The U.S. economy remains in highly-questionable shape, and many experts are asking where the source of recovery will come from. Over at Salon, Michael Lind has come down firmly on the side of domestic public growth — more specifically, infrastructure.

Here’s the crux of his argument: American consumer demand has shrunk, and will never really recover to its former levels. So Washington’s solution has been to turn to foreign demand as the savior of our economy. But neither foreign private demand nor foreign public demand will solve our problem, since other countries don’t want to buy our exports and our pesky rules about free markets, industrial espionage and human rights — which aren’t shared by major exporters in, say, Asia — will keep us from really competing in foreign countries.

Granted, we’re hardly against an increase in infrastructure spending to battle the nation’s troubles. In fact, one could argue that our very existence is geared towards seeing this possibility become a reality. But we also believe that the path to growth isn’t by calling for mini-revolutions — it’s by evincing change from a grass roots and policy level.

Though on this point, well, we couldn’t agree with Lind more: “Infrastructure spending and improved public healthcare increase the productivity of America’s businesses and workers. Trophy houses and day spas do not.”

So what’s left? Domestic public demand — aka infrastructure. For the next decade or so, Lind says, the American government will need to fill in a good chunk of the missing demand for American businesses and labor, and thereby compensate for all the private sector deleveraging that occurred when the asset bubble burst. Here’s how he thinks it should all go down:

To avoid competing with private enterprise, the government should produce public goods that increase overall productivity and that the private sector has no incentive to provide, in good times or bad, such as infrastructure and social services like policing, health care, education and care for the young and old. In addition to mobilizing idle resources and labor directly, both infrastructure and public service spending could help business in general by boosting the purchasing power of Americans who are now unemployed.

Infrastructure-led growth could boost private-sector productivity if it lowered energy costs for businesses and households, reduced freight and passenger congestion or increased the efficiency of telecommunications while lowering the cost. At the same time, infrastructure-led growth could bolster American manufacturers and suppliers and prepare for an export rebound in the future, as long as Buy American laws required that all infrastructure inputs like steel, concrete and electronic components, and all equipment used to construct infrastructure, including machine tools and construction vehicles, must be made in the U.S.

All of which sounds pretty great, in theory. Except there’s the one glaring issue that needs to be dealt with: How do we pay for it? Lind’s answer is pretty much guaranteed to make him very unpopular with a large number of people: “By more borrowing and by higher taxes that fall disproportionately on the rich. Both would channel now-idle savings into enhancing the infrastructure networks and manufacturing base of the U.S.”

Increasing our already-staggering national debt is a popular idea with very few people. Raising taxes is popular with even fewer. (more…)