The Economics and Patriotism of Infrastructure Jobs Programs

Infrastructure map courtesy of The Atlantic

The Economics and Patriotism of Infrastructure Jobs Programs

America’s crumbling infrastructure is both a safety hazard and a drag on our economy that is projected to only get worse. If we’re going to tackle the really big challenges of government budgets, deficits, debts, and the economy, then every citizen must understand the realities of what a deteriorating infrastructure means to this country. We then need to demand that our elected leaders stand strong against austerity and, instead, do whatever it takes – including raising taxes on corporations and the wealthy – to improve our infrastructure.

Properly-funded federal and state infrastructure improvement jobs programs would produce immediate and lasting benefits, including but not limited to:

1) Putting large numbers of Americans back to work in good paying middle class jobs which would immediately boost the economy from the bottom up (since trickledown economics has proven to, once again, be an unmitigated and disastrous failure)

2) Making all of us safer and less vulnerable to infrastructure inefficiencies, failures, or acts of terrorism

3) Demonstrating to American companies and to the world a sense of patriotism that includes spending public funds on the infrastructure that is so vital to our economic and commercial success

Putting patriotism and safety issues aside for the moment (although I don’t know why we should), the sheer impact to our economy and our own selfish financial interests are at stake. This is usually motivation enough for most Americans to demand action from our politicians.

I think it ought to be more than just self interest. Americans have become the experts at professing their patriotism at every opportunity. We’re known the world over for our self-proclaimed exceptionalism. It’s why I believe that we ought to be thinking about and talking about funding the repair and expansion of our infrastructure as one of the most truly patriotic things we can do for ourselves and our country.

First, the economics. Math, after all, doesn’t require an emotional investment or belief system. It just is.

The Economics of Infrastructure

In his blog post, “Crumbling Infrastructure Has Real and Enduring Costs,” William A. Galston of the Brookings Institution points out that a study by the American Society of Civil Engineers projects that, “…by 2020, if the mounting investment gap in infrastructure is not addressed, ‘the economy is expected to lose almost $1 trillion in business sales, resulting in a loss of 3.5 million jobs . . . the cumulative cost to the U.S. economy will be more than $3.1 trillion in GDP and $1.1 trillion in total trade.'”

He also tells us that the Building America’s Future Educational Fund report reveals that a lack of a national infrastructure plan puts a serious drag on our economy. The example he cites is “…in 2010, Americans spent a total of 4.8 billion hours stuck in traffic, wasting 1.9 billion gallons of fuel, at a total cost of $101 billion.”

Let these numbers sink in.

$1 trillion – that’s a ‘1’ followed by 12 zeros; $1,000,000,000,000 – in LOST BUSINESS SALES and 3.5 million lost jobs in just 7 years.

$101,000,000,000 wasted sitting in traffic in just one year.

So in addition to patriotism and public safety, do we as Americans really want to waste greater and greater amounts of time, energy, and money sitting in traffic or waiting for delayed flights and trains?

Do you want to waste even more of it in the future?

Do you want American businesses to forego realizing ONE TRILLION DOLLARS in sales between now and 2020?

If not, then ask yourself how or why we ought to buy into Paul Ryan’s thinking that what’s needed most right now is greater austerity.

His budget – which unless I’ve missed it still seems to be the GOP’s position, too – proposes we spend $78 billion, or 25% less, on infrastructure than the White House’s proposed budget of $104 billion per year over the next decade. According to Galston and some think tanks, the White House’s budget is already less than one-half of what’s needed to repair our infrastructure, and yet Ryan would have us believe we need to spend even less.

How does that solve the problem? I simply cannot believe there’s that much waste and, true to form, Ryan still is unwilling or unable to offer any substantive details.

So as far as the economics go, one would think that numbers like the lost sales, lost jobs, trade imbalances, and lost productivity would be enough to rally the public *and* the business community to demand that something be done immediately to repair, improve, and expand our infrastructure. It’s not like there aren’t precedents to follow with proven outcomes. We – meaning the government hiring both workers and outside companies as contractors – have done big infrastructure projects before.

It took courageous leadership in government to get those projects moving. The private sector was and still is the beneficiary of that leadership. Where is it now?

No, You Didn’t Build That

With all due respect and admiration for the courage and creativity of entrepreneurs and captains of industry everywhere, I remind you that, “NO, YOU DID NOT BUILD THAT!”

