Patterico's Pontifications

11/11/2016

Trump’s Jobs-Destroying (Yes, Jobs-DESTROYING!) Infrastructure Program

Filed under: General — Patterico @ 1:36 pm

Donald Trump’s proposed trillion-dollar infrastructure bill will not create jobs. On the contrary: it will destroy jobs.

That may sound counterintuitive. But it’s right. With your permission, I’d like to explain why.

When the federal government passes a huge bill that would appropriate a lot of money for something like infrastructure, the usual reaction is: hey, at least it employs people. It’s understandable for people to think that. It’s what Big Media will tell you. It’s a totally natural reaction to have. It’s what I used to think when I heard about programs like this.

Then I ran across Frédéric Bastiat and the parable of the broken window. The concept of the seen and the unseen. The key insight is that analyzing economic problems usually requires you to look past the things you can see, and focus on the things you can’t see. If you have not heard of this before, that’s cool. I hadn’t either, three years ago. But it’s one of the single most important economic concepts you can ever learn. (Thanks to Gabriel Hanna for bringing it up in this context.)

Here’s the scenario: Imagine some kid throws a baseball through the window of a bakery and breaks it. The baker now has to repair the window. One could look at this as a great boon for employment in the community. After all: someone has to be paid to make a new window. Someone has to be paid to install it. When each of these workers is paid, they now go to other businesses and spend that money, and now other businesses do better through the magic of the Keynesian multiplier! If you’re a Keynesian, you could almost work yourself into believing that it was a good thing that the window was broken!

And yet, intuitively, you know this has to be wrong. Destruction is not good for the economy. What’s the flaw in the analysis? It has to do with the seen and the unseen.

The payments to the window maker and the window installer are what is seen. It doesn’t require imagination to see that people are being paid.

What is unseen is what the baker could have done with the money he had to use to fix the window. Maybe he was saving up for a new oven that he now can’t buy. With the new oven, he could have made his products more efficiently. The bread he sold would have been cheaper. That may mean more sales and profits for him (after all, he wouldn’t buy the oven if he didn’t think it would pay off eventually) and he can now spend the extra money elsewhere. What’s more, cheaper bread means the consumers buying the bread have more money in their pockets. Their standard of living goes up and they can spend money elsewhere. Or, as a commenter of mine points out: “perhaps the baker might have used the broken window money to pay a young apprentice who would then learn a valuable skill and perhaps one day own a bakery herself.”

But all of that is unseen. It requires imagination to realize that the money used to repair the window could have been used for other, more productive things.

When government spends taxpayer money to build a bridge, the bridge is seen. It’s right there. You can see it with your eyes and feel it with your hands. But what is unseen is all the things that could have been done with the money that was instead taken from taxpayers to build the bridge. That money can be used for capital investments to build businesses and employ more people. You could use the money you keep to buy a car that you need to get to work. You could use it to pay for your child’s education. There’s all sorts of things the money could be spent on, besides the bridge.

Which creates more jobs and wealth in society: money in the hands of taxpayers such as consumers and small businessmen, or money in the hands of federal bureaucrats? Do you think, in general, that businesses, with their need to economize and make a profit by satisfying consumer preferences, will do a better or worse job meeting the needs of society than inefficient federal bureaucracies? The answer, for a free market guy like myself, is obvious: of course private industry does better! Someday, I will make a more comprehensive case as why this must necessarily be so. For now, the simple answer is this: the incentives of the marketplace create more jobs than the inefficiencies of non-market governmental incentives to create pork and wasteful spending.

So, in the end, taking money from the taxpayers for infrastructure actually takes away more jobs than it creates.

