[southernmissouri2007]

Who came up with the idea that infrastructure spending could create Jobs and put money in people's pockets and create demand I don't think it was Keynes/FDR because I think the idea has been around for a lot longer ?

http://en.wikipedia.org/wiki/Infrastructure

[Wolfman]

The basic principle of Keynesian economics was used in Inter-War Germany, Japan, and Britain, and the Swedish Stockholm School of Economics came up with the same idea as Keynesian Economics at about the same time as Keynes. All they really did was take what other countries had done and put it together into a working whole.

[Kman]

I remember reading somewhere that it is an idea that is very ancient, atleast from the 18th century if not older, they just didnt call this type of non-sense Keynesianism back then.

[Wolfman]

If you want to get really technical, it goes back to the Akkadian Empire, which collapsed about 4,100 years ago. I just assumed the OP was referring to modern practice.

The population of Akkad, like all pre-modern states, was entirely dependent upon the agricultural systems of the region, which seem to have had two principal centres: the irrigated farmlands of southern Iraq that traditionally had a yield of 30 grains returned for each grain sown and the rain-fed agriculture of northern Iraq, known as "the Upper Country".
Southern Iraq during Akkadian period seems to have been approaching its modern rainfall level of less than 20 mm (1 in) per year, with the result that agriculture was totally dependent upon irrigation. Prior to the Akkadian period the progressive salinisation of the soils, produced by poorly drained irrigation, had been reducing yields of wheat in the southern part of the country, leading to the conversion to more salt-tolerant barley growing. Urban populations there had peaked already by 2,600 BC, and ecological pressures were high, contributing to the rise of militarism apparent immediately prior to the Akkadian period (as seen in the Stele of the Vultures of Eannatum). Warfare between city states had led to a population decline, from which Akkad provided a temporary respite.[31] It was this high degree of agricultural productivity in the south that enabled the growth of the highest population densities in the world at this time, giving Akkad its military advantage.
The water table in this region was very high, and replenished regularly—by winter storms in the headwaters of the Tigris and Euphrates from October to March, and from snow-melt from March to July. Flood levels, that had been stable from about 3,000 to 2,600 BC, had started falling, and by the Akkadian period were a half-meter to a meter lower than recorded previously. Even so, the flat country and weather uncertainties made flooding much more unpredictable than in the case of the Nile; serious deluges seem to have been a regular occurrence, requiring constant maintenance of irrigation ditches and drainage systems. Farmers were recruited into regiments for this work from August to October—a period of food shortage—under the control of city temple authorities, thus acting as a form of unemployment relief. Some[who?] have suggested that this was Sargon's original employment for the king of Kish, giving him experience in effectively organising large groups of men; a tablet reads, "Sargon, the king, to whom Enlil permitted no rival—5,400 warriors ate bread daily before him".[32]

Harvest was in the late spring and during the dry summer months. Nomadic Amorites from the northwest would pasture their flocks of sheep and goats to graze on the stubble and be watered from the river and irrigation canals. For this privilege, they would have to pay a tax in wool, meat, milk, and cheese to the temples, who would distribute these products to the bureaucracy and priesthood. In good years, all would go well, but in bad years, wild winter pastures would be in short supply, nomads would seek to pasture their flocks in the grain fields, and conflicts with farmers would result. It would appear that the subsidizing of southern populations by the import of wheat from the north of the Empire temporarily overcame this problem,[citation needed] and it seems to have allowed economic recovery and a growing population within this region.
As a result, Sumer and Akkad had a surplus of agricultural products, but was short of almost everything else, particularly metal ores, timber and building stone, all of which had to be imported. The spread of the Akkadian state as far as the "silver mountain" (possibly the Taurus Mountains), the "cedars" of Lebanon, and the copper deposits of Magan, was largely motivated by the goal of securing control over these imports. One tablet reads "Sargon, the king of Kish, triumphed in thirty-four battles (over the cities) up to the edge of the sea (and) destroyed their walls. He made the ships from Meluhha, the ships from Magan (and) the ships from Dilmun tie up alongside the quay of Agade. Sargon the king prostrated himself before (the god) Dagan (and) made supplication to him; (and) he (Dagan) gave him the upper land, namely Mari, Yarmuti, (and) Ebla, up to the Cedar Forest (and) up to the Silver Mountain".

[nucklepunche]

Basically the idea is this. The wealthy don't spend the vast majority of their money and instead hold it in securities. The poor and middle class by contrast spend the vast majority of their income. If the poor and middle class have more money they will demand more products and services and this creation of demand will lead to businesses hiring. In essence the theory works like this. A lot of people are unemployed, particularly those in the construction trades. We can put these people back to work and put people working in low skilled low wage industries to work in inevitably higher wage work on infrastructure projects. These people will take that money and spend it on things like food, automobiles, houses etc. which will stimulate demand in those industries and expand hiring there and thus across the economy. It might be viewed as "trickle up" economics instead of trickle down. Ancient empires were aware of this as Wolfman explained. There were no free market think tanks in ancient times so Julius Caesar could get some roads build without Groverius Norquistius stomping his feet and crying like a baby.

[Stormsmith]

I think if we look at a lot of civilizations, ancient or modern, and see the degree of architectural excellence as well as the functional infrastructures such as Roman roads and aquaducts, we are looking at make work projects: beautiful cities drew trade and tourists. There is a political end to this: as nicklepunche notes, wealth distribution from a bottom up approach keeps businesses ticking over. Even major religions engaged in these projects: Having a huge cathedral in your town made the town develop into a city fairly quickly. Huge cathedrals took ages to build, ensuring tradesmen years of productivity, and large workforces wanted food suppliers, from grocers to taverns. Large quarries were required to supply rock, haulers were engaged to cart the stuff to the worksite and so on. Ultilmately, the cathedral would draw large crowds of non-local worshippers who spent locally. Everyone prospered.

Another model was to grant tax relief to specialized companies. If you processed raw wool into finished goods, for example, and hired a local workforce, you'd be eligible for tax relief. You would get more if you purchased the wool from a local herdsman, esp where the herdsman got feed from another local farmer, more still if you purchased the dyes and fixers from a local apothacary/chemist, sold to local shopkeepers, and the ultimate goal: export abroad.

The idea was for one business to support as many other local businesses as possible keeping the wealth within the community and with the end goal of drawing in new money by exporting finished goods, as opposed to todays model of shipping work out to the cheapest producer, and in turn selling this cheap ... ah.... stuff to us. This approach does little to encourage excellence in craftsmenship.

Trickier to pull off the bottom's up approach today due to NAFTA etc.

[USB]

Civil engineering department of the government of USA is the one responsible for building infrastructure. One does not have to hire and rehire or hire and fire or fire permanently. The idea is causing more unemployment. Temporary employment through infrastructure only causes the governmnet to invest in areas which are already filled up by the Department of Public Works and Infrastructure. They're temporary solutions with destructive repercussions on the economy. The fact that the liberals declare "good news" of jobs awaiting the jobless, it creates economic insecurity on the part of the jobless and waste. Do not invest in areas that do not need them. Leave almost all industries to the market and everythig will settle accordinly. You should see what I saw on my desk 15 years ago: an economic blueprint on how to sabotage the American economy by directing socialist-liberal Soviet moles to waste money on infrastructure, welfare and universal child care, etc. It was prepared and authored by the KGB and Stasi.