You just get to benefit from it. The nation’s infrastructure is, without question or doubt, part of the reason for any commercial success and, hence, at least part of the resulting wealth that’s made possible in America for those who want to start, run, and work in the private sector. Trust me; I’m your fan and one of your biggest cheerleaders. I just think it’s time that you and your followers put your copy of Atlas Shrugged down and join the rest of us in the real world.

Business people everywhere – from the titans running multinational corporations to the small business owner on Main Street struggling to compete with Walmart – owe it to themselves and their self respect to please stop this self-indulgent and self-serving love affair with the Randian mythology. It’s tedious and tiresome and, truthfully, a complete fantasy. Where would you be if your workers quit tomorrow, and when was the last time you built a bridge, an airport, or an electrical power station?

To the business people busying themselves complaining endlessly about the government, please stop your childish whining and please start acting like real leaders. You can start by acknowledging that if you’re going to continue to benefit from everything a democratic society has to offer – including infrastructure – then you are going to have to pay for it. That’s how capitalism works, right? Payment for goods and services rendered?

Yes, I know that means higher taxes than the historically low taxes you pay now. The only sympathy you’re going to get are from fellow wealthy individuals and the people you’ve duped into believing in another fantasy – trickle-down economics.

Look, if your business cannot survive an increase in taxes and the closing of loopholes, well then maybe you’re not such a successful business person after all. Don’t feel bad. Lots of people have tried and failed more than once, including yours truly. It’s what makes me your cheerleader. I know how hard it is. We both know that there are no guarantees, but I will say this; never once did tax obligations figure into my thinking or have any impact on my results.

Real entrepreneurs don’t let things like taxes get in their way; they don’t use them as a lame excuse for not trying, nor are they the cause for why one tries and fails. Only someone who has never started a business would believe such a thing.

It’s only in bad novels by Russians with absolutely no economic credentials where real entrepreneurs give up and disappear because they were somehow defeated by government or society.

To the average citizens who rises in Randian defense of all things private and corporate, including infrastructure, I’d like to ask you a few questions.

How well do you feel you understand the profit motive and the demands it places on the business managers to maximize revenues and minimize expenses?

Have you really thought through what it would be like living in a country where every other river crossing or highway exit extracts a toll from us that goes only to a corporation and their shareholders?

If you have thought about it and you do want to see infrastructure privatized, then I would like to hear how and why you believe that the corporation collecting your tolls will forego maximizing profits and, instead, do what’s best for the nation and for the local community once they’ve built their monopolies modeled on Matty Moroun and his Ambassador Bridge?

It all comes down to money, of course, and, like it or not, it takes money to fund a democracy.

So here we are. We’ve arrived at a point in our political and societal evolution where, hyperbole and ignorance of the facts notwithstanding, American corporations, wealthy individuals, and their toadies in the GOP continue to foist upon us their strategy of fear, uncertainty, and doubt – along with unhealthy doses of outright lies – to keep us at bay and living in fear that they’ll abandon our shores if they can’t keep – and even reduce further – their already historically low tax obligations when they do pay any taxes at all. (Yes, I’m looking at you Mitt Romney, GE, and the rest of you uber-rich individuals and corporations paying very little taxes or actually getting tax refunds.)

The message from Big Money America and the GOP is clear: they are completely and utterly devoid of care or concern for this country and its citizens outside the now well-known 2%.

Where’s The Patriotism?

Galston reminds us that we’ve pulled together as a nation under both Democratic and Republican administrations before to do big infrastructure projects. We’ve done what’s been needed before. We can do it again.

A federal (and state) infrastructure program now would put lots of people to work. In addition to safer and more efficient infrastructure, big and bold new projects – hell, even repair and rehabilitation projects – would mean lots of decent paying middle class jobs for Americans. That is exactly what is needed right now to get the economy growing faster and better. What we don’t need and can’t afford is more austerity and more of our fellow citizens left with little choice or opportunity outside of working in retail or the fast food industry.

We need a sense of patriotism.

Federal infrastructure projects are patriotic and need to be talked about as patriotic. They are physical and enduring evidence of the love and devotion we should have to our country and to each other. Our society simply cannot operate without infrastructure, so programs to repair and improve it is service to our country, isn’t it?

Since the days of the Erie Canal, infrastructure projects have proven to deliver huge economic and societal benefits both at the time they are undertaken and for generations to come. We Americans need to remember this every time we merge onto an interstate, get on a train, board an airplane, turn on our lights, or buy bananas in January. None of that is possible without infrastructure, and that infrastructure was built by Americans for Americans.

