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Forget QE3, America Needs a Real Road and Job Stimulus

EconMatters's picture




 

By EconMatters

How is the condition of roads that you drive On? Well, the roads that I drive on are so bad that they require a large truck or SUV to navigate at anything close to normal speeds. The potholes are alignment killers, and the horrible patches were slapped on so poorly that they become uneven speed bumps. And I reside in one of the top 5 largest cities in the U.S. with a lot of petro money that has done much better than most of other cities (e.g., the newly bankrupt Stockton, CA) during the financial downturn in the economy. It gets better yet; I'm talking about the better part of town instead of the lower revenue districts. So the question is how did we get to this state? And what are the likely solutions?

I think a lot of City, County and State revenue which ought to be going towards upkeep and proper maintenance of the roads is being diverted to other areas of government, i.e., administrative and higher than market salaries of government employees (Include benefit calculations into this equation). In short, big government spending is out of control, and it is so bad, that revenue which is supposed to go towards basic services like quality roads to drive on is being circumvented by other factions of big government which should be further down the line on the need food chain.

This fact really points out what a disaster the first $900 Billion stimulus was, and how if we cannot get these roads fixed when that money was on the table, when will we ever be able to drive on quality roads again like in the 1950 and 1960`s? It literally has been that long since some of this infrastructure was originally built, and is long overdue for a full replacement cycle of CAP EX spend, and not more ad-hoc patch jobs.

One solution is to do another round of stimulus, this one dedicated strictly to mainstream road and infrastructure projects like bridges and basic utilities. This means 100% infrastructure spend, not 5% like the last stimulus with the majority of the rest going to either special interest or pork barrel projects. This will be expensive, in the Trillion dollar range, but yes the roads are that bad. However, with the economy lacking any true growth prospects, and the ad-on effects of true job creation, which a legitimate infrastructure package brings, this expense can in part be paid for with increased tax revenue reaped from a healthier economy.

But there is a caveat, and a large one, these jobs need to be for existing American citizens. These jobs cannot be offshored or outsourced. As the current projects are outsourced to private firms, who then maximize profits, and sacrifice quality of product by hiring illegal immigrants to do the bulk of the physical labor. The country doesn`t reap the entire benefits if the existing model of road construction outsourcing of these jobs ultimately just sends a substantial sum of this money out of the country via Western Union (the figures over the last decade have been staggering to say the least).

The other solution is for governments to slim down and cut the wasted bureaucracy, so that funds which should be going towards maintaining quality roads are actually used for this purpose. This probably would only occur if the voting public starts demanding better roads, to the point where it actually becomes a campaign issue that politicians have to make public stances on, and be voted out of office for not delivering upon said objective.

Unfortunately, I don`t think voters really care about this issue, and would rather have their local pork barrel spending projects, and just drive heavy duty SUV`s to traverse the roads. Compare our roads with German roads and you can visualize the quality of product produced, and commitment to infrastructural needs in this country.

By the look of our roads you would never guess we are a first rate Super-Power in terms of Capitalistic revenue generation. Again traversing roads that seem like roads in some third world countries, I have to ask where is all the money going? And whoever decided this wasn`t a high priority for the last stimulus package needs to be voted out of office for dereliction of duty.

Further Reading - QE2: An Unmitigated Disaster

 

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Thu, 06/28/2012 - 10:43 | 2568576 steve from virginia
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This article is funny! 

It's from the 'borrow yr way out of debt' department:

We are all bankrupt because of non-remunerative cars and unaffordable roads. The solution to the bankruptcy is more cars and roads. The solution to a hangover is more drinking ...

Can't make this up ...

What is underway is a world becoming car-free and roads returning to a 'natural' state.

Best to spend on RAILroads.

Thu, 06/28/2012 - 10:19 | 2568314 TDoS
TDoS's picture

Rich guy hates big government until the roads in the wealthy part of town start to go.  

Thu, 06/28/2012 - 10:18 | 2568302 Vidar
Vidar's picture

Roads will continue to suck until they are privatized. There is nothing the market can accomplish that the state can not screw up.

