Public Investment and Economic Growth

In the years following World War II, the papers of any major city... told daily of the shortages and shortcomings in the elementary municipal and metropolitan services. The schools were old and overcrowded. The police force was under strength and underpaid. The parks and playgrounds were insufficient. Streets and empty lots were filthy, and the sanitation staff was underequipped and in need of men.... Internal transportation was overcrowded, unhealthful, and dirty.... The discussion of this public poverty competed, on the whole successfully, with stories of ever-increasing opulence in privately produced goods. J. K. Galbraith (1958), p. 253 After a lively debate in the late 1950s and early 1960s about the merits of John Kenneth Galbraith’s theory of social balance (The Affluent Society), the economics profession dismissed (or forgot) Galbraith’s admonitions about the perils of neglecting the public infrastructure. David Aschauer, however, rekindled a great deal of interest in the efficiency of