I can tell what you’re thinking: all that being said, some repairs do need to be made. Infrastructure does need to be maintained. But much infrastructure is, or should be, private — and to the extent it is maintained by government, that should occur on the state or local level. Electricity and other utilities should be run by the market; making it a state responsibility is a mistake, leading to things like rolling blackouts, water shortages, and the like. Government should not choose winners and losers in terms of sources of energy. Mass transit projects seemingly always prove to be wasteful, and if a private company can make a go of them, let them try. As to projects that must be completed by the state, very few such projects should be federal in nature. Water supply and waste disposal are local issues. The federal government should have nothing to do with it. Even the interstate highways are owned and operated by the states. And, despite that fact, we just passed a $305 billion infrastructure package in December 2015, less than a year ago — back when Republicans were scared to death to make any stand on the budget whatsoever for fear of having Barack Obama shut down the government and claim the Republicans in Congress were at fault.

The idea that we are starving infrastructure spending is a myth. We’ve spent more on infrastructure than ever before. So, with infrastructure being primarily a state and local responsibility, how much more do we need to spend now on a federal level? People can debate that. Personally, my offer is this: nothing.

As we have this discussion, keep in mind that a spendthrift Democrat whom many considered (fairly or unfairly) to be a socialist at heart, Hillary Clinton, thought it required about $275 billion to improve our infrastructure. Now Donald Trump, Mr. Bankruptcy himself, is telling us that it requires $1 trillion. Why? Are we going to gold-plate all the bridges? Are we going to spend millions to put the name “Trump” on the side of every overpass?

More realistically, are we going to have a pork extravaganza the likes of which the world has not seen for eight years? And the answer to that one, as Trump fan Sarah Palin might put it, is: you betcha!

But in any event, as we have this debate, let’s remember the seen and the unseen. All this spending is not free. It comes out of people’s pockets.

A Donald Trump presidency is going to required fans of the free market to do a lot of learning, and a lot of educating others on economics. It’s a topic I have learned a lot about in the last three years, and I don’t hold people in contempt if they haven’t questioned these assumptions. I didn’t myself.

My pet project, in which I hope to promote the values of liberty, the free market, and the Constitution — including educating people about economics as I have done in this post — is the Constitutional Vanguard. We have a private Facebook group, open only to members of the group, and are discussing our plans for the future. If you haven’t already, join us by signing up here.

[Cross-posted at RedState.]

UPDATE: Added JVW’s observation to the post. Great stuff.

85 Responses to “Trump’s Jobs-Destroying (Yes, Jobs-DESTROYING!) Infrastructure Program”

  1. Ding.

    Patterico (115b1f)

  2. Great post, P. The other thing to mention to liberals when explaining Bastait, is that perhaps the baker might have used the broken window money to pay a young apprentice who would then learn a valuable skill and perhaps one day own a bakery herself. Or hell, maybe he would have donated it to Planned Parenthood. That would really blow their minds.

    JVW (6e49ce)

  3. Seattle and Metro/King County is “investing” tens of billions of dollars in “infrastructure”, which is a euphemism for expenditures on unionized labor, generally pouring concrete and posting flagmen on major arterials. This could be fine, but it all depends on the details. My neighbor works for a company that just moved from the suburb of Federal Way into downtown Seattle. He used to drive his car to work, and the drive was no more than thirty minutes and generally much less. Now he drives his car to a parking lot next to a train station, walks a hundred yards to the train station, then rides an elevated train to a station in downtown Seattle that is a bit over a quarter mile from his work place. Which he walks. The net result is that his commute now takes two additional hours out of his day, and the walking portion is long enough that it will be quite unpleasant on rainy and snowy days, both of which occur with some frequency in Seattle.

    This might still be a profitable investment from a societal viewpoint depending on how much the company saves by moving into Seattle. But it is certainly a dead loss for my neighbor, who is required to pay for the “infrastructure” trough increased sales and property taxes in addition to bearing the increased inconvenience of getting to work. The company is publicly traded, and I will be interested in seeing how much their G & A expenditures decrease year over year, 2016 versus 2015, especially any itemization that might help identify the benefit of moving a company into downtown Seattle.

    Of course, the company might be looking ahead. They might want to cash out their property assets before we see a bout of 1980s-style inflation with its resultant increases in interest rates coupled with their corresponding decreases in property values.

