In his new book, American Gridlock: Why the Right and Left Are Both Wrong, Woody Brock, president and founder of Strategic Economic Decisions, describes five critical economic challenges facing America:
1. Preventing a "lost decade" of economic stagnation and mounting debt.
2. Preventing future national insolvency from entitlements spending.
3. Preventing future "perfect storms" in the financial markets.
4. Standing up to 'thugocracies' that rig their currencies and engage in other unfair practices.
5. Addressing income inequality.
In the accompanying video, Brock and I discuss his self-described "commonsense solutions," including his recommendation for a massive 10-year, $10 trillion infrastructure spending program, funded by a public/private partnership.
"We need a Marshall plan for infrastructure," says Brock, who compares America to a homeowner who hasn't replaced his roof in 50 years.
"We're not talking bridges and potholes — that's just the beginning," he says, citing energy grids and medical system infrastructure as examples of other needed projects. "$1 trillion a year is conservative."
Good vs. Bad Deficits
Brock dismisses those who say America "can't afford" to borrow and spend such immense sums.
"The great misunderstanding that is paralyzing the entire West is the mistaken belief that deficits are bad and we can't borrow money," he says. "It is wrong."
To Brock, there are good deficits and bad deficits. "Good deficits are when you borrow and more than happily pay the money back," he explains. "Deficits are wonderful, if you need a new roof put on. Bad deficits are when you spend money keeping people at work who vote for me but the debt is on the shoulders of the grandchildren."
The key to his plan, he says, is to only invest in projects that are economically justifiable — and likely to generate a positive return on investment — versus those that are appealing to local politicians.
"You don't invest in infrastructure willy-nilly," Brock explains. "You only invest in a subset of projects that make money. Then the bond market says 'we're happy to lend you money if you're not wasting it.' That's what's novel about this."
The sad truth is this concept, what Brock calls "the new logic of public finance," would indeed be a novel approach.