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This whole infrastructure argument is bunk. It is being perpetuated by:
- the construction industry
- politicians that want to curry favor with the businesses in their district
Here is why I feel this way. Imagine the country is your household. The economy in your house is in a slump. So, you decide that the way to get it going is to make some improvements. So you hire your teenage son to paint the exterior and you hire your daughter to pave the driveway. These things needed to get done anyway, and it will bring more money into the household. WIN-WIN!!!
However, somebody still has to pay the son and daughter, so really, you are just moving money from Point A to Point B, but WITHIN THE SAME HOUSEHOLD. Yes, you were going to get that work done eventually, you just pushed up the date and called it "Stimulus"...
The argument that infrastructure spending is not necessary might make sense if what we had were in tip-top shape. But it is not. Many bridges and roads are rotting away due to years of disinvestment. Even more are inadequate to handle the traffic, this deficiency disguised because fewer people are driving to work. Some rural counties have given up repaving their roads and are reverting to gravel. Now, with plenty of construction workers and engineers available, is the perfect time to do it. As far as financing, foreign investors are begging the US to take their money, accepting real negative returns.
Infrastructure was supposed to be a big part of the stimulus package. The reality was that only a fraction of the $250 billion proposed for infrastructure ended up there ($64 billion with $ 27 billion to highways and bridges).
It is reported that $2.2 trillion dollars is needed to meet current infrastructure needs. The reported amount translates into over $400 billion dollars a year over the proposed 5 years period just to address immediate needs. That would certainly have a significant stimulative affect on the economy.
To bring our infrastructure up to 21st-Century standards the investment would be even higher. Instead of kicking the can down the road America should show its leadership and vision by establishing a "race to the moon" charge to our society to develop the world-class infrastructure, energy systems, building technology, and next-generation transportation products that work in conjunction with a new national infrastructure.
This mission would create more jobs for our economy than we currently have workers to support and would act as a driver for construction, manufacturing, and small businesses. It also would alleviate emigration issues since the amount of work generated would be greater than the number of people we have to fill them. Cities in decline across America could see a renaissance as new residents move in to get to work.
The country would also benefit from reduced dependence on foreign oil as new energy, building, and transportation systems would significantly improve our energy efficiency and could take advantage of existing resources such as natural gas that could be integrated into the new infrastructure systems.
Let's stop with the cheap money and 0% interest loans to financial institutions making risky bets with our money. Instead of billions of dollars disappearing in bad hedge fund bets we, as a nation, can create something of lasting value that benefits the majority of our citizens.
Infrastructure is the key to economic growth. These jobs would have a multiplier effect on our economy and provide broad-based sources of tax revenue. An Infrastructure Revolution could be the driver for the next 50 years or more providing America with continued growth and prosperity!
No. Actually creating a regulatory and tax environment where businesses can competitively manufacture in this country is what will create growth, not just building a bunch of high-speed rail lines to nowhere. Aiding entrepreneurial growth is critical as well, given how small companies are the ones that create growth.
No. Actually creating a regulatory and tax environment where businesses can competitively manufacture in this country is what will create growth . . . .
That is called a Tariff.
All covered in the US Constitution Thingy we do not use so much, anymore.
High Growth countries like China use Tariffs quite effectively.
All covered in the US Constitution Thingy we do not use so much, anymore.
High Growth countries like China use Tariffs quite effectively.
US? Not quite so smart.
Actually, no. Can you say Hawley Smoot? The problem is with the costs of doing biz in the U.S. The CEO of Intel did an interview recently, discussing manufacturing domestically versus doing so overseas. It costs roughly a billion dollars more to build a plant in the U.S. than it does in Asia, and only $100 million of that is in labor costs. The rest is taxation and regulation.