    BobStewartatHome (b2bab4)

  4. Fantastic, JVW. I have added that to the post.

    Patterico (115b1f)

  5. Thing is… much of this spending doesn’t, as such, come out of people’s pockets.
    It comes from pulling dollar-antidollar pairs out of the Void, spending the dollars, and attempting to hide the antidollars.
    Sooner or later this must fail and the antidollars catch up with us, but we always expect this to happen to somebody else’s grandchildren.
    Mind you, paying for past years’ antidollars that were insufficiently hidden is already coming out of our pockets, but modern methods for hiding negative wealth are much more sophisticated.

    Eric Wilner (3936fd)

  6. Japan’s Lost Decade was in part due to endlessly paving and repaving the entire country, makework projects intended to “create jobs”.

    “But”, the counter-reply always comes, “these won’t be make-work, this will be things we NEED.”

    But if there are things we need, which are not getting built, why are they not already being built by someone who wants to make a buck?

    Two reasons:

    1) You could make a buck by doing these things, if it were legal to do so.
    2) You cannot in fact make a buck by doing these things.

    If 1) is in operation, the only way for society as whole to be better off, is for government to remove the restriction and let private money do the job. The government can only pay for things by confiscating money from other people; if those people WANT to build the bridge or whatever it is they will happily pay the money, no confiscation needed.

    If 2) is in operation, then you have to ask why:

    2a) You can’t make a buck on this thing because no one can deliver it at a price anyone is willing to pay.

    2b) You can’t make a buck on this thing because there is no way to charge people for the benefits that would accrue to them (free rider problem). Example: the US Navy keeps the sea lanes open; cops keep the peace; courts provide a non-violent method of conflict resolution. We don’t know how to bill people for “how much they use”.

    2c) You can’t make a buck on this thing because we have some reason not to care whether it makes economic sense or not, yet it still should be done for non-economic reasons. Examples: public defenders, equestrian statues of heroic figures, etc.

    If 2a) is in operation, then the government simply has no business doing it.

    If 2b) or 2c) are in operation, fine, the government should do it, but it will not “create jobs” regardless, because the government will destroy jobs by reallocating money from where people have voluntarily put it.

    Gabriel Hanna (64d4e1)

  7. By all means, spend money on infrastructure, or pork, or whatever damn fool thing you come up with: just don’t lie to us and say we will somehow “create jobs” by doing so. Don’t take $20 out of my wallet, buy me $10 worth of something I didn’t want to spend $10 on, and then tell you me you made me better off.

    Gabriel Hanna (64d4e1)

  8. Gabriel Hanna,

    You may reject some aspects of Austrian economics, but you’re sounding a lot like an Austrian economist. I like it.

    Patterico (115b1f)

  9. @Patterico:You may reject some aspects of Austrian economics, but you’re sounding a lot like an Austrian economist.

    I agree with them where I find them to be right. :)

    Not sure I reject everything they have to say, maybe the differences are more apparent than real.

    Still working on a simulation that can evolve prices from preferences.

    Gabriel Hanna (64d4e1)

  10. In the parable, don’t forget that the window maker probably wasn’t just going to sit around, complaining about being bored, if the baker’s window wasn’t broken. That window maker could’ve done any number of things, from making windows for new buildings, to cleaning & fixing equipment, to paperwork & accounting, to taking a vacation from having done those previous three things for a living for the past few months.
    Of course, sometimes there isn’t enough demand for windows for the windowmaker to afford all this… in which case, maybe the windowmaker should be using her skills for a different career?

    CayleyGraph (353727)

  11. November 11, 2016

    Leonard Cohen (1934-November 11, 2016): Democracy

    “One of our greatest poets. He lived to see the first flickers of the great change.

    It’s coming to America first,
    the cradle of the best and of the worst.
    It’s here they got the range
    and the machinery for change
    and it’s here they got the spiritual thirst.
    It’s here the family’s broken
    and it’s here the lonely say
    that the heart has got to open
    in a fundamental way:
    Democracy is coming to the U.S.A.

