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Forget QE3, America Needs a Real Road and Job Stimulus
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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I totally agree but it takes political will and cooperation to pass any kind of as jobs or infrastructure bill, so you can fucking forget it.
Yea, that damned other party is at fault.
Yep, what we need, is more bills, GIVE US MORE BILLS!!
Watch CNN much?
How many times does it have to be screamed? The role of government is NOT to create ponzi stimulus packages and whatnot in order to 'fill the gap'. If there is a gap in job growth, or in the financial markets, or yaddadadada leave it be. Much as it would be nice to have a job, the government cannot fill a job gap or create 'programs' like Quantitative Easing, or ZIRP, or job stimulus sustainably. If the economy doesn't recover 'in time' then the government either gets toast like Greece or it pulls the rug for 'stimulus'. Either way the gap suddenly gapes wide open again, which induces panic at the sudden gap creating more downturn then what may have been originally.
The best thing the government could do is force transparency on your bank. E.g. if you have $5,000 deposited at Bankruptcy of America, they must, by law, provide detailed information to you, daily, on all assets they hold, what they are(in detail), the current value of those assets, and any underlying those assets may be relying on. Of course if you're that much of a dumbass to be putting your money in BAC in the first place you probably wouldn't know what to do with the info.
Real markets need all the info. I believe I remember reading something published by NBER about back in the 1800s newspapers used to publish asset holdings of local banks and interest rates would fluctuate accordingly at that bank due to the risk of those assets. That's called normal market principles. Not the shite we have now.
I have to disagree. The government can most definitely fill a job gap and create programs that sustainably support useful jobs. The only problem is that the government is too shortsighted, myopic, and wound up in political games to do so. Instead of investing tax dollars into R&D, innovation, education, or kickstarting small business, the only thing they can come up with is building roads, dams and other public works that have little to no prospective value.
There's a reason countries like Finland are doing so well right now, compared to the rest of Europe. When the times were still good, they invested in education, and in attracting high-tech business. Finland now has one of the highest education levels, and probably the largest per-capita high-tech industry in the world. This is something that free markets would probably not achieve without any form of government stimulus.
Finland may have invested in education, or not, regardless:
A huge reason finaland is doing so well(or the only one perhaps) is because the music never stopped in property there.
http://www.thebubblebubble.com/finland-housing-bubble/
"Finland's Finance Undersecretary Martti Hetemäki has warned that a property bubble is imminent -- and the collapse of the market as house prices continue to climb."
Of course, bankers don't believe it, just like they didn't in the U.S.
http://www.globalpropertyguide.com/news-Bubble,-or-no-bubble-Economists-differ-on-Finlands-property-market-419
http://globaleconomicanalysis.blogspot.com/2011/06/housing-atm-theory-and-finlands.html
"These clowns are actually trying to sell reverse mortgages for mostly elderly customers. And they are promoting them with the classic ATM-in-da-house bubble-pictures! The captions are something like 'Going traveling again?!' and 'Yeah since I have this home-made cash.'"
3 up arrows for suggesting crony capitalism? What is going on? No government stimulus period.
Roads, bridges, & dams have no value?
More Keynesian Economics 101. Hasn't this dude learned? Sure, we can have the government spend money on infrastructure, but it damn sure better add far more than it costs to the wealth of the nation. So first, you have to tie up all the rascals that will try to steal that money and throw them into the bottomless pit for 5 to 10 years (see Contract With Americans: 2012, at www.nar2012.com).
Then you get all the passive cooled SNR (small nuclear reactors) labs and designers (which are mainly public labs and universities) together and the government will pay them to come up with one central design... fucking quick, it shouldn't be that hard. Everyone signs on to participate in a limited open source policy whereas if they are a U.S. lab, and they sign on and render up their designs, they're in. If a segment of their proprietary design is used, the government pays them, but for everyone involved, its open source. Give them a deadline, any disputes, the President can put himself on the line and get it right or catch hell if he gets political. Yeah, it's a tough job, if it's too hot, stay out of it and don't run.