Our roads, airports, railways, and sea ports have become too small, too old, and crumbling too quickly after decades of use for us to stand by and let it happen. They’re more and more unsafe and, for all the true capitalists out there, it’s a drag on our economic vitality and growth that will only get worse unless we do something about it.

And when it comes to defining what it means to be an American, letting our infrastructure deteriorate turns us into a second-rate first-world nation. It’s an embarrassment and a shame on all of us. We’re always making lots of noise about being number 1. I don’t know about you, but I never hear any Americans proudly proclaiming, “We’re #33!”

It’s time to show some real patriotism outside of military excursions. It’s time for Americans to rally together to demand that our elected officials put us to work fixing and rebuilding America’s infrastructure.

It’s good for us citizens. It’s good for business. It’s good for America.

Sounds like patriotism to me.

Sources:

(1) Galston, W. (2013, January 23). Crumbling Infrastructure Has Real and Enduring Costs. http://www.brookings.edu/blogs/up-front/posts/2013/01/23-crumbling-infrastructure-galston?cid=em_alert012813

(2) Plumer, B. (2012, March 30). What Paul Ryan’s budget actually cuts – and by how much. http://www.washingtonpost.com/blogs/wonkblog/post/what-paul-ryans-budget-actually-cuts–and-by-how-much/2012/03/20/gIQAL43vPS_blog.html

(3) Berfield, S. (2012, May 3). Matty Mouron, Detroit’s Border Baron. http://www.businessweek.com/articles/2012-05-03/matty-moroun-detroits-border-baron

CHARTS: Here’s What The Wall Street Protesters Are So Angry About…


I think this Business Insider article is one of the best collections of facts I’ve ever seen assembled about the economy.

Each graph is linked to its source or has the source stated as part of the chart image. Most come from the Federal Reserve Bank of St. Louis. Others are from the Bureau of Labor Statistics, the CIA (yeah, that CIA), UC Santa Cruz, Institutional Risk Analytics, Reuters, and the New York Times.

It is apolitical. It is simply historical data in graphical form about unemployment, corporate profits, banking, and the like. It doesn’t project or forecast anything. It does offer brief descriptions about what that data means to everyone, not just the Occupy Wall Street movement.

The author, Henry Blodget, is no left-wing loon. Besides being CEO and Editor-in-Chief of Business Insider, he has firsthand and what some might call a “colorful” history in the financial services industry.

On a related note, I also thought that the image above was telling. It comes from The Atlantic

Was hoping we all might borrow this idea from that article:
“The greatest threat to our economy is neither corporations nor the government. The greatest threat to our economy is both of them working together,” Sinclair writes. “There are currently two sizable coalitions of angry citizens that are almost on the same page about that, and they’re too busy insulting each other to notice.”


“If we can’t persuade nations with comparable values of the merit of our cause we’d better reexamine our reasoning.”
Robert McNamara, former president of Ford Motor Company, Secretary of Defense to JFK and LBJ, and former president of the World Bank in the 2003 documentary, “The Fog of War”, on America’s involvement in Vietnam and the fact that we, as a nation, are not and never have been omniscient or perfect.

Why the Republican Party Hurts Free Markets

I think we have the deregulatory philosophies and policies of the so-called free market capitalists, mostly of the Republican Party and their latest incarnation of a high-priest, Alan Greenspan, to thank for much of our economic problems. Even he seems to now be acknowledging this (http://www.npr.org/templates/story/story.php?storyId=96070766). It’s not all his fault, to be sure.

The rest of this somewhat lengthy post (from an email thread with friends dated January 24, 2008) attempts to make the point that our troubles are rooted squarely in the social, fiscal, and political ideology of the neo-conservative elements of the Republican Party.

(Now excuse me whilst I climb on top of my soapbox!)

Let’s start with the concepts of “free markets” and “capitalism”. In my mind, “free market” does not and should not mean a “free for all”. Maybe there never was a time when true free marketers understood that they were nothing without a market. Maybe true capitalists could never reasonably be expected to understand that their primary goal and very survival depends on the needs of their markets and how best to grow those markets for the benefit of everyone’s long term prosperity and stability. Maybe there was never any hope that they could, would, and should accept the logic and reason for legislation, regulation and oversight as the very best means for keeping out those who would manipulate, cheat, and ultimately destroy those very same markets for their own personal gain.