    It’s coming from the women and the men.
    O baby, we’ll be making love again.
    We’ll be going down so deep
    the river’s going to weep,
    and the mountain’s going to shout Amen!
    It’s coming like the tidal flood
    beneath the lunar sway,
    imperial, mysterious,
    in amorous array:
    Democracy is coming to the U.S.A.

    Sail on, sail on
    O mighty Ship of State!
    To the Shores of Need
    Past the Reefs of Greed
    Through the Squalls of Hate
    Sail on, sail on, sail on, sail on.”

    http://americandigest.org/mt-archives/grace_notes/leonard_cohen_1934novembe.php

    Colonel Haiku (3bf827)

  12. @Cayleygraph:Of course, sometimes there isn’t enough demand for windows for the windowmaker to afford all this… in which case, maybe the windowmaker should be using her skills for a different career?

    Wash your mouth out with soap. The correct answer is, that the government should make people have a minimum number of windows. And maybe pay to brick some up so the windowmaker can make new windows.

    Gabriel Hanna (64d4e1)

  13. I need a scorecard.

    Didn’t Trump get the memo that there aren’t enough “shovel-ready” projects out there to make a whit of difference? Obama has even confessed this. Obama pumped a trillion into worthless infrastructure expenditures with no effect on the economy and now Trump will double-down on the same programs. But why should this come as any surprise? Trump’s record tells us exactly who his is: a big spending liberal.

    Also, hot off the internet is news that Trump is backing down on dismantling Obamacare and will not try to make Mexico pay for the fence. And we are only three days in. It is going to be a long four years.

    ThOR (c9324e)

  14. In a related story, us dummies in Los Angeles County passed Measure M on Tuesday, which is yet another big bond issue to “repair and expand” freeways and roads, as well as increase public transportation throughout Los Angeles County. One that would theoretically affect me the most is the expansion of the Metro Green Line into Torrance. When I moved here 20+ years ago I was told that the Torrance expansion would be completed by 2015. Then maybe 10 years ago they asked us for more money and said the Green Line expansion to Torrance would come in 2024. Then on Tuesday we shoveled even more money to them and now we’re hearing that the expansion is expected to come closer to 2030. Who wants to bet by the time they finish building the rail to LAX that all the money will be gone and they’ll be floating another bond and promising a Torrance station in 2040?

    And this is why I vote against these sort of initiatives, and that’s why I am against the national infrastructure.

    JVW (6e49ce)

  15. The big “tell” came in Iowa when Trump pledged to double ethanol subsidies.

    We see what we want to see.

    ThOR (c9324e)

  16. In a related story, us dummies in Los Angeles County passed Measure M on Tuesday, which is yet another big bond issue to “repair and expand” freeways and roads, as well as increase public transportation throughout Los Angeles County.

    Whaddya mean “us”?

    Patterico (115b1f)

  17. I can’t read the whole post now but if Trump uses it to bribe the Dems to STFU and to actually repair roads, then maybe okay.

    I just came back to log into amazon to order my groceries since the grocery stores pushed for their 10 cents per bag tax. I emailed the CA Grocers Association and said “bye”.

    So I will enjoy one more day of Paul Ryanesque giddiness at the thought of him and his “man of action” accomplishing good things together.

    Cheers!

    Patricia (5fc097)

  18. Just wait until Santa Ana is marching on the Alamo and the Tennessee volunteers can’t get across the Mississippi because there are no bridges. Then you’ll see why we need infrastructure.

    It’s become a tradition for Presidents to reward their supporters with pork, and Trump was not going to be the man to end it. He is the man who will be looking to steer as much of it as possible to his family and friends.

    nk (dbc370)

  19. Also, hot off the internet is news that Trump is backing down on dismantling Obamacare

    Yeah, I didn’t do a stand-alone post about this, but the parts he wants to keep are the parts that sound nice, like keeping the ban on denying coverage for pre-existing conditions. But get rid of the parts that supposedly (not in reality) make that possible.

