An article this week that I found to be of some interest is regarding the Panama Canal.


http://news.bbc.co.uk/2/hi/americas/6074106.stm

The article discusses a plan to expand the Canal in order to accomodate larger shipping vessels which have been become more prevalent on the seas. The Canal as it stands is not able to handle the larger ships in a manner which allows for quick speedy and predictable passage.

The plan would cost approximately 3 to 5 Billion Dollars and would create significant temporary construction jobs and increased jobs in other sectors regarding the Canal (secondary jobs).

Critics say that the funds should be better used to directly help the poor of the country while advocates argue that if the canal does not receive the expansion they will lose further market share causing a increase in the amount of poverty.

The notion of economics and what is the best course of action comes into account on this debate. While helping the poor of a country to enter a middle class seems to be an agreable notion, how is this best acheived? Is it acheived through direct transfer payments (distribution of excess funds to the poor) or should the poor give something back? If they should give something back, what should that be?

While I agree that construction jobs would be created in the short run, these jobs are temporary and do not really add any long term value to the country, especially as it would unlikely that a Panamain (spelling?) construction contractor would be used to do the building (that last statement might require justification in a proper paper, but it has been ignored for the purposes of this blog). Therefore the real benefit of this project would be both the increased revenue from the expected increased traffic and the fact that the Canal is losing market share as it stands currently. The decision as to whether or not this project should be undertaken as opposed to other potential projects (assuming there are some) should be weighed against that thought primarily.


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