investment | Barataria - The work of Erik Hare

What is money? Your answer may depend a lot on how much of it you have. Ultimately, the main purpose of money is convenience. A system of barter works pretty well when two people have things each other need – someone with chickens meets up with someone else who recently slaughtered their pig and both have bacon and eggs. But if you can also exchange those eggs for money you can save it up to buy something different or bigger.

As we’ve concluded before, Adam Smith was right – money is a matter of belief. Whether it’s gold, Euros, or Canadian Tire Money it’s worth whatever you believe it is worth. Our own US Dollar is backed by the “Full faith and credit of the US Government”, which is scary if you think about it.

But money is more than convenience and faith – it’s what it takes to make things happen. And that’s worth thinking about some more.

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As the water from Hurricane Sandy receded, tens of thousands of homes remained without power for weeks. New York Governor Cuomo was livid – “The utility system we have was designed for a different time and for a different place,” Cuomo told a news conference. “It is a 1950s system.” The ConEd grid is, of course, managed entirely by private money, but it is a highly regulated utility. You can bet that the hammer will fall on them as they are forced to rebuild a completely new system in areas where the old one was more or less washed away.

Down the coast in Washington there is a different focus, one that highlights how a developed nation can have such a terrible problem with antiquated infrastructure. There, the talk is about how to avoid a “Fiscal Cliff”, a political problem focusing and complicating a very real problem with excessive deficits built not around long-term investment but merely keeping the government running.

The divide between the two is bigger than the 3 hours 25 minutes it takes the Amtrack Acela to cover the distance. It is the gap between the reality that infrastructure investment has an incredible immediate impact on the economy, pays for itself in the long term – but remains neglected as too expensive.

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