    It’s like being in favor of programs but against cuts that pay for them.

    It’s not a free-market solution, and the free-market reforms that would make it workable are not going to be passed, I suspect.

    Patterico (115b1f)

  20. Whaddya mean “us”?

    Ah, democracy, where you pay the tax even if you don’t vote for it. Maybe you and I can riot on Palos Verdes Boulevard.

    JVW (6e49ce)

  21. I just came back to log into amazon to order my groceries since the grocery stores pushed for their 10 cents per bag tax. I emailed the CA Grocers Association and said “bye”.

    So I will enjoy one more day of Paul Ryanesque giddiness at the thought of him and his “man of action” accomplishing good things together.

    Cheers!

    Thanks Patricia! It’s appreciated!

    Patterico (115b1f)

  22. JVW’s-back-of-the-envelope fix for ObamaCare, which in no way comes close to fixing the problem:

    1) Drop all of the Obama mandates for plans, allowing for a cheap basic plan with high deductibles, and
    2) Thus cut the subsidies for the middle-income folks for the ObamaCare plans.
    3) Keep the “tax” on those who fail to purchase coverage and peg the fee to what the cheapest plan costs on average.
    4) Keep the no-denial-for-pre-existing conditions, but
    5) Apply the Cadillac Tax on the top plans and use that money along with the savings from canceling the middle-income subsidies to help subsidize the preexisting-condition folks.
    6) Declare victory. Fly to Michigan to sign the bill.

    JVW (6e49ce)

  23. Too much hampering of the market. Unless it’s an interim solution.

    Patterico (8834d2)

  24. Trump should build a bridge between Milwaukee and Michigan like Benton Harbor or somewhere around there ( just connect i94 straight through the lake no tolls). Those two states voted for Trump and they get totally screwed on those toll roads through Chicago. That will help those economies a lot.

    Jcurtis (37d5dd)

  25. @Jcurits:That will help those economies a lot

    Only because they will get to suck tax money out of the rest of the country to pay for it. I would benefit too, if everyone in the country was forced to give me a dollar. But we can’t all get that, it would cancel out.

    If that bridge would benefit those economies, why don;t they build a toll bridge out of their own money? If those economies can’t afford it, why do they get to make people in California and Florida pay for it?

    Gabriel Hanna (64d4e1)

  26. Tunnel under the lake, please, like the one across the English Channel. The Skyway is ugly enough, and scary in the winter.

    nk (dbc370)

  27. 25, both Wisconsin and Michigan provide free roads for Americans to travel on but they have to pay a fortune in tolls just to take a trip out of their states. Especially Michigan. You can’t get to far across your border before you are forced to pay Illinois, Indiana or Ohio a fortune just to drive your vehicle.

    Jcurtis (37d5dd)

  28. Great explanation on the broken window theory. Often those who want to use the power of government ignore those hidden costs and missed opportunities.

    Patrick Henry, the 2nd (2ab6f6)

  29. Too much hampering of the market. Unless it’s an interim solution.

    Yeah, but my plan presupposes that repeal-and-replace is a nonstarter with the new President.

    JVW (6e49ce)

  30. What you SEE is an expensive bridge with lots of lake effect snow on it ( the road will be thermal melting ) as well as the jobs to build it. Great Lakes region steel and building the bridge materials is more jobs. What you DON’T SEE is all the man-made island cities that will be built along this bridge and have interchanges to these cities that they have to build themselves. Who the heck wouldn’t want to live in the middle of Lake Michigan?

    Seriously though, a president needs to repay the states who elected him. That’s a necessity. That’s the point I’m trying to make. Don’t give the blue states a nickel except do a few nice things for Minnesota and New Hampshire so they can be added to the red column in 2020.

