Ever wonder why real wages are falling?

A messy fight is looming over who will pay the huge extra costs of the Metro Tunnel, with the Andrew Government reportedly warned the total blowout of..

The Metro Tunnel is Victoria’s very own NBN, although there are quite a few others like it but not quite as draining although very bad as well. There was the desal plant, and the billion spent on the Miki Card, getting rid of level crossings in the city, others too, but this one is big big time. Infrastructure spending at its absolute stupidest. The above story is a snippet from the H-S this morning.

There are economic idiots everywhere, but the biggest ones are the ones who think government infrastructure projects like this are good for the economy. Even the Premier is beginning to see what a black hole this is. Construction everywhere you turn in the City, whole city blocks turned into construction sites, billions of dollars being spent, and not a dollar’s worth of actual value-adding output anywhere to be seen. We are looking here at immense costs, for which there will NEVER be a single cent of profit ever earned.

Keynesian economics was once only about getting an economy out of a recession. Now it’s about massive and permanent deficits coupled with massive and permanent forms of public waste. Now they have overrun their original costs to $3 billion, but there is more than just the tunnel that comes with all of this. Victoria is bankrupt in the same way that economic theory is bankrupt. I was just up in Sydney and they are about to finally start running their idiotic streetcars down George Street. That, too, will never turn a dollar of profit, which means it will never ever repay its costs in the benefits it provides. Pure waste but presented as a public benefit. My biggest query is always why isn’t this obvious?

Modern economic theory is a disaster for anyone whose government believes any and all of it. Public spending has its role, but is a drain on an economy’s productivity. Oddly because of the Keynesian nature of the National Accounts, all of this will show up as growth in GDP even though it is nothing of the kind. And there will be many people employed, except not employed on projects that will add to the economy’s net level of real production. They are not value adding. They may create a dollar’s worth of value, but for each dollar of value created it will cost much much more than a dollar. Why does this make sense to anyone?