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

Class Warfare and John Galt; Both are Fiction

A recent Facebook post by The Christian Left (image courtesy of that post), sparked some interesting discussion. Some people apparently saw this as a metaphor for Obama acting as a messiah while simultaneously dividing the country with his “class warfare” against the rich.

This whole idea of “class warfare” strikes me as being mostly an issue for wealthy conservatives. Even more curious is that it’s become a rallying cry for middle class conservatives who feel compelled to rise to the defense of the wealthy and the threat they face from onerous government intervention and taxation.

Why is that?

Well, it seems to me that there’s no denying that conservative (and GOP) media spokespersons like O’Reilly, Beck, Hannity, Coulter, and that whole crowd are intent on convincing us of the evils of government. Their rhetoric seems focused on protecting their benefactors while simultaneously serving their own greedy self interests by attracting as many eyeballs (and devotees) as possible. Nothing seems to work like some good old hyperbole (devoid to the degree possible of any facts) for riling up the uninformed and for driving wedges between all kinds of people. If it’s not the fake (and worn out) War on Christmas, it’s the new (and just as fake) Battle Royale between Takers and Makers.

(And before conservatives accuse me of bias, let me at least come clean and admit to mine. I am proud to call myself a progressive and a liberal. Yes, similar accusations can be made about the hyperbole from left wing personalities, too. However, and to my experience, at least they seem to be defending us little guys with their rhetoric. They don’t try to scare us into siding with the wealthy in the hopes that someday the wealthy will shower us with generosity in the form of….what?….jobs at Walmart? Oh, and the so-called “liberal media” actually seem to care about and cite real science and actual facts. Bonus points in my book for that sort of behavior.)

Conservative spokespeople from Boehner and McConnell on down through Faux (sorry, Fox) News, The Drudge Report, and tea partiers everywhere would have us all believe that if we don’t stop hating the wealthy and don’t start supporting even more and more concessions – Boehner is actually proposing lowering the tax rates?!? – we’re doomed. They seem to actually think – or more likely, want us to believe – that we in the middle class will actually witness a physical manifestation of the disappearance of “job creators” a la John Galt if the middle class comes out on top in this so-called war of the classes.

In other words, if the middle class triumphs and taxes go up on the wealthy, the wealthy will retreat to points unknown while the rest of us are left standing around wondering from where our next hand out will appear.

For the record, just because I favor raising taxes on all corporate profits, closing all corporate tax loopholes (especially of the offshore variety), and doing away with subsidies to last century’s industries like oil, coal, and natural gas doesn’t mean I hate the wealthy. Oh, and I’m not a socialist. (Ok, I admit it. I am a little on issues such as universal health care and higher education, but that’s for another post.)

And, just because I think the Bush Tax cuts for individuals earning over $250K ought to expire and, frankly, those rates ought to go up a little more, also doesn’t mean that I hate the wealthy. Hell, I’ve spent my entire adult life working pretty hard and taking risks with start-ups – including my own; twice! – to try to be among them. Never once has my tax rate come into the thought process that went into those decisions. Never once have I met a true entrepreneur who said that taxes – especially of the personal income variety – were part of their decision making process for starting a business.

There is no class warfare. It’s imaginary, just like that fictional character in that novel written by a Russian atheist who didn’t know you-know-what from Shinola when it came to economics. There’s nothing to be afraid about. The wealthy are not going to take their marbles and go home if their taxes go up. They aren’t going to curl into fetal positions on beach chairs somewhere and wallow in their hatred of government. They’ll do what they do best; find ways to create more wealth for themselves.

As for those CEOs and business owners who want to make a statement by laying people off or closing up operations because their taxes are too high, I say this. Either they aren’t very bright, they aren’t really entrepreneurs, or they are liars. Only a foolish business person would take such actions if the business was doing well. Business people don’t just walk away from their business. At the very least, they sell it so they can go someplace sunny the rest of their lives and enjoy their prosperity. I hope to join them one day, so long as it’s not as the old guy bringing them fresh towels and cold drinks.

It takes a thriving and prospering middle class to be a thriving and prosperous economy. This is why I’m so absolutely astounded by anyone who isn’t making $250K or more who identifies themselves with the GOP and supports the likes of Boehner, Ryan, Cantor, McConnell and that crowd. Here’s why I say that.

Businesses cannot survive and thrive without customers. Without a strong and consuming middle class, there is no market, businesses won’t prosper, and business people can’t make as much money. Smart politicians and business people understand this, and history has proven that the middle class needs more than some “trickle” coming down from on high in order to grow. Ask the medieval kings how that whole serfdom thing worked for them.

Today, it’s not class warfare. It’s not warfare of any kind. It’s ethics and arithmetic. The wealthy are not paying their fair share. That’s the arithmetic. More than that are the ethics. The wealthy are not paying enough back to society. It’s our society and how economics within it operates, after all, that gives them the environment in which to create, function, and prosper. (No, conservatives, business did not build that.) The wealthy owe a debt back to our society paid in the form of taxes in order to keep our society functioning for this generation of all people and for the next generation of entrepreneurs.