    Jcurtis (37d5dd)

  31. God created the world in six days and rested on the seventh.

    Donald Trump acknowledged Hillary Clinton’s concession to become ‘President-elect’ less than 70 hours ago.

    “He’s got all the time in the world.” – James Filby [Alan Young] ‘The Time Machine’ – 1960

    DCSCA (797bc0)

  32. legends, the other time travel show, revisited the 80s, neal mcdononough has a way of stealing scenes, as the villain,

    narciso (d1f714)

  33. Good article, but it has nothing to do with “Trump’s Infrastructure”!
    Trump’s strongly leaning to repairing our crumbling infrastructure by having private enterprise do it.
    Sure that will mean “pay for use” in a lot of cases but he recognizes that this Country has no money to spend – we’re broke and heavily in debt.

    jon h (cad807)

  34. I do believe this involves the issuance of govt bonds, instead of brorrowing straight out from china,

    narciso (d1f714)

  35. I’m curious as to how he is going to score removal of impediments as part of the $1T. Choking the EPA and opening Chukchi to actual drilling, chopping a tiny slice off of ANWR and selling the oil under it, easing GOM leasing restrictions, accelerating new nuclear plant permits and permitting the pipeline are all relatively easy and carry very little budget impact yet the positive economic benefit could run over $100B per year. I’d sure be willing to give him $400 billion worth of credit for the deregulation involved.

    Rick Ballard (bca473)

  36. Trump is going to blow money on infrastructure? How awful!

    Oh well, at least we got this to look forward to, if we can’t have crappy roads to drive on…

    https://pjmedia.com/trending/2016/11/11/trump-to-support-nationwide-concealed-carry/

    LBascom (d82ccd)

  37. Good article, but it has nothing to do with “Trump’s Infrastructure”!
    Trump’s strongly leaning to repairing our crumbling infrastructure by having private enterprise do it.
    Sure that will mean “pay for use” in a lot of cases but he recognizes that this Country has no money to spend – we’re broke and heavily in debt.

    Having private enterprise do it, and government pay for it, is still taking money from the taxpayers.

    Patterico (115b1f)

  38. Seriously though, a president needs to repay the states who elected him. That’s a necessity. That’s the point I’m trying to make. Don’t give the blue states a nickel except do a few nice things for Minnesota and New Hampshire so they can be added to the red column in 2020.

    Use of government programs to buy votes. Wrong when FDR did it with WPA, and wrong now.

    But yeah, I expect he’ll do it.

    Patterico (115b1f)

  39. yes, he’s drawing out the skydragon temples,

    narciso (d1f714)

  40. Trump is going to blow money on infrastructure? How awful!

    Oh well, at least we got this to look forward to, if we can’t have crappy roads to drive on…

    That whooshing sound is the sound of the points made in the post you didn’t read whooshing over your head.

    That’s OK. I wasn’t talking to you anyway. I never expected you to try to learn economics and so I feel no disappointment.

    Patterico (115b1f)

  41. I do believe this involves the issuance of govt bonds, instead of brorrowing straight out from china,

    Huh?

    China doesn’t guy bonds?

    How does China lend us money if not by buying bonds?

    You lost me.

    Patterico (115b1f)

  42. Ahh, personal insults! Where would nevertrumpers be without them?!

    LBascom (d82ccd)

  43. It’s a shame that conservatives continued to oppose Trump even after he won the nomination. Now we will have no power in his administration to advise against things like this. We can just go on writing our opinions to a world of people who don’t care.

    That’s the price of ideological purity for a minority group like conservatives: if we can’t compromise and support the people who have enough votes to actually win then we can’t have any influence at all.

    Cugel (6da421)

  44. @ 44, Regarding the compromising of principles
    If you compromise on your principles, then you might have more influence, but you’ll have no reason to be influential. That’s how establishment Republicans got to where they are now.