Once the basic design is settled up on... (and I mean in a fucking hurry, no dick'en around), then any power company and/or community that wants to build an SNR gets government backing. Soon, we have a ton of these fuckers up and running (ideally on thorium - Th), creating jobs and POWER, that gets America that much closer to energy independence. Can you imagine a government program to finance jobs that actually creates real wealth while securing America's future all at the same time? Well, I'm having a hard time with it too, but odds are, we'll have to do something to start this motor back up once we've cleaned out the cesspools of Washington DC/NYC.
Then we can start tearing those giant dynamically cooled lurking nuclear time bombs we have scattered on every coast, lake, river, and water way so we prevent that day when one or another takes a volumous shit (Fuckushema), and it doesn't devistate an entire region. The government can finance that demolition, too, and figure out a way to take it out of the backside of the companies that own these disasters in waiting, because you know they're going to want in on the SNR's. To which I say fine, just make'em pay. If you don't give them some pain, they will never respect us in the morning, right?
This pushes real contruction projects creating real fucking wealth that is spread all over the country, creating real fucking jobs, which creates more jobs et al. Now if we can pull our heads out of the ass of Wall Street and the Federal Reserve where they keep us in the dark, some of what we create with such a government program just might stick to all the American people. But if we're going to embark upon a serious SNR policy and we don't get rid of these sharks, we're all fucking shark food. Don't believe me? Look at the solar programs in America. It's all JP Morgan and every other parasite looking to get on the first gravy train that comes along. I say fuck'em. Putt'em away for 5 to 10, God knows they've broken enough laws to merit the time off.
Viva la' Revolucion.... www.nar2012.com and coming soon to a computer near you.... www.electanewcongress.com.... tell your friends you heard it here first, at Zero Hedge.
The Federal government needs to get out of the road building business. Eliminate or drastically cut the federal gas tax. The states can then raise their gas tax by an equal amount. If necessary a small federal gas tax can be kept soley for the purpose of sending a basic amount of funding to states like Wyoming who would not otherwise be able to raise the money to afford to maintain even a barebones road network.
The Federal gas tax is not going Anywhere. It's the bigest Government money maker of all.
Also give the federal highways back to the states.
Fuck Wyoming, it can raise its own revenue to maintain its roads and if it can't it can start to look like Detriot. Why should my tax dollars go to subsidize a state with lower taxes, so that they can get businesses to move there at my expense (loss of jobs AND MY tax dollars). What the hell is going on with the comments for this article!? There are a bunch of Neo-Conservatives basically saying "not your form of stimulus, my form of stimulus."
Crumbling roads are the logical follow on to crumbling civic-mindedness. This has resulted from universal corruption which started at the top and then spread throughout the body politic, not unlike the fish that rots from the head down. We have the government of a third world country and the roads of one. Look around you socially,culturally and politically, the process of de-civilization is well advanced. Why? Because you really don't care to uphold the principles of a civilized society. As to the question of where the money went and continues to go, are you familiar with cronyism? Probably not. Ultimately, missing infrastructue upkeep money has ended up in the hands of the bondholders. Huh? Who are they you ask? They are your real rulers, at the state level and above. The elephant in the room, paradoxically invisible. Really though, why worry about where all those taxes that are supposed to keep the infrasture from crumbling, that we all pay through the nose go? We have more important fish to fry, you know, like entertainment, nonstop, 24/7. In fact it makes us uncomfortable, even thinking about such things. Let's just keep it light and have a good snicker about something trivial and funny.
Excellent summation, Q.
Yup. I tell people look no further than the mirror for why this country is where it is. Citizen apathy and ignorance is the disease and everything else you see are just symptoms. As long as people care more about KimK, the NBA finals and DWTS than they do about sociopathic banksters/politicians and the quality of life for their children then we continue on this course and things only get worse. The problem lies right in the mirror.