Thu, 06/28/2012 - 10:05 | 2568178 Snakeeyes
Snakeeyes's picture

Here is the chart of M2 Money Velocity indicating that The Fed has very little effectiveness.

http://confoundedinterest.wordpress.com/2012/06/28/the-molasses-recovery-us-and-eurozone-gdp-growth-slow-as-molasses-in-winterime/

Certainly, infrastructure can have stimulative effects. But it also is subject to massive waste and cronyism. Like CA high speed rail.

 

Thu, 06/28/2012 - 09:48 | 2568111 disabledvet
disabledvet's picture

Create more taxpayers sounds like a plan. How's the money being spent?

Thu, 06/28/2012 - 09:49 | 2568117 disabledvet
disabledvet's picture

In fact how much money is in there to begin with?

Thu, 06/28/2012 - 09:32 | 2568048 JamesBond
JamesBond's picture

this country has bigger worries over the next year than paving roads.  

 

jb

Thu, 06/28/2012 - 09:21 | 2568000 Hexagon Sun
Hexagon Sun's picture

Crumbing infrastructure is a major fucking issue in this country, though the author does a poor job of framing it by categorizing it simply as fixing / repaving roads. In 2008, the American Society of Civil Engineers gave America's infrastructure rating a D, and noted that we needed $2t simply to keep it from crumbling. Not only our highways, but bridges, dams, levees, sewers, and pretty much everything else was built in the years immediately following WWII, and are in desparate need of replacement. Former Pennsylvania Governor Ed Rendell is a big advocate for this issue. Sadly, it will probably take another major bridge collapse, like the one in Minnesota, before Americans wake up to realize that the very backbone of their modern existence--infrastructure--is, literally, falling apart before their eyes.

Of course, here in the Bay Area, the biggest infrastructure project that this country has seen in years is underway--the new eastern span of the Bay Bridge--and, now, $5b later and merely a year or so away from completion, studies are coming out questioning its structural integrity. Must be all that Chinese steel its made of. Meanwhile, we just a couple months back, we celebrated the 75th anniversary of the erection (it is SF, you know) of the Golden Gate Bridge--an engineering marvel and undoubtedly the most beautiful bridge in the world. I doubt we could build anything now that even lasts for 75 years, much less something that will be loved and revered worldwide. And they call this progress.

 

Thu, 06/28/2012 - 12:00 | 2569252 Centurion9.41
Centurion9.41's picture

LoL listen sport, infrastructure is NOT a big f'ing problem across the country.  It's a big f'ing problem in liberal states who are busy buying off votes via entitlements and NOT doing/maintaining the very things gov. is supposed to do.

Your extremely low IQ is proven by your own words: "I doubt we could build anything now that even lasts for 75 years"

Ignoramouses like you are exactly why the US is going bankrupt.

Thu, 06/28/2012 - 09:17 | 2567985 j0nx
j0nx's picture

No money for roads or the people bitches because banks need bailed. It continues because YOU allow it. It boils down to that.

Thu, 06/28/2012 - 08:59 | 2567937 RoadKill
RoadKill's picture

The problem Republicans have with infastructure stimulous is the ammount of money that is spent relative to the ammount of work done.

Government infastructure projects are notorious for cost overruns and bloat (some might say fraud). To many States are not right to work states and have prevailing wage requirements for public projects. An earlier article on ZH (maybe Testosterone Pit or another partner) was about a project to rebuild a creekbed in New York where they had to pay temporary workers $75 an hour for work that could be done for $10 or less.

On top of over generous union wages and benefits, every single one of us has driven by a project with 1 guy working and 10 standing around doing nothing. Slap on top of that the administration bloat and the mafia theft through no-bid projects and other fake billing methods.

And even US corporations get in on the game. MLM and VMC and Cemex and Holcim etc... Have all jacked up prices for aggregates (5x) and cement (5x) and have seen their profit margins triple in the last 10 years. And despite the housing bust the prices and margins (adj for utilization of fixed assets) have barely changed. As an investor I always asked why and the response was because demand for public infastructure projects was high and those projects netted very attractive margins. And all they talk about on their conference calls are a new highway bill to let them milk the public for the next 10 years.

Thu, 06/28/2012 - 08:50 | 2567910 LFMayor
LFMayor's picture

I love this.  Whine some more about the boys and me rolling around out here in Redneckistan with our "gas guzzling 4x4's that make flowers weep".

