The IMF says let's have lots of public investment

We do seem to have an example of slavery to some defunct economist here:

IMF urges governments to turn on the spending taps

A 1pc rise in public investment could eventually create up to 33m new jobs, the international lender has said

If governments up the rate of public investment then there will be more investment and thus economic growth. Et voila!

In the actual report we get the little proviso that causes the problem:

Even so, a gradual scaling-up of public investment financed by borrowing could pay off with positive

short- and long-term multipliers, as long as interest rates do not increase too much (Buffie and others

2012; Online Annex 2.1) and governments choose and manage investment projects to maximize economic returns for their citizens.

It’s that last which produces the problem. Such public investment must be productive in and of itself. The argument to just spend now on anything isn’t enough, the projects built must be wealth increasing themselves.

And what does our government spend the public investment cash upon? We’re still only just starting HS2, something that has been on the books since the last recession but three. Something which technology has made into a massive boondoggle before we even start.

Or perhaps that idea of insulating every house in the country, that Green New Deal?

13.8 million homes had cavity wall insulation (70 per cent of homes with cavity walls).

Of the 5.3 million homes without cavity wall insulation, 4.0 million are easy to treat

standard cavities, and 1.3 million are hard to treat (including standard cavity wall

property with issues such as structural faults or presence of a conservatory, creating

access issues and some unfillable cavity walls). There are around 0.8 million properties

which may or may not have cavity wall insulation.

• 16.2 million homes had loft insulation of at least 125mm (66 per cent of homes with

lofts). Of the 8.0 million homes with lofts without at least 125mm of insulation, only a

small number are estimated to have no insulation. Around 5.8 million of these homes

require easy to treat loft insulation, and 2.3 million are hard to treat (including room in

roofs, flat roofs and some unfillable lofts).

Most of that’s already done and any crash program will bring out every bodger in Western and Central Europe to waste the budget. As happened - without the European involvement - in Australia.

Government isn’t a good manner of identifying projects which maximise economic returns. There is no shame in this of course for we’ve that other sector of the economy, the market one, which lives and dies - in a manner which bureaucracies don’t - by identifying economic returns. Things which that market sector leaves by the wayside tend, therefore, to be things which don’t have said returns.

Yes, of course, there are exceptions, public goods being among them. But that’s still a tough test, identifying and then crafting the plan to provide them. A tough test which our current system of government - whoever is nominally running it - doesn’t seem to pass.

It’s important to grasp this caveat the IMF insists upon. The public spending only boosts the economy if the plan is, in and of itself and regardless of when done or who financed by, economically sensible in the first place. Oh, and it needs to be done efficiently too, that spending.

Hands up who believes the British government is capable of either identifying or managing projects like that? Well, quite, probably better to run with the fructification in the pockets of the populace option then.