City Journal: Public-Private Peril

From CityJournal:

Second,the government must build the physical infrastructure that people and capitalneed to thrive—levees in California, masstransit in NewYork—but that individuals can’t practically construct ontheir own. There’s an important difference between government spending to propup failed private-sector credit infrastructure and government spending to fixcrumbling physical infrastructure. With the credit markets, private-sectorinvestors need time and less government-created uncertainty to begin rebuilding.Indeed, they’re already doing so. High-quality companies not guaranteed by thegovernment have issued nearly $80 billion in bond financing in the past fewweeks, up from $60 billion during the final three months of last year, asinvestors have voted for easier-to-comprehend financial structures and borrowershave responded. The more money the government pours into an unnecessary andfutile effort to preserve the old, failed credit-infrastructure regime, the lessmoney it will have to repair the public-sector physical infrastructure—which theprivate sector can’t fix.