Source item
Open original source ↗Quoted context
These are the quoted author’s words.
Because the US government relied on neoliberal economists, who (in service of Wall Street) insisted that all of that cheap money should flow to the most profitable sectors, following the dogma of the "free market". They said the government can't "pick winners", and instead private investors and corporations would "allocate capital more efficiently" (not by investing in fixed assets, but by juicing their stocks). Infrastructure has notoriously low return on investment dragged out over long periods of time. Venture capitalists and private equity firms wanted high ROI in short-term cycles of a few years at most. So that's where most of the money went during the ZIRP period. If you want good Infrastructure, you need state planning and state-directed investment of "patient capital", as Chinese officials call it. This is why China's socialist system -- based on public ownership of most banks and investment firms, with enormous state-owned enterprises in the construction industry -- has excelled in infrastructure development, while US infrastructure has deteriorated and 95% of US corporate earnings have gone to share buybacks and dividends. Wall Street won. Main Street loss.
BenjaminNorton ↗