Maybe it’s time for those who like to call themselves capitalists and free marketers to realize the danger in listening to the Ken Lays, Jeff Skillings, Andy Fastows, Bernie Ebberses, and, yes, Alan Greenspans, Dick Cheneys, and the Bush-type royalty of the world who would have us believe…
….creative accounting like mark-to-market, derivatives, and the like are real things on which to base an economy
….the fantasy and fallacy of the Ayn Rand-followers who trust in the benevolence of an untaxed, uncontrolled, and unregulated wealthy to have everyone’s best interests at heart
….that not getting caught is the same thing as not doing anything wrong, and that
….no one – especially government – should be poking their civil service noses into business

As Americans, we especially like that last one. When it comes to the authority to regulate commerce, we forget that Article I, Section 8 of the Constitution specifically gives Congress the power and, hence, the responsibility to do just that. Could be the good ol’ Founding Fathers knew enough about human nature even way back then to know that, generally speaking, people and business needed regulation if they were to perform for the common good and not just their own self interest. (Common good, by the way, is a great way to think about a free and open society. Keep that in mind.)

Isn’t it time to finally wake up to the fact that “trickle down” is just another way of saying “pissed on” by the powerful and wealthy elite in business and government? Isn’t it time to admit that “trickle down” is actually a good description of what happens to people everywhere except at the top – we get a trickle of what government “gives” to those at the top in the form of deregulation or tax cuts? Isn’t it time we recognize that there is but one political party where big business, ultra-wealthy, and neo-conservative social and political dogma come to their full realization…all at the expense of the rest of the common good?

As I see it, big business and government are one and the same inside the Republican party. R’s talk a good game about being inclusive, being for less government in our lives, being for less government spending so as to avoid bad things like increasing deficits, and being about protecting American families and family values. Well, from my perspective, they’ve done exactly the opposite beginning with Reagan and finding their full throat especially over the last 8 years. Again, just my opinion.

The following excerpt from an article by author Larry Beinhart summed it up pretty well for me (http://www.alternet.org/workplace/98913/a_crash_course_in_economic_crashes/?page=entire)

“The core, the very heart of Bushonomics, is cutting taxes, especially for the wealthy. …the tax cuts were sold as economic stimulus and jobs packages with the promise that they would not create deficits. This last was based on a romantic Ayn Rand vision of millionaires racing into the backwoods to build, build, build new businesses that would create jobs, “good jobs,” and new taxes would be paid by the businesses and the workers, making up for the initial deficits.
Alas, none of that ever happened.
Deficits were created.”

More good reading by Beinhart on Bushenomics (I like that term!) can be found here (http://www.larrybeinhart.com/articles/node/12) and at his web site.

I also think that the AFL-CIO’s executive council statement from March of last year is worth reading (http://www.aflcio.org/aboutus/thisistheaflcio/ecouncil/ec03052008a.cfm).

It opens with…
“The implosion of the housing market and the cascading crises in the credit markets are the direct consequence of a 30-year experiment of trying to create a deregulated, low wage economy where high consumer spending is propped up by easy credit and asset bubbles. Real solutions must be based on restoring the economic health of the American middle class through good jobs, health care, retirement security and a voice at work for all. And an important part of the solution must be the thoughtful, comprehensive re-regulation of the financial markets.”

Don’t get me wrong, I’m working my ass off trying to build as much personal wealth as I can just like everyone else. I don’t expect or want government at any level to provide – or limit – my potential or opportunities. The reality as I see it, however, is that the old adage about the corrupting influence of power is all too true and very much alive in the backrooms and corner offices of so-called capitalists and free marketers who, it seems to me, are found far more often in the Republican Party.

Capitalism and free markets are honorable ideas, too be sure. It’s a shame that they have been usurped and corrupted by what I see as a twisted ideology based upon greed and exclusion now found almost exclusively in neo-con Republican dogma, and which manifests itself as so-called pro-business policy and legislation that, in the end, is anything but helpful to the advancement of markets and the people who make up those markets. Us.

The very idea that business people – especially those people in financial markets who wield such great power and influence and whose decisions affect so much of our lives – need not be regulated is not only silly and naive, it’s dangerous and serves only to breed more and more corruption. Left unchecked and unregulated, positions of that much power are destined to be filled with people from ever smaller circles of influence who care less and less for anyone except themselves and their exclusive circle. They will gladly sacrifice entire markets and economies – the very goose that lays their golden eggs – in order to amass as much personal wealth as possible and as fast as possible.

Consider this.