One of my clients is a large furniture manufacturer. Today, he has to manufacture roughly 50% of his lines overseas. This guy is the classic owner of a family company, who cares about his community and tries to take care of his workers. Yet, despite doing his level best to actually pull some of his manufacturing back to the U.S., he cannot figure out how to do it in a way that makes those particular lines cost-effective for the consumer. Because his plant is in Michigan, he has to deal with a book of Federal and State regulations that could choke a horse. His estimate? A good 20% of his costs are simply dealing with governmental affairs--the equivalent of half his AGI on his entry-level lines. Mind you, this isn't the kind of CEO who tries to cut corners. A highly ethical man. A guy you'd want to work for. So when he talks about the millstone of government, you know he's shooting straight. So he has to suffer the problem of a 13- to 14-lag between order and delivery from China in order to provide a good price point, while his domestic stuff is out the factory door within six days of order.
What's more, an infrastructure approach to building the economy can be a dangerous path. China has relied on that extensively, with construction amounting to roughly 25% of their GDP for years. The problem is that they haven't been able to stop building without adverse economic effects, so now there is a huge oversupply. For example, in Shanghai and Beijing at this moment, there is a 10- and 11-year oversupply of housing in those markets. Just as a comparison, cities such as Las Vegas and Phoenix only had a year's excess inventory at the top of the real estate bubble. And of course there are the well-publicizied 'ghost cities' built in the middle of nowhere to house 1,000,000 residents or more that are completely uninhabited. The last time I checked, the occupancy rates in all those gleaming Shanghai skyscrapers is at the 25-35% mark, when profitability typically comes at the 75% occupancy rate. Even as we speak, there is an ongoing downward pressure on real estate values. This government-driven oversupply means we could be looking at an epic decline in real estate values in China, a drop that will make our real estate decline look like a hiccup in comparison. So all that ballyhooed Chinese growth and prosperity might be an illusion, the product of smoke and mirrors. Heck, even in our own economic history, the benefits have been dubious. After all, seven years into FDR's enormous spending program for infrastructure during the Great Depression, 1939 unemployment levels were 17.3%. So much for the notion that building a bunch of roads is the path to prosperity.
All because someone had the bright idea that a bunch of make-work infrastructure and building projects could magically yield permanent economic health.
Yes we all know these infastructure jobs Obama has pushed has helped bring down the unemployment rate.
While Germany had a 11% of unemployment rate in 2005
Germany currently has a 5% unemployment rate.
Why? Well Germany cut taxes on corporations & the rich in the mid 2000's
It has been extremely successful.
While Obama's stimulis package has been a huge flop.
Obama's stimulis package maybe huge but he must have some bad E.D because his stimulis package is big & floopy & just can't get the economy up.
Well lets see, tax cuts end up in the hands of millions of decision makers while stimulus ends up in the hands of a few cronies. I am sure I am happy with my purchases, but not necessarily so much with those of the cronies. I think states can handle the infrastructure when their tax revenue improves with the economy.
Tax cuts should be the primary form of stimulus. I am all for infrastructure for its own sake but the more local it is, the better. In other words, I am for:
Well lets see, tax cuts end up in the hands of millions of decision makers while stimulus ends up in the hands of a few cronies. I am sure I am happy with my purchases, but not necessarily so much with those of the cronies. I think states can handle the infrastructure when their tax revenue improves with the economy.
Tax cuts should be the primary form of stimulus. I am all for infrastructure for its own sake but the more local it is, the better.
Yep. What's more, anyone who has ever done business with the government can testify what a convoluted, miserable experience it can be. One devotes more time and energy dealing with what is essentially a rigged process.
Case in point? Three years ago, I was asked by a branch of the military to do some work. The person in charge of this section basically asked around and then called me based on some recommendations of others.
I walk in the door, make my presentation, and walked back out the door with a purchase order for $600,000 worth of work. Six months later, I had completed an incredibly complex project using ad hoc teams, finished it under budget and three weeks prior to the deadline. What's more, the program was wildly successful, beating their target by more than 25%. Everyone in the headquarters loved me and the effectiveness of my work was praised up and down the chain of command.
In any logical universe, I'd do the next years' work, correct? We actually started out that way, planning for the following year. BUT a purchasing officer got wind of what was going on and swooped in. The program was not put out for bid, there wasn't a government-certified contractor involved, no minority vendors involved, etc. etc. So my client in the military suddenly had to put the whole program out for bid. We never even got a shot at the assignment.
