POINT OF ORDER
Don’t build castles in the sky, Mr Trump
SA has several cautionary tales for Donald Trump’s $1-trillion infrastructure dream, writes Tim Cohen
If there is one lesson US president-elect Donald Trump could learn from SA, it’s this; don’t trust grand infrastructure spending to boost the economy. It’s hard to tell precisely, but all indications are that he fully intends falling into exactly the same trap SA fell into after the economic slowdown in 2008. Throughout his campaign, Trump railed about the US’s ageing infrastructure. In his victory speech, he said he would "rebuild" it and it would be "second to none". He is, after all, a real estate mogul for whom debt-financed construction projects are second nature. His plan is to spend about $1-trillion over 10 years, which would constitute about 25% of annual federal spending. It’s always intrigued me why there is such a big disconnect on this subject between the views of politicians and voters on the one hand, and reality on the other. At least for South Africans, it’s so much easier to see the truth now. Most obviously, economic growth has faltered. SA’s growth rate normally ...
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