According to a 2007 research paper published by The Levy Economics Institute of Bard College (http://www.levy.org/pubs/wp_502.pdf), in 2004, the latest year for which federal data was available at the time, the top 1% of American households held just over 42% of nonhome wealth “defined as net worth minus net equity in owner-occupied housing (the primary residence only)” (Wolff, p7). Think about that for a minute. Almost half of the nation’s wealth is held by 1% of us.

What’s even more interesting to me is this. Their wealth had risen by about 2% from 2001, the year W took office, to 2004. So it got me thinking. What was that wealth distribution like under other presidents and their parties?

Well, all that wealth held by the richest 1%….
…was 42.9% in 1983, 2 years after Reagan took office, and had jumped 4% to 46.9% by the time he left in 1989
…had dipped by 1.3% to 45.6% in 1992 during King George I’s reign
…had bounced back up by 0.6% to 47.2% by 1995 during Clinton’s first 2 years, but
…fell back to 39.7% – a whopping 7.5% drop – by the time Clinton left office in 2001

What does it prove? I don’t know for sure, but I decided to dig deeper.

Republicans controlled the Senate but not the House in 1981, 1983 and 1985 during Reagan’s 2 terms (http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm). The deregulation and tax cuts of Reaganomics were implemented in ’81 (http://en.wikipedia.org/wiki/Ronald_Reagan). As we all know, such measures take time to manifest themselves. Given that reasoning, Reaganomics was presumably having significant positive affects for the wealthy by ’89 when 47% of the nation’s wealth was held by that wealthiest 1%.

On the other hand, Clinton’s Omnibus Budget Reconciliation Act of 1993 passed that August without a single Republican vote in a Democratically-controlled Congress and:
1) cut taxes for 15 million low income families
2) made tax cuts available to 90% of small businesses
3) raised taxes on the wealthiest 1.2% of taxpayers and
4) mandated a balanced budget

When Clinton left office 8 years later, this country had a $559billion surplus. (Source: http://en.wikipedia.org/wiki/Bill_Clinton). If we assume the same timetables for Clinton as we did for Reagan, then the 7 to 8 year gaps from implementation to maximum realization are essentially the same.

All I know is that I was prospering and the economy seemed much healthier during Clinton’s administration, especially towards the end, and before the wealthy right-wing’s favorite Republican son bought his way into the White House and started his service in January, 2001.

So let’s do the same math on W. In 2001, he whips us into a frenzy about the budget surplus being our money and returns it to us – well, not “us” but to the wealthy – and, lo and behold, 7 years later we’re in the worst economic crisis since the Great Depression.

Truth, or circumstances that conveniently fit a theory? If you’re still debating Darwin and favor creationism as part of school curriculum, then I can guess how you’ll answer that! 😉
(Don’t get angry. I’m just be the snarky little liberal!)

Probably would be a good idea to make sure that The American Recovery and Reinvestment Bill of 2009 – and anything else that comes out of the White House or Congress during this presidency – is judged along the same kind of time tables, and not in weeks or months.

When it comes to capitalism and free markets, the answer is, “No, I’m not a communist, socialist, fascist, or any other -ist (except atheist!).” Capitalism is good and preferable to all the other -isms. And, no, I don’t think Warren Buffet, Bill Gates, and every person of wealth is a criminal, nor do I think they should start writing us all checks under some government mandate that strives to “redistribute wealth”. (That’s code speak. More on that in a minute.)

I just think people need rules. Especially people of great power and wealth. They need to be governed and regulated by laws that, to quote a famous document, “…promote the general Welfare” instead of promoting the disturbing and ever-growing prosperity gap in this country. Government oversight and regulation of business is what helped this country – you, me, and the rest of the middle class (by some accounts, including those earning income as high as $250K (http://assets.opencrs.com/rpts/RS22627_20070320.pdf) – to rise up from beneath the boot heal of the wealthy elite. Without government oversight and regulation, we’d all still be living in company housing, working in dangerous conditions, and trying to buy goods and services – including food – that did not need to meet any quality or safety standards. Why should it be any different for financial markets?

What I firmly believe we need to be doing as citizens is electing leaders who are willing to stand up to the so-called capitalists and free marketers – and their party – who got us into this mess. We need to be willing to talk openly about our support for proper levels of taxation and regulation as the reasonable price for living in a free society based on democractic principles and not feudal ones in which a small ruling class controls all the wealth and power.

It means we need to recognize code-speak like “tax and spend liberals”, “death tax”, “big government” and the like for what it really is – a subterfuge perpetrated and perpetuated by an elite few from within a political party who has lost all sense of morality and social conscience, and has society’s best interest nowhere in its sights.