Infrastructure as stimulus

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From the Strib: Oberstar looks to job-creating infrastructure projects

"Last month, the House passed a $60 billion stimulus package, half of which was for transportation and infrastructure projects. It offered $12.8 billion to the states, including $208 million for Minnesota. But the measure stalled in the Senate when President Bush indicated he would veto it.

House Speaker Nancy Pelosi, D-Calif., now wants to more than double the spending to as much as $150 billion."

"A study by the Federal Highway Administration estimated that for every $1 billion spent on transportation projects, 34,799 direct and indirect jobs are created.

Minnesota currently has $218 million construction-ready projects awaiting federal funds, according to a recent survey from the American Association of State and Highway Transportation Officials. Applying the FHA's formula, that would bring 7,586 new jobs to the state, Schadl said."

(1) Minnesota does not have enough ready projects. Our population says we should get 1.67% of the national budget, but with only $218 million available to spend in Minnesota out of $30 Billion on offer, we are getting less than 0.75% of total disbursements. Minnesota did not learn the lessons of Robert Moses, the New York Power Broker who always had engineered projects queued up waiting for construction money available.

(2) Repeat three times: Jobs are a cost. Jobs are a cost. Jobs are a cost. If one company came to do a project at your house and said it would cost $100,000 and employ 10 people and another said it would cost $50,000 and employ 5 people, you would do the latter. I want the government to do that as well for my tax dollars. I want to maximize benefits per unit cost. If by doing so, we employ some people, that is a nice side-benefit; but if we deviate from that and do projects solely to employ people, we will be wasting money which in the long run will shrink the economy. Surely there are efficient ways to spend money, which will have a stimulatory effect.

(3) Are these projects really beneficial or are they like the famous Japanese make-work projects with 5 supervisors for every worker? One of my favorite pictures is that of the Boonsboro Pike, the first Macadam Road in the US, with five workers lounging for the three actually doing work:

Boonsboro Pike

2 Comments

Apparently Oberstar hasn't heard of the Parable of the Broken Window. When politicians say "create jobs", they usually mean create construction jobs, a natural constituency for those who favor larger government.

Also, $1 billion for 34,799 jobs is not very effective, by comparison ($28,736 per job). Many state economic development agencies are able to create new employment at far less than $10,000/job. Federal transportation spending does not compare favorably.

(3) Those five guys are not lounging, three are hammering the quarry rock into gravel, one is doing quality control and the fellow in the top hat is supervising. 4 of the 5 are directly enabling the road layers to do their job.

There is often many tasks that need to be done on a project besides the actual construction.

David Levinson

Network Reliability in Practice

Evolving Transportation Networks

Place and Plexus

The Transportation Experience

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Assessing the Benefits and Costs of Intelligent Transportation Systems

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This page contains a single entry by David Levinson published on October 30, 2008 6:14 PM.

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