"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."
When it comes to any actual cuts in public sector salaries which would be representative of Taxpayers, I'll drop this thought...
Talk to Wisconsin Gov. Scott Walker
-or-
Talk to the hand
Most of the money is going to pay for bloated pensions not roads and it ain't getting any better.....
The only possible solution is an Obummer sponsored QE public works program across the USSA but he has no money................
"The only possible solution is an Obummer sponsored QE public works program across the USSA but he has no money................"
I am even more despondent than you......He has no money!!! We are taxed at an effective rate of 50 percent of our wages year in and year out and yet POTUS is out of money..sniffle, sob, snifff......sob
Here's a thought. Privatize the roads!
Brilliant, absolutely brilliant idea! Let's turn over trillions of dollars of public property to well connected campaign funding crony capitalist contractors and pay them another tax to use the highways we have already paid for 10 times over! Very elegant solution!
Great idea! Give the roads to the Jooze. They can set up toll booths and collect even more money! They took over the banks and that was good (for the Jooze that is). Maybe they can do the same on the highway system. Spend money on maintenance? You've got to be kidding! It's much more profitable to spend the money on junkets for politicians. They can get an all expense paid (except for the 110% the taxpayer pays of course) trip to Israel to see the wonderful roads there.
Total Hicks/Hansen bs, as Friedman said, just give them spoons and you can employ 10x the number.
Typical Berkeley/Krugman answer.
It is stunning to consider how Americans think about their wages and salaries, their taxes. Where does their tax money go? It goes to provide state services to people who don't work, some of which expenses are necessary but almost none of which are efficient. Federal taxes? They go to poor folks? Nope. That is in large part an illusion. Mainly Fed taxes go to military contractors and suppliers, soldiers whether full-time or national guard, and above all to physicians and pharmas. Poor and old folks run up the bills, but the money goes to physicians. What have all the worked-up voters done about that? Nothing. Not a thing. We'd be better off spending more and more efficiently on primary/secondary education and preventive medicine, early medical interventions including [if you want me to pay for your care] behavioral interventions. You want cigarettes? Big sodas? Triple cheeseburgers? Stop. Stop or no free care. Red tag on your "Free Medical Care" record. Exercise. And let's join Sweden, Germany, et al, and stop requiring a four-year degree in X before med school. If you want the specialized education for research, select for that after med school or become a bio-chemist. We need more physicians but cheaper physicians. We need people responsible for their weight, their insulin, and their lungs. "What are we going to do, just let people who don't comply die?" No. We're going to let them pay for their own medical care. "But what about liberty to do what the hell you want?" Do what you want on your own dime. That's fine. Road rebuilding? Let's do that when somebody makes us, the tax-payer, an offer that seems reasonable. When they really want the work, they'll come down in price.
You wrote: "Where does their tax money go?" Instead of your wild and inaccurate claims, let's look at the actual numbers:
Federal expenses, 2011:
Defense: 718 Billion (of which 159 billion was for Iraq and Afghanistan).
Partial list of Domestic expenses:
Medicare, Medicaid, CHIP: 769 billion
Safety Net Programs: 466 billion
Social Security: 731 billion
Total domestic benefit programs: 1.966 trillion
Real defense budget for 2012 is $986.1 billion and $994.3 billion for 2013. Your defense budget is off by at least $250 billion on the low side. Here are the facts:
http://www.theatlantic.com/politics/archive/2012/02/the-real-defense-budget/253327/
LOL - how about money printing by FED, how about debt? Let's not fail to include half of all currency being flushed in the name of value transfer to the top 0.05 percent of the public.
That's why all those idiots bought Hummers, they knew the US was going Third World!
more keyensian bollocks. build only private toll roads like the famous autobahn you mention
I don't think Germany has any toll roads.
you mean an autobahn in Germany? ... I can't name one private toll autobahn in Germany. Trucks have to pay a toll, and they want to start making cars pay tolls, but the autobahns aren't private (they do, however, tend to be very good, especially the new ones in the east).
