The following OpEd ran in the March 20, 2020 Boston Business Journal:
Although we are not currently in a recession, other countries hard hit by the impacts of the COVID-19 coronavirus are entering into recession. In any case, the likelihood of a national and local economic slowdown due to the effects of this national emergency are fairly high. We all hope that this historic reaction to a pandemic will be relatively short-lived, however, we just do not know the extent and length of these impacts.
Historically, economists have generally recommended governmental investments in infrastructure when there is a downturn in the economy. Infrastructure investments can help to minimize the damage and duration of a recession by working as an effective fiscal stimulus. Furthermore, the costs of materials and labor tend to drop during times of reduced growth, making new public investments more cost effective.
What role should our state and local governments play at this point in the crisis? Over the last few years it has been very clear that our infrastructure is sadly insufficient to handle the phenomenal growth we have seen over the past decade. With more than 500,000 new jobs created, our transportation systems have been overstressed and our housing stock shown to be insufficient to handle the demand from current residents and newcomers.
The state should take advantage of this slowdown and press forward aggressively with an infrastructure investment package on an accelerated production track. With a window of opportunity provided by the significant reduction in highway traffic and mass transit usage, the impacts of disruptions to the roadways and MBTA, normally caused by major maintenance, capital repairs and improvements, would be far less. In addition, interest rates are dropping and governmental bond debt for this kind of work will be a beneficiary of this trend.
These investments would benefit businesses, residents, workers and commuters. However, what would not benefit our economy at this time are policies that could hurt local businesses already teetering on the edge of viability due to declining revenues. With this fragile economy, cities and the state should not be adding costs to businesses or pursuing additional restrictive regulations. Not only can these actions hurt businesses and stop real estate projects from moving forward, they will also delay the recovery following a recession. This is especially relevant regarding housing development where current production costs are already slowing the pipeline for new projects.
We are all in uncharted territory, locally and globally. First, let’s do whatever we can to safeguard the health of our people and support our businesses and the workers they employ. But let us continue to look to the future. This crisis will end at some point. Preparing our economy for a return to growth requires a commitment today for long term infrastructure planning and investment. We’ve been given some time to act on our most troublesome problems, let’s not waste it.