Coming soon to a pockmarked, corncob of a road near you:

Monster Truck Madness, bitches.

Thu, 06/28/2012 - 08:36 | 2567867 surf0766
surf0766's picture

No more government spending. Cut government 50% cut taxes 25%. Welcome to the new economy.

Thu, 06/28/2012 - 09:03 | 2567943 d edwards
d edwards's picture

Wasn't one of the earlier stimulus plans supposed to be for "shovel ready projects" like roads? Of course, we learned later right out of that lying 0bama's mouth that he guessed the "shovel ready projects wern't so (chuckle chuckle) shovel ready."

He was laughing at the American taxpayer who got screwed (again.) And the only shoveling that was done was shoveling money into his cronies pockets. Long past time for articles of impeachment.

Thu, 06/28/2012 - 08:46 | 2567892 dwdollar
dwdollar's picture

That's way too generous. It's more like keep government the same size, have government do 50% less, and raise taxes 10%.

Thu, 06/28/2012 - 08:32 | 2567860 gaoptimize
gaoptimize's picture

I'm sorry we don't live in a time where this article is correct.  Any additional spending will be 100% barrowed, making matters worse than they are.  They recently "chip and tar"d our rord.  I'm sure it is harder on the tires but the maintenance is far less expensive.

Thu, 06/28/2012 - 08:30 | 2567854 Bloodgroove
Bloodgroove's picture

Come to Florida.  Every stinkin' road around here is being rebuilt.  They been rebuilding I 10 into Jacksonville now for about 6 years.  I think they originally built I 10 from Jax to the Santa Monica pier in six years.  I don't know about you, but everywhere I go I see orange cones and "ROAD CONSTRUCTION AHEAD."  I guess Chairman Obama had to do something with all the illegals around here that used to build houses for speculators that lost everything.  I guess they could tear down all the useless housing they built. 

Thu, 06/28/2012 - 08:23 | 2567838 q99x2
q99x2's picture

They can start making better roads by first throwing Obama under the bus.

Thu, 06/28/2012 - 08:23 | 2567836 lindaamick
lindaamick's picture

Maybe the US should stop creating terrorists among brown peoples by occupying and droning thus creating a never ending and greatly expanding spending loop and spend tax monies on the USA.

Thu, 06/28/2012 - 08:13 | 2567803 skipjack
skipjack's picture

More money for schools ?  Really ?  Who is the idiot who thinks that more and more money thrown at an indoctrination scheme is good spending ?  If you want education like Finland, then get the government out of the schools business and let parents decide where their kids get educated.  And yes, stop requiring 4 year degrees for Hertz Rent-A-Car counter help...teach arithmetic in 1st thru 3rd grade, as we used to do before the Federal elephant and ass barged into the room and took over with union layabouts and crap "curriculum"..

Thu, 06/28/2012 - 07:51 | 2567759 Sudden Debt
Sudden Debt's picture

Roads?!

America needs MASS BURIAL SITES! And guns for the survivers...

 

Thu, 06/28/2012 - 08:52 | 2567918 LFMayor
LFMayor's picture

you've got the cart before the horse.  You need the guns first.    Why am I haveing to lecture a Yurp on this though?  You fuckers are the only ones to ever make and use Industrial killing centers.

Thu, 06/28/2012 - 07:27 | 2567697 CPL
CPL's picture

Couple of things.

  1. The US does not possess enough diesel to replace all the roads, maybe 5% of what's out there, most municipalities can't fill in potholes because of their pension promises/debt problems.  Do you think for two seconds that all we'll see is a repeat of current situation sooner?
  2. The US does not have enough Bitumen to replace the roads (remember we're put that in our gas tank now ala Oil Sands)
  3. The US government does not have the credit to extend to rebuild the roads.
  4. The US government does not have enough alllies to help in building it's roads.
  5. Any attempt to rebuild all the roads has the exact same inflationary outcome as just printing money and handing it to the banks.  In fact who do you think manages the fund for all current road work projects?
  6. The US will not have a to big to fail bank by the end of this year.
  7. The US IS a third world country if looking at cost of living, salaries and income distribution, it's actually worse than a third world nation.  All the peasants have BA's in psychology or some retarded business degree (I think I've met one success that's started a business with a degree)
  8. Why start talking like the ditch digging programs help build the US when the majority of the population is simply too old to do that type of labour and should be enjoying a well deserved retirement.

