I have to admit, the transportation portion of the stimulus package troubles me. It’s not that I have a bad opinion of it; what troubles me is that I have considerable difficulty forming an opinion at all. The process is so hasty, and involves so many different players, and will fund such a vast number of projects, and has so many blanks yet to be filled in, that coming to grips with the totality of the initiative is quite challenging.
“They often feed you a maddening diet of “it depends on the context” and “this is a complex issue” …
This is too bad, because the stakes are certainly high. In my opinion, our efforts to intelligently discuss public finance are sorely handicapped by the fact that conditions on the savanna did not force our ancestors to evolve brains that could process the mathematical concept of a “billion.” So think of the nearly $50 billion price tag at around $150 for every single person in the country.
Would we be better off driving on smoother roads thanks to the stimulus when we could be driving on perfectly smooth virtual roads with the help of the brand new Wii (plus the optional steering wheel and a bunch of driving games) that each American household could have with its share of the money?
Is the transportation stimulus good stimulus? Is it good transportation? Academics can be difficult to pin down when you’re looking for a comforting “yes or no” answer to a question; they often feed you a maddening diet of “it depends on the context” and “this is a complex issue” and “on the other hand.” This can be frustrating, but on an issue this complex I’m afraid nuanced answers are the only ones possible. I’ll have a few, both skeptical and supportive, coming up.
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How many months has it been since the stimulus has been passed?
How much of that money has been spent (the stimulus was supposed to be timely, right)?
How many jobs have been created/saved?
I tried to find out, but found the transparency of recovery.gov to be a little more opaque than I’d hoped.
Those smooth roads on the Wii will not be, for the most part, built by American workers. Part of the purpose of the stimulus package is to put people to work making things that will benefit us in the future. Infrastructure has a future benefit to business. Wii, well maybe not. That $150/person may improve the overall transportation network applied to a road and someone will be hired to build the road, spending their paycheck on, perhaps, a Wii? Ultimately the effectiveness of the program as a stimulus just requires a road be built. The effectiveness of the road requires it go somewhere useful and carry useful traffic. Hence the “it depends” answer.
I work for a state DOT, and the “stimulus” is a joke. Projects were delayed for weeks to months to try to get some of the money, ridiculous 7′x11′ signs are required to let everyone know which projects got a few bucks out of the deal, and the additional paperwork during construction is obscene (many forms that used to be yearly are now monthly, and many that were monthly are now weekly). The state legislature cut our annual budget by roughly what we got out of the “stimulus.” It’s all just a big show of smoke and mirrors.
The reasonable way to visualize large numbers is to figure the Opportunity Cost, NOT the cost per person (how much is 300 million anyway?)
I have published some of this before but it needs restating–The Panama Canal- the largest construction project in history at the time- cost $375 million in 1913 dollars. The CPI from that time has grown 2120%, making the cost in 2008 dollars about 7.95 billion dollars. So $800 billion would buy from scratch, ONE HUNDRED Panama Canals.
Here’s another, perhaps more practical purchase-
The approximate cost of constructing a twin track 10,000 km maglev system including 300 kph trains, tunnels, bridges and stations, between major US cities is about $800 billion.
Average construction cost would be about $US 50 million per kilometer. About 1200 maglev cars would be needed. The rolling stock would cost only US$20 billion.
Actually, like most big mass transit systems, it would not be able to pay its own way, but at least you’d see where your money went…. and how fast.
Does anyone honestly believe that the government can do something quickly and efficiently? How much of this money is going to fall into the vortex of govn’t bureaucracy? 10%? 25%? Given how slow this will make it out and how much may be wasted, I feel pretty confident that the economy will turn around long before the pavers get reved up to lay asphalt.
$50 billion? Last I recall reading the roads & bridges portion of the “stimulus” was around $30 billion. Or, does that include other infrastructure, or maybe includes interest costs?
Anyway, the “shovel-ready” projects part seemed suspect to me, and I just this week read that there are 2 road projects in Northern NJ funded by the stimulus that are now going to bid, so it will be awhile before the bids are received, reviewed, awarded, contracts signed, etc. Shovels are probably months away. So much for spending quickly.
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Dave
I’m a civil engineer and here are my thoughts:
1. I think additional spending on infrastructure is a good thing. Our country has deteriorated for lack of spending.
2. The gas tax is way too low. We are closer to Venezuela than any other first world nation. Anyone who tells you that it can’t be raised is a liar or a thief. And probably doesn’t fully understand the issues
3. I would love to see the American public get enthusiastic about public transportation. This could be a great time to build approximately 20 inter city rail systems and a backbone of high speed rails between large cities. This could change the way we travel. I wish people thought more about this and talked about it everyday. It matters.
#5 – JimBob, But they will use that natural turn around as a pin-up for these socialist financial policies.