Marc Faber is right about spending money on Ameican beer and Ameican whores. You've got to spend money on things Amerikka still makes.
If we suspect we've hit peak oil, wouldn't an investment in roads be futile?
Don't they say the road to hell is paved with good intentions? In this case the road to hell is paved with debt, entitlement, and the almighty printing press. Anyway...
Peak oil will only be a minor problem. It can all be taken care of because we have not reached Peak Printing yet. With all the soon-to-be-worthless fiat all the central banksters will print to try to save "the system" I bet we can build one hell of a nice road. Maybe call it the Fiatbahn, the Dollarbahn, or maybe the Yuanbahn. Or better yet Fucktard Lane.
Secession anyone?
Maybe not futile but resource depletion could make it costly. All sections of the ecomony would be clamoring for any resources that they can get. Tradeoffs between them would come into consideration.
who's we- you and Al Gore?
In my city, the government does not want to repair the roads because they do not want to encourage people to drive cars.
I wrote in a comment in 2009 that a new depression would not become really evident until potholes were not being fixed any more and the plumbing all leaked, and never gets fixed.
These are just initial signs of a more aggressive infrastructure decay process still to come.
In my city we have a brand new stadium and new government office buildings. There is no money for road upkeep so we have to live with the worst rated roads in the country. It seems we've hit peak government ... peak corruption, peak size, peak lunacy.
Stuck on Zero
Peak Corruption ? You, sir, are an unrestrained optimist.
The freeways and interstate highways in SoCal are falling apart. If you're forced into the #2 or #3 lane the pavement undulates from all the heavy trucks; the entire roadbed needs to be redone. It's been this way for at least the past 2-3 years.
in SoCal?Reaaally? what-the illegals aren't chipping in enough to get the roads fixed? CALPERS is gonna bleed you dry-FU and hooray for us- and you wonder why Cali can't pay its bills.
The 0.001% travel by private jets and choppers. Who gives a fuck about highways?
Which can be easily shot down in any SHTF scenario.
Easily? Prove it...
People, people, people. The whole argument is moot. Even if spending money on roads is a great idea. Most of the money allocated will never end up as pavement. Remember Obummers shovel ready projects? It will quietly be siphoned off into every politicians pet projects and cronies.
get rid of worthless Davis-Bacon and it would open bidding to a lot more contractors and the bottom would drop out of the price of road-building instead of enriching a handful of politically connected big builders. not to mention you would eliminate all the big union labor bullshit. $50 an hour($100/hour w/benis and all OT is 2X) here in IL for a slug operator to drive a roller that a 14 year old could drive?WTF. until then-F*ck all "road building stimulus"
Blasphemer, don't you know how hard it is to push the button that turns on and off the vibratory mechanism... it really fuckin hard. Sometimes you have to actually use your ring finger, sometimes the thumb, don'e even ask me about when you have to use your pinky. They deserve everything they get, including a failing pension...
No, no, no, no.
Stimulus is economy by command. That's the problem. It doesn't matter if the money is mandated for US citizens or some other noble gesture. What matters is that the money flows by directive. That is poison.
I look at stuff to invest in all day long. Believe me I would love to invest in a little turnpike or toll road. I would keep that thing in tip top shape. But there is absolutely no way that Leviathan wants competition for roads. No way. Mine would be better and cheaper, and you wouldn't need to fund it with property tax. Fee for use.
But you will never get the chance to see that. Fuck stimulus, fuck central planning fantasies about what "ought to be." That's where all the pain comes from, all this misallocated capital, screaming to be liquidated and Leviathan won't let prices fall.
Your computer is probably powered over a grid built by FDR's public works projects in the 1930s. Oh the irony of it all.
I totally agree. At least the money would go towards bringing up America's standard of living, instead of the banker's. I would LOVE to see what you speak of.
A nice road building project would be something at least to keep the illegal immigrants busy.