 

Dumbest idea ever.  Want to see people get healthy and wealthy?  Cull 2/3's of the population and keep the population low on purpose from that point on.  How that gets done, who knows and who cares anymore.  Trying to fix the issue now is futile.  4 years ago, this might have helped...now the math points to "too fucking late."  Too many hands, too much debt, too many mouths.

 

This is now reset time.

Thu, 06/28/2012 - 07:09 | 2567653 andrewp111
andrewp111's picture

 

"I think a lot of City, County and State revenue which ought to be going towards upkeep and proper maintenance of the roads is being diverted to other areas of government, i.e., administrative and higher than market salaries of government employees (Include benefit calculations into this equation)...."

There is no question that ZIRP is utterly destroying State and Local pension schemes. Even the pensions that were honestly constructed need 8-10% yield to meet their obligations. Increasing portions of tax revenue are being diverted just to avoid municipal bankruptcy.  This addiction to high yields is the biggest and longest lasting legacy of the Bubbles. Obama's Porkulus (Stimulus) was just a temporary payoff to the same groups so their pensions and wages would not be cut. It did not stimulate or fix anything. And it is only going to get worse.

Thu, 06/28/2012 - 09:26 | 2568015 JamesBond
JamesBond's picture

your analysis is spot on.

state pension plans are about to detonate across the country thanks to faulty yield formulas ....

 

jb

Thu, 06/28/2012 - 09:42 | 2568086 j0nx
j0nx's picture

Been hearing that shit for 5+ years now and so far they haven't. I'm not debunking your claim but it is getting tiring hearing it over and over for the past 5+ years. Starting to sound like a parrot. Sqwaak pensions are blowing pensions are blowing Sqwaaak. It's time to shit or get off the pot with the financial implosion predictions.

Thu, 06/28/2012 - 12:23 | 2569450 JamesBond
JamesBond's picture

do you even know what QE is and how much went to shore up state budgets?!?

 

 

 

Thu, 06/28/2012 - 07:07 | 2567651 Go Tribe
Go Tribe's picture

It's never enough for you spenders, is it? More roads, bridges, prescriptions, school levies, old people levies, oil and gas credits, etc. How much is enough for you? Just drive around DC. Piglets on the teats. This isn't government, it's theft.

Thu, 06/28/2012 - 07:02 | 2567643 shovelhead
shovelhead's picture

Gonna fly around town on one of them Govt. subsidized solar powered unicorns.

Don't need no stinkin roads. GO GREEN!

Thu, 06/28/2012 - 06:38 | 2567614 Pee Wee
Pee Wee's picture

Where is all the money?

Great question(s).

 

Thu, 06/28/2012 - 08:54 | 2567924 LFMayor
LFMayor's picture

I wonder... could be?

Buying grape Drank and skittles wid ma EBT?

Thu, 06/28/2012 - 06:32 | 2567609 the not so migh...
the not so mighty maximiza's picture

Yes we need more !!!!  Summer of Recovery IV part G section 1.45a

Thu, 06/28/2012 - 06:16 | 2567602 dolly madison
dolly madison's picture

Wow, that is such a different experience than I am having here in my little town in California.  They repave things around here that I think shouldn't be repaved yet.

I personally would be fine with less good roads.  I am very frugal by nature, and hate to see waste.  I did pave a short road on a property I owned before and looked into repaving another property.  I know it really costs a lot.

Also when I visited Mexico years ago, I really liked the feel of a less built up place.  It was nice seeing people selling things with carts and presumably paying no permits for their business activity.  I loved the charmingness of the unpaved roads there.  Besides medicine and computers, I don't have much use for the way we've built our country up.

Thu, 06/28/2012 - 07:43 | 2567742 Treeplanter
Treeplanter's picture

I agree.  As an OTR truck driver i see a lot of construction and good roads. CA is the exception.  My main complaint is narrow state and county roads.  Obama blew too many trillions.  We are insolvent.   Alls signs say  DEFAULTS AHEAD.