I think that it’s childish, silly, and dangerous for us to believe that Big Money isn’t pulling the strings in DC. Let’s not kid ourselves about which strings they have more of and pull more often. It’s the self-appointed defenders of business. It’s the GOP.

That said, this “war” being waged over taxes on the wealthy and the possibility that they will therefore refuse to magically create jobs if their taxes go up is even sillier and more dangerous. We need to be more mature in our thinking when it comes to politics, policies, regulations, laws, and tax codes that are more progressive and which move to ensure the majority of Americans are not back in the conditions that most average people endured in the Gilded Age.

My grandparents came to America in the great immigration of the early 20th century. My parents were born in America in 1915 and 1925. They told vivid and disturbing stories of what it was like to live under the boot heal of unregulated, under taxed, and wildly powerful Big Money corporations back then. Why today’s middle class thinks we need to return to tax policies and regulatory environments that even come close to those days is beyond my comprehension.

So, I wonder what it will take to get the dwindling middle class in the GOP to stop voting against their own economic self interest?

I wonder if the GOP will ever stop trying to sell us on the fallacy of trickle down economics, and I wonder how many more times we will need to see that economic theory proven wrong before we shunt politicians who espouse it to the sidelines where they belong?

My advice is simple. Let’s do the math, do what’s right, and put ourselves back on a track toward recovery for the vast majority, not the privileged few. Let’s stop pretending that there’s a war between the classes, and let’s stop believing in fiction as a basis for an economy.

The Economist: Network Neutrality Problems In The U.S.

http://www.economist.com/node/17800141

Isn’t the question of what is fair and reasonable for both the corporation and the citizen simply a question of “fair and balanced” regulation of those markets by elected officials?

If Communism’s complete control of an economy is a bad thing, isn’t it possible that a purely free and unregulated capitalist economy can be bad at some level, too?

Isn’t our political system some evidence of the benefits and righteousness of “checks and balances”, and that those checks and balances ought to extend to citizens and corporations alike?

So why this love affair by some with complete and total deregulation?

To expect “benevolent” corporations driven purely by profit, shareholder value, and led by people we don’t elect and can’t control to regulate themselves is, IMHO, dangerously naive. Where’s the proof that they have the proper incentive to put society’s collective long-term interests ahead of their own immediate personal gain?

History has proven to me that we can’t trust the people who run corporations to regulate themselves properly. (For an interesting treatment of incentives, I would recommend a book I’ve just started reading, Freakonomics. Pretty interesting and not what I was expecting.)

What confounds me so completely is how so many in the middle class appear so blindingly naive to the reality of unregulated corporations and the people who benefit from them. They seem blissful in their intentional ignorance and dismissal of the facts that insufficient regulation has proven again and again to be disastrous to our economy, our environment, and our safety. They cling to the false promises of trickle down economics and tax breaks for the wealthy, neither of which has ever worked and which still don’t, while the economic malaise of the last 10 years continues, unemployment remains high, and Wall Street bonuses are at record levels.

I don’t understand why some people warn against FCC regulations while, in the same breath, profess to completely and utterly trust these same companies to benevolently use their near-monopoly positions to do the right thing as they control not just *how* but even *what* we access. It’s crazy.

Monopolies are never good except for those who control them. Keeping monopolies from forming, and controlling companies who would gladly be a monopoly if they could, needs to be a function of government officials we elect and the people they then appoint to manage regulatory agencies. I trust those I can “fire” through frequent and regular elections – as badly corrupted as that process can and will continue to be without meaningful campaign finance reform and the repeal of the travesty that is the Supreme Court’s Citizens United ruling – much more so than the people running corporations whom I can’t fire and who see me only as a potential revenue source to be squeezed for maximum value on a financial quarter-by-quarter basis.

Those of us old enough to remember the break up of AT&T know what it meant for competition. Speaking only for myself, I believe I have that break up to thank for a career that includes working for companies who trace their very existence to the government stepping in and breaking up AT&T. Innovation comes from competition, not from monopoly. Competition is supposedly a cornerstone of free markets. I vigorously support that principle. I have spent the better part of my career helping companies to compete and win business, and hope to do so again soon.

However, the price we pay and the risk to us as citizens for that innovation needs to be part of the discussion. I really don’t think we can trust corporations to do anything more than what is best for their shareholders. That is, after all, the mission of a for-profit corporation. I have no problem or issue with that. I simply have been around enough CxOs, boards of directors, and a few angel investors and VCs to know that when it comes to choosing between money and people, money wins every time.

That’s not to say that these are bad people. It *is* to say that given free rein, the incentives built into our capitalist system drives these John Galts to thinking only about their own short-term personal gain and wealth even if it has to come at the expense of and to the detriment of everyone else.

All of today’s belly-aching by big corporations and their paid-for (mostly) GOP mouthpieces about needing to control their networks without government interference while they simultaneously don’t open those networks to competition is all the evidence I need to support greater and not less regulatory oversight of network access providers (some of whom I’d like to be working for right now).

What’s lacking, especially in the Democratic party, is political will. It takes political will to stand up to these corporations and to their terribly misguided, misinformed, and naive supporters in the middle class.

I’m more than a little surprised and happy to see The Economist essentially conclude the same thing when it comes to political will.