Thursday, September 15, 2011

Still NOT Shovel Ready

Chinese high-speed rail crash site.
Where oh where did the money go?  As Investor's Business Daily points out today in a piece titled "5 Myths Behind Obama's Infrastructure," we were supposed to spend $809 Billion in 2009 on "infrastructure projects..."  that was going to save the economy.  It was going to create "400,000 jobs."  Instead, the number of workers in that sector fell dramatically.  Now the figure is $50 Billion more that Obama wants to add and for what?  To build high-speed rail so we can be more like China?  As the image at the right illustrates, top down mandates of construction projects don't turn out so well.

Yes, the Eisenhower Interstate system was an incredible investment - but remember - it was primarily done for military purposes.  During World War II, Eisenhower had accompanied a military convoy and seen how long it had taken to move from A to B.  The interstate system ties in with the Strategic Road Network to facilitate the movement of forces internally in the United States. The airstrip every 5-mile myth is just that...but it is still considered important for moving men and materiel in time of crisis.

We will probably never know if Obama was a good student or not - those grades are deep in the vault - but what we do know is that he is not very bright about creating jobs and encouraging growth.  As damned near every American knows now, the Federal Government cannot create a job without funding it by taking the money from someone else - or worse, borrowing or printing the money.  

Do we have infrastructure needs in the United States?  You bet we do - take a look at the ASCE Infrastructure Report Card where a minimum of $2.2 Trillion is estimated to bring our infrastructure up to par.  The Urban Land Institute's Annual Report on Infrastructure is another scary read.  But remember, the authors of both of these reports have an incentive to encourage the spending.  As an old business partner of mine used to remind me:  "Always remember how people are compensated."  Not saying their intentions are bad, nor that the reports are not sobering, but the problems are better solved at the local level and that's where the problems of regulation and interference by such interest groups as the environmentalists, for example, become insurmountable.

One of the bridges, that Obama talked about in his taxpayer funded campaign stop speech at NC State yesterday is the Bonner Bridge in the Outer Banks - guess who is holding that improvement up?  The environazis.  Read all about it here.  Even if you gave full Federal funding for these projects, they will either get held up in the Courts or take years to plan, design, issue the RFP's, receive the RFP responses, impose Federal wage rate and quota regulations, pull permits, conduct environmental impact studies, traffic count studies etc. etc.  The cost of the project will double in that time period, so it still won't get done.

The best way for these projects to get done is to have demand bubble up from below.  The light rail projects along the Front Range in Denver are a great example.  When the plans were originally presented for a $3 billion system, the citizens of the metro-Denver area rejected them outright.  It took several years of explaining the benefits of the system and a measured "let's test it as we go" approach before the voters approved the tax increases necessary to fund the system.  The closer to the dirt that you can get the funding and the impetus, the more successful the project will be.  Just don't tell the President that.  

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