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In 2017, President Donald Trump was considering a major increase in federal government spending on infrastructure: building and repairing bridges, highways, rail lines, and subways.
In 2017, President Donald Trump was considering a major increase in federal government spending on infrastructure: building and repairing bridges, highways, rail lines, and subways. An article in the Economist argues that: "Just as economists talk of 'negative externalities' (from, say, pollution), infrastructure can have positive externalities that are not captured by investors but will benefit society." Source: "Are Big Infrastructure Projects Castles in the Air or Bridges to Nowhere?" Economist, January 16, 2017. Explain what positive externalities might exist from infrastructure spending. A. Spending on roads, bridges, and highways will increase the profits of companies building these structures. B. Infrastructure spending will enhance the image of the government to its citizens and potential voters. C. There is likely to be an increase in productivity for any business that uses the infrastructure. D. The article is incorrect: Infrastructure spending does not result in positive externalities, as citizens indirectly pay for the infrastructure through higher taxes
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