want to build in the Bay Area, you need to convince the local NIMBYs to allow you to do so.
- wolco 7y ago
  It is geograpically constrainted and cannot build new single detacted. Building up changes the character and no one mentions earth quake issud and the lack of supertall building found commonly elsewhere.
  - nradov 7y ago
    Earthquake safety has only a minor impact on building construction costs. If you put aside land and permit costs, constructing a building in the Bay Area costs about the same as other major metropolitan areas.
  - CalRobert 7y ago
    " cannot build new single detacted" so... don't? Plenty of other types of home. (Nevermind that we're accepting the idea we don't have room at face value)
ACow_Adonis 7y ago
There's certain economic laws you can't get around even with capital expenditure. Diminishing marginal returns, political and social capital, etc. In fact, trying to increase capital expenditure to achieve future income gains actually faces an anti-intuitive danger: most capital expenditure creates future depreciation/maintenance/ opportunity costs. So if you mis-allocate big chunks of capital expenditure (and centrally driven political decisions such as this have a high risk of that happening compared to decentralised/incremental/market decisions) your apparent fix can actually make the situation worse, as your big chunks of capital create future maintenance and depreciation and political liabilities which create (political) pressure for further draws on the future tax base. There's a strong argument that various forms of past infrastructure spending that now require upkeep the local population can't afford (various road infrastructure in local municipalities) and rust belts are literally that. Also, if the form of capital expenditure focuses on environmental resource consumption or uncosted externalaties, some forms of capital expenditure can be thought of as transferring future consumption into the present. And then I haven't even touched upon whether the capital expenditure/expansion is funded via debt...
- jammygit 7y ago
  You never hear discussions about maintenance costs of infrastructure. I wonder what the math looks like for a given bridge/road

ThrustVectoring 7y ago

The housing supply in the Bay Area is politically constrained, not capital-constrained. It does not matter how much money you have; if you want to build in the Bay Area, you need to convince the local NIMBYs to allow you to do so.

wolco 7y ago
It is geograpically constrainted and cannot build new single detacted. Building up changes the character and no one mentions earth quake issud and the lack of supertall building found commonly elsewhere.
- nradov 7y ago
  Earthquake safety has only a minor impact on building construction costs. If you put aside land and permit costs, constructing a building in the Bay Area costs about the same as other major metropolitan areas.
- CalRobert 7y ago
  " cannot build new single detacted" so... don't? Plenty of other types of home. (Nevermind that we're accepting the idea we don't have room at face value)

ACow_Adonis 7y ago

There's certain economic laws you can't get around even with capital expenditure. Diminishing marginal returns, political and social capital, etc. In fact, trying to increase capital expenditure to achieve future income gains actually faces an anti-intuitive danger: most capital expenditure creates future depreciation/maintenance/ opportunity costs. So if you mis-allocate big chunks of capital expenditure (and centrally driven political decisions such as this have a high risk of that happening compared to decentralised/incremental/market decisions) your apparent fix can actually make the situation worse, as your big chunks of capital create future maintenance and depreciation and political liabilities which create (political) pressure for further draws on the future tax base. There's a strong argument that various forms of past infrastructure spending that now require upkeep the local population can't afford (various road infrastructure in local municipalities) and rust belts are literally that. Also, if the form of capital expenditure focuses on environmental resource consumption or uncosted externalaties, some forms of capital expenditure can be thought of as transferring future consumption into the present. And then I haven't even touched upon whether the capital expenditure/expansion is funded via debt...

jammygit 7y ago
You never hear discussions about maintenance costs of infrastructure. I wonder what the math looks like for a given bridge/road