Let us, just for the sake of argument, agree with Keynesian economists. It is possible for the economy to get stuck at a non-optimal equilibrium. Government can then – should then – shock the economy to an optimal equilibrium through intervention.
The underlying method here being to stimulate demand in the economy. This involves increasing the budget deficit (for MMT types, print more money and spend it) by either spending more money or cutting taxes. The usual preference is to go build infrastructure because multipliers.
You might, just about, get a Keynesian to agree that tax cuts could work but infrastructure’s much better. Oh Yes.
At which point, Tesla:
The government-run Xinhua News Agency reported that it had taken Tesla just 168 working days, about six months, to go from permits to hooking up the electricity to the brand new plant. “This is quite fast, even by Chinese standards,” says Ivan Su, an analyst at Morningstar Inc.
That’s the sort of speed at which you need to spend money on infrastructure if you’re going to be injecting that demand into the economy within the same business cycle.
Now, can anyone at all think that we’d be able to build infrastructure here at that sort of speed? Aren’t we still to break ground on HS2 after how many decades is it?
That is, we’ve so festooned the economy with permits and permissions that we’re shocked someone can put up a factory in 6 months. Which is exactly the reason that Keynesian demand management by infrastructure spending doesn’t work.
And doesn’t that just micturate all over the Green New Deal?