Thu, 06/28/2012 - 03:37 | 2567523 Whalley World
Whalley World's picture

As a canuck, i must gloat that i bragged at the new Fraser River crossing  and expanded Hwy 1 crossing into Van, but sadly realized it is like a life preserver for a jumper off the Titanic

Thu, 06/28/2012 - 03:51 | 2567533 Sockeye
Sockeye's picture

That bridge is an off balance sheet taxpayer fleecing iceberg lurking in the dark cold water.

Thu, 06/28/2012 - 02:02 | 2567467 Uncle Remus
Uncle Remus's picture

Roads? We don' need no steenkin' roads.

 

Roads is what got us suburbia, speed traps, fake drug inspection points and unfunded rest areas. Roads is what got us LBJ and look where that got us?

 

Unless you're talkin' Inca Roads...park it, park it.

Thu, 06/28/2012 - 07:47 | 2567751 Treeplanter
Treeplanter's picture

Pure nonsense.

Thu, 06/28/2012 - 01:56 | 2567464 lemonobrien
lemonobrien's picture

we need less roads; denser cities, for free range, open space, and farm land. oil is going away; maintaining roads is expensive.

Thu, 06/28/2012 - 08:19 | 2567825 marchare
marchare's picture

Agenda 21?

Thu, 06/28/2012 - 01:29 | 2567445 honestann
honestann's picture

The roadbuilders have one of the most brazen and obvious kickback schemes in government.  They suck up tens of millions of dollars just putting up cones and taking them down, and as long as they're kicking back to the politicians who give them the contracts, they don't have to do much of anything except make it look like something is being done.  If you watch a job carefully, you can easily see how this works.

Thu, 06/28/2012 - 02:37 | 2567484 SmittyinLA
SmittyinLA's picture

my local govt "repaved" my street last year, I say "repaved" in quotes because they really just painted it black with a light emulsion, they didn't even clean it or remove the weeds, let along patch the cracks and potholes, it was the "travellers driveway scam" on a municipal scale, they did close it for 3 days, and put up many signs and even brought in a porta-potty for the part time road crew.   

I was so miffed at the poor quality of the work I took photos of the weeds, dead squirrels and even a bannana peel that the contractors "painted" with emulsion and sent them to the city, oh ya, they also painted all the inspection hartches and manholes shut too, and I checked the contract, the price they paid was more than a new asphalt street in Texas . 

Thu, 06/28/2012 - 01:02 | 2567423 natty light
natty light's picture

We need to rebuild the (conventional, not high-speed) railroad system. 

Thu, 06/28/2012 - 01:00 | 2567420 beentheredonethat
beentheredonethat's picture

you and keynes get back on the horse you rode in on and get out of here before the ZH readers get this.

Thu, 06/28/2012 - 00:43 | 2567395 DavosSherman
DavosSherman's picture

121,600 gallons of oil to pave one fucking mile of road.  And gas prices will then do what?

Thu, 06/28/2012 - 01:13 | 2567436 Centurion9.41
Centurion9.41's picture

Here we go...

Look sport, first of all I've yet to find the source for the 121k gallon assertion.  It's one of those things said by a liberal and squawked by all the liberal lemmings and never questioned.

Regardless, even if it is true.  Low quality oil is used, not the "sweet" kind used to make gasoline.  So please think and do some research before squawking like a lib.

Thu, 06/28/2012 - 01:38 | 2567451 0z
0z's picture

Is there a way to get a hold of the guy who wrote this? He needs someone who can explain him the way the world works.

Thu, 06/28/2012 - 00:31 | 2567378 Peak Everything
Peak Everything's picture

What a fucking idiot. Global oil production will begin to fall at 4%+ per year within 1-4 years. Thereafter rationing and much less driving. If we have a deflationary collapse resulting in low oil prices you can expect a much faster decline than 4% per year because all of the recent oil requires $80+ to produce it.

Thu, 06/28/2012 - 00:45 | 2567398 michael_engineer
michael_engineer's picture

Seems like much less driving has been occurring in many places now for years already. That might be trying to tell us something.

Thu, 06/28/2012 - 02:53 | 2567494 mind_imminst
mind_imminst's picture

No more roads please. We have plenty of superhighways, strip malls, parking lots, convenience stores already. We can't afford the upkeep. Suburban sprawl is a ponzi scheme at its heart.

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