Coyote Blog

Obama and the Left want a big new infrastructure spending bill, based on twin theories that it would be a) stimulative and b) a bargain, as needed infrastructure could be built more cheaply with construction industry over-capacity.

Since this is exactly the same theory of the stimulus four years ago, it seems a reasonable question to ask:  What happened to the damn money we spent last time?  We were sold a 3/4 of a trillion dollar stimulus on it being mostly infrastructure.  So where is it?  Show us pictures, success stories.  Show us how the cost of construction of these projects were so much lower than expected because of construction industry over-capacity.  Show us the projects selected, to demonstrate how well thought-out the investment prioritization was.  If their arguments today have merit, all these things must be demonstrable from the last infrastructure bill.  So where is the evidence?

Of course, absolutely no one who wants to sell stimulus 2 (or 3?) wants to go down the path of investigating how well stimulus 1 was spent.  Instead, here is the argument presented:

Much of the Republican opposition to infrastructure spending has been rooted in a conviction that all government spending is a boondoggle, taxing hard-working Americans to give benefits to a favored few, and exceeding any reasonable cost estimate in the process. That's always a risk with new spending on infrastructure: that instead of the Hoover Dam and the interstate highway system, you end up with the Bridge to Nowhere and the Big Dig.

In that sense, this is a great test of whether divided democracy can work, and whether Republicans can come to the table to govern. One can easily imagine a deal: Democrats get their new infrastructure spending, and Republicans insist on a structure that requires private sector lenders to be co-investors in any projects, deploying money based on its potential return rather than where the political winds are tilting.

This is bizarre for a number of reasons.  First, he implies the problem is that Republicans are not "coming to the table to govern"  In essence  then, it is up to those who criticize government incremental infrastructure spending (with a lot of good evidence for believing so) as wasteful to come up with a solution.  Huh?

Second, he talks about requiring private lenders to be co-investors in the project.  This is a Trojan horse.   Absurd projects like California High Speed Rail are sold based on the myth that private investors will step in along side the government.  When they don't, because the project is stupid, the government claims to be in too deep already and that it must complete it with all public funds.

Third, to the extent that the government can sweeten the deal sufficiently to make private investors happy, the danger of Cronyism looms large.  You get the government pouring money into windmills, for example, that benefits private investors with a sliver of equity and large manufacturers like GE, who practically have a hotline to the folks who run programs like this.

Fourth, almost all of these projects are sure to be local in impact - ie a bridge that helps New Orleans or a street paving project that aids Los Angeles.  So why are the Feds doing this at all?  If the prices are so cheap out there, and the need for these improvements so pressing, then surely it makes more sense to do them locally.  After all, the need for them, the cost they impose, and the condition of the local construction market are all more obvious locally than back in DC.  Further, the accountability for money spent at the Federal level is terrible.  There are probably countless projects I should be pissed off about having my tax money fund, but since I don't see them every day, I don't scream.  The most accountability exists for local money spent on local projects.

My new Forbes column is up, and it discusses an article by Michael Malone that said in part:

The recent quick fade of the Deficit Commission was the latest reminder that America no longer seems to have the stomach for big challenges.  There was a time "“ was it just a generation ago? "“ when Americans were legendary for doing vast, seemingly superhuman, projects:  the Interstate Highway System, the Apollo Missions, Hoover Dam, the Manhattan Project, the Normandy invasion, the Empire State Building, Social Security.

What happened?  Today we look at these achievements, much as Dark Age peasants looked on the mighty works of the Roman Era, feeling like some golden age has passed when giants walked the Earth.

My response includes the following:

The list he offers is a telling one "” all except the Empire State Building were government programs, just as were the "mighty works" of the ancient Romans.  And just like the Romans, these and other government projects have more to do with triumphalism than they do with adding real value.

It is interesting he should mention the Romans.  There were few grand buildings during the centuries when Rome was a republic.  Only in the later Imperial period, when Rome became an autarky, did rulers begin to build the monumental structures that Malone admires.  Emperors taxed their subjects and marshaled millions of slaves to build temples and great columns and triumphal arches and colosseums to celebrate"¦ themselves.  Twentieth Century politicians have done the same, putting their names on dams and bridges and airports and highways and buildings.  They still build coleseums too, though today they cost over a billion dollars and have retractable roofs.  Are these, as Malone suggests, monuments to the audacity of the greatest generation, or just to the ego of politicians?...

This is the same concern that drives Thomas Friedman to extol the virtues of the Chinese government, where a few men there can point their fingers and make billions of dollars flow from their citizens to the projects of their choice.  This is a nostalgia for coercion and government power, for Lincoln imposing martial law, for FDR threatening to pack the Supreme Court, for the Pharaohs getting those pyramids built.  It is a call for dis-empowerment of the masses, for re-concentrating power in a few smart visionary folks, presumably including Mr.  Malone.

The new bypass bridge at Hoover Dam.  Photo courtesy of the Mail Online.