Enough of QE, Let’s Get Fiscal (as in Infrastructure)

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 SUVs 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.

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