Robert Reich on "the cure for America's chronic recession":

But the biggest challenge now, as it was before the 70s, is lack of aggregate demand. Consumers don't have enough money in their wallets to keep the economy growing. And the Fed is stuck. If it cuts interest rates much further it risks pushing the dollar lower. But that will spur inflation as everything we buy from abroad costs more.

So what's the answer? We've got to go back to fiscal policy -- big time. The tiny checks the Treasury just sent out are barely enough to pay our rising fuel bills. We need a stimulus package that's truly up to the job of restoring aggregate demand.

The best and easiest candidate for the large-scale stimulus that's needed is spending on the nation's crumbling infrastructure. America has deferred billions of dollars of maintenance on bridges, sewers, water systems, levees, and dams. That's already cost the nation dearly.

Problem is, the public doesn't trust the government to spend money on infrastructure wisely. Why should it, when so many earmarks go to dumb infrastructure projects like "bridges to nowhere"?

So here's the deal: The next president should establish a national capital budget that lists infrastructure projects in priority order, for the nation as a whole. No more earmarks. The capital budget will reflect the nation's true infrastructure needs. The government would fund that capital budget the way capital budgets should be funded - through borrowing that assumes a realistic return to those capital investments. This is what any smart business does.

Infrastructure spending, guided by that capital budget, would inject adequate demand into the economy to get us growing again. At the same time it would create millions of new jobs. And America gets the infrastructure we need for the twenty-first century.

It's a win-win-win.

Sounds good, but I am confused about a few things. First, infrastructure is a public good, so where does the private return on the investment come from? Second, wouldn't more borrowing-for-spending increase the national debt? Third, what prevents bridges to nowhere from being maneuvered onto the priority list?

My gut tells me that there are fundamental structural problems with the economy that a traditional approach to restoring aggregate demand ignores. Like, we're not making anything anymore in this country. Our economy, it seems to me, is based on services and retail. Services are local stuff like haircuts or global stuff like financial management. Retailers sell stuff made in China. Barbers can't sustain an economy, stock brokers can't keep pumping out returns if nothing is produced, and buying Chinese stuff creates a trade deficit. Can an economy sustain itself that way? Is restoring aggregate demand - so more people buy Chinese stuff and give their money to stock brokers and cut their hair more often - really the solution?