Summary of American Gridlock pt 1

Beautiful Mind discovered via the deduction from five axioms of a theory of bargaining completely devoid of any data: There is only one variable that matters to the bargaining outcome—the degree of risk aversion of Player 1 compared to that of Player 2. Nash showed that, the more risk averse one player is relative to the other, the more he will get "bargained down" to accept a smaller share of the pie. No information overload here. The same holds true in much of physics. Just recall the elegant simplicity of the great "laws" of Newton and Einstein, respectively: F = MA and E = MC². Only three variables in each. No information overload here either.

The irony in all this is the widespread failure to appreciate the complete irrelevance of most of the data now available for problem solving. The great poet T.S. Eliot stressed this point some eighty years ago with his prescient query: "Where is the wisdom we have lost in knowledge? And where is the knowledge we have lost in information?" Bingo!

The Four Basic Assumptions or Goals: Whatever policy is adopted to get the economy moving, it must satisfy these four policy requirements —requirements which play the role of First Principles in our analysis. Like any set of First Principles, these national goals should strike you as being as "reasonable" as apple pie and motherhood are desirable. (1)Much more rapid GDP growth; (2) Much reduced Unemployment; (3) A contented bond market unlikely to go on strike; and (4) Infrastructure reconstruction before our infrastructure "goes critical" which is now expected to start happening in many different areas.

The Policy Solution: I propose that a Marshall Plan sufficiently large to redress our infrastructure crisis (a good $1 trillion per year) is the only solution that achieves these four goals. By infrastructure, I do not only refer to roads and bridges, but to the nation's electric and refinery grid, public transportation, and new modes of delivering medical and educational services. These proposals are fleshed out at length in American Gridlock. Your initial skepticism will probably take the form of two questions: First, does the nation have the physical resources for an investment of this magnitude — one which can easily show to be "needed"? Second, does the government have the financial resources to fund such a program? Surely it does not.