Class Warfare Blog

December 12, 2012

We Need Infrastructure Spending Now

Filed under: Economics,Politics — Steve Ruis @ 11:14 am
Tags: , , , ,

Walking to the store yesterday I saw yet another intersection getting wheelchair accessibility modifications. This is not an uncommon occurrence in a city the size of Chicago. And it does bring up a basic fact about infrastructure: the costs of maintenance do not go up linearly with the amount of infrastructure.

To make this clear, think about the cost of putting in a sidewalk to a local government. You already have title to the land, so you just need architects and engineers to determine what to do and how to do it, then you have to contract with a construction company to build the thing and then you need to inspect the work, do all of the paperwork and voila, you have a new sidewalk. The maintenance on that sidewalk is minimal, at first, so you go off and build roads, highways, power poles and lines, whatever your community needs.

But sidewalks do not last forever, they do need maintenance and replacement from time to time, but in the case of this intersection in a Chicago residential neighborhood, those sidewalks were in fine condition, but here they were being torn up and replaced. Now, the cold-hearted might just say that people in wheelchairs just need to cope, but collectively we have decided that it is only fair to redesign the pedestrian accesses to the sidewalks to make them wheelchair friendly. Now think of every intersection in the city of Chicago. The cost of retrofitting them is immense. Our needs change, so the old no longer serves and it must be replaced. So infrastructure upkeep is not just a simple fraction of the cost of construction.

Think about our antiquated electric power grid. It needs to be replaced. Think about whole stretches of our highways and the hundreds of unsafe bridges needing repair. We have fallen behind significantly in the upkeep of our infrastructure, partly because the cost of “maintenance” doesn’t cover the cost of upgrades, etc. We have been budgeting assuming that maintenance is a constant fraction of the cost of the installation and that is woefully underestimating the real cost. Then on top of that we have “deferred” the maintenance, in other words we put it off until a later day because, well, we just don’t have the money right now. And we continue to do so.

Now is the time to act to bring up the level of repair of our infrastructure. The reasons?
• the cost of borrowing the money to do this is approximately 0%. We will never get a better deal.
• the number of out-of-work construction workers is huge which has depressed the cost of labor.
• the money paid to the architects and engineers and laborers and suppliers of raw materials and truck drivers will be spent almost immediately by those folks which will stimulate the economy. Plus there is time for the money those folks spend to be spent again (by the subsequent recipients) before the next year is out, amplifying the effect. (Economists call this the multiplier effect. In this case $1 spend on construction creates well over $1 of economic activity.)
• the problems with our infrastructure will only get worse and will cost even more as time goes on. It is not like they will “heal themselves” like a cold will if you just wait.
• all of the expenditures will go to Americans and American companies. The jobs cannot be “outsourced.”

If China is willing to lend us the money to make this nation stronger, creating jobs that generate more than enough tax revenue to pay off those loans, we will be fools if we don’t act. The more we wait the more it costs us in the long run.

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6 Comments »

  1. It’s been nearly 15 years since i was last in the States and even then i was utterly amazed (shocked is a better word) at how bad the infrastructure was. Still, a trillion a year on defense must produce something, right 😉

    Comment by john zande — December 20, 2012 @ 1:04 pm | Reply

    • Go ahead, twist the knife! ;o) An applicable statement is “stupid is as stupid does.” And no one in this country paid any attention to Osama bin Laden saying “I am going to bankrupt the U.S.” We just went ahead and let him encourage us to do it, then did it. Amazing.

      Your syntax indicates you now live in England, no? Are you an ex-pat or a Brit who just traveled “over the pond” upon a time?

      You curmudgonly friend,

      Steve Ruis

      Comment by stephenpruis — December 20, 2012 @ 1:34 pm | Reply

      • Actually neither. An Australian in Brazil! We use the Queens English though, and a really handy international decimalised system of measurement called the Metric System 😉 Sorry, let me slip that knife out from your 3rd rib.

        Glad i found your blog. A true diamond!

        Comment by john zande — December 20, 2012 @ 1:59 pm | Reply

        • Good on you, mate! I done heard of that there metric thingamabob, wished my chemistry students had, too.

          I love the fact that we can “converse” across continents without paying some effing corporation a fortunce for the right to do so!

          Steve

          Comment by stephenpruis — December 20, 2012 @ 2:10 pm | Reply

  2. […] From the web site, Class Warfare Blog: […]

    Pingback by Alec Foege Calls for Change - Pilant's Business Ethics — December 31, 2012 @ 12:52 am | Reply


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