The result? The winning vendor did the next years' assignment and went $200,000 over budget and was two months late with delivery. The work was not nearly as good and they failed to hit their benchmarks for success. To make matters worse, this vendor was constantly arguing with my client, producing stuff that wasn't what he asked for. However, the winning vendor did go to church with the decision maker up the ladder in the Pentagon, so that was what really mattered.
In a microcosm, that is the problem with all government projects. The stultifying procedures. The opportunity for cronyism. The complete absence of bottom-line awareness. And yet people think this would be the savior of the economy? You've got to be kidding me.
Yep. What's more, anyone who has ever done business with the government can testify what a convoluted, miserable experience it can be. One devotes more time and energy dealing with what is essentially a rigged process.
Case in point? Three years ago, I was asked by a branch of the military to do some work. The person in charge of this section basically asked around and then called me based on some recommendations of others.
I walk in the door, make my presentation, and walked back out the door with a purchase order for $600,000 worth of work. Six months later, I had completed an incredibly complex project using ad hoc teams, finished it under budget and three weeks prior to the deadline. What's more, the program was wildly successful, beating their target by more than 25%. Everyone in the headquarters loved me and the effectiveness of my work was praised up and down the chain of command.
In any logical universe, I'd do the next years' work, correct? We actually started out that way, planning for the following year. BUT a purchasing officer got wind of what was going on and swooped in. The program was not put out for bid, there wasn't a government-certified contractor involved, no minority vendors involved, etc. etc. So my client in the military suddenly had to put the whole program out for bid. We never even got a shot at the assignment.
The result? The winning vendor did the next years' assignment and went $200,000 over budget and was two months late with delivery. The work was not nearly as good and they failed to hit their benchmarks for success. To make matters worse, this vendor was constantly arguing with my client, producing stuff that wasn't what he asked for. However, the winning vendor did go to church with the decision maker up the ladder in the Pentagon, so that was what really mattered.
In a microcosm, that is the problem with all government projects. The stultifying procedures. The opportunity for cronyism. The complete absence of bottom-line awareness. And yet people think this would be the savior of the economy? You've got to be kidding me.
One of the paths out of the labyrinth of lies is to view economic activity in a pure barter model, but not to leave out what the banker had for dinner like Ricardo. Here are two scenarios to answer the question of what people need or want:
* da guberment hires a team of experts to do case studies on what people need or want. Naturally a large budget will be required for such a large undertaking with office space and staff.
* da guberment gives money for people to spend and they buy what they need and want.
Which of these constitutes welfare more? Which if these will more accurately reflect the needs and wants of the people? The first example would actually pass as earned income while the latter is considered welfare.
Absurd? Consider the lord of the primates when out of all other ideas now considers following monkeys and apes to discover their apothecaries of herbal medicine. If ya all are out of ideas in the ivory towers, its time to follow the monkeys.
Give us the stinking money and just stop us from doing stupid things like buying SUVs. Its a lot easier to prevent stupidity than it is to promote genius. Da guberment knows stupidity best and should stick with what it knows.
Too bad there seems an obsession with 50 to 60 year old design infrastructure.
Building more highways for Oil burning cars is about as out-of-date as if the Navy were still building battleships after Pearl Harbor.
If we are going to be building something, can we not choose something with a future?
That's why my OP called for 21st Century infrastructure. It is not just roads. It's the power grid, natural gas lines, next-generation transportation systems, etc.
Theses variables are complementary and are interdependent with several other key business sectors. The multiplier effect is huge. And yes, it does include fixing existing roads that are in bad shape. Those are jobs that are essential to the lower-skilled workers that are currently having the most difficulty finding employment and have been on unemployment insurance the longest.
It's a win-win solution as it reduces social welfare costs while generating taxable income as well as expanding the business base.
It beats QE3, Twist and all the other smoke and mirror games being played with our money that has not resulted in any tangible products of lasting value or jobs for our American people.
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