    M Patterson (7d4d4d)

  45. The “unseen” is just another way of stating the well-accepted concept of opportunity cost.

    However, your broken window illustration doesn’t really work, because no one expected the window to be broken; it was an unexpected, additional expense. When it comes to infrastructure, everything has a planned service life, and road and bridge replacement as things wear out is simply a normal part of government expenditures. Actually, a lot of those projects have been put off longer than they should have been, because governments were short on funds.

    My point has been that these are appropriately state projects. The law requires that 92¢ out of every $1.00 spent by the federal Highway Trust Fund be spent in the state in which it was collected. It would be wiser to cut the taxes which provide revenue for the Highway Trust Fund by 92%, and give the states the room to raise their taxes for that. Why does the money need to go to Washington, to be passed through the bureaucracy, just to be sent right back to the state? Why does a congressman from Alabama have to approve a road project in Maine? Nevertheless, infrastructure spending is a legitimate government function, and I’d much rather see our tax dollars spent on that than giving them to keep alive some lazy scumbag who will not work.

    Full disclosure: I run a ready-mix concrete plant, and I have made money on road and bridge construction. I’m close enough to retirement — 1 year, 4 months and 26 days — that I might not see any personal benefit from an increase in infrastructure construction.

    The economist Dana (f6a568)

  46. If you compromise on your principles, then you might have more influence, but you’ll have no reason to be influential.

    a good conservative principle i think is where you wait to see the actual proposal before running around screechering like a hyper-emotive screaming meemie

    happyfeet (28a91b)

  47. As an OTR truck driver who drove the US highways in the early 90s, I can say with absolute certainty that the US highways are better now than they were then. I can also say with absolute certainty that US highways are much better than Mexican highways or Philippine roads.

    Beyond that, when Wyoming rebuilds part of an interstate, they tear down the entire road going in one direction, all the way down to the dirt, for a 15 mile stretch. Then they do a complete rebuild. All this takes from about mid-May to mid-October to complete. Cut out the unions, and the roads will be built with the same quality or better, with much less money, and in much less time.

    John Hitchcock (84ed39)

  48. Infrastructure isn’t all about roads I’ll point out. There’s the Keystone pipeline to be built for example, the electrical grid needs to be hardened against an EMP event, for another.

    Dana has it right, interstate infrastructure is a legitimate government function, there’s a million other functions government should not be involved in that needs to be cut.

    LBascom (d82ccd)

  49. we need lots of drone ports too cause of where will the flying burritos land

    happyfeet (28a91b)

  50. LBascom,

    The energy grid is, to put it charitably, convoluted thanks to federal government intervention. Deregulation is the solution, not more federal control through rules or money.

    DRJ (15874d)

  51. When government spends taxpayer money to build a bridge, the bridge is seen. It’s right there. You can see it with your eyes and feel it with your hands. But what is unseen is all the things that could have been done with the money that was instead taken from taxpayers to build the bridge. That money can be used for capital investments to build businesses and employ more people. You could use the money you keep to buy a car that you need to get to work. You could use it to pay for your child’s education. There’s all sorts of things the money could be spent on, besides the bridge.

    This of course depends on how badly you need the bridge. And sure, there’s the libertarian argument that if the bridge is needed, private funds will be raised to do it. Sadly, this ignores about 100 other realities of our system such as it taking 5 years to open a taco stand in some cities and building a bridge would take about a century of approvals. UNLESS it is done by government.

    And yes, all of this is wrong, but it’s also real and unlikely to change.

    So, government has an effective monopoly on large civic projects, and government gets its funds through taxes. Even toll-based construction has problems as the private partner always insists on exclusivity that prevents even government from reacting to future congestion.

    So, the question is “do we need the bridge?” If so, then there is economic benefit there, too. And it may be of more benefit than spending the money building a factory if the workers can’t get to the factory because there’s no bridge.

    Kevin M (25bbee)

  52. Dana,

    cut the taxes which provide revenue for the Highway Trust Fund by 92%, …

    What would we get for the 8% that the Feds would continue to collect? If they didn’t have to write all those checks to the states, maybe they could eliminate a few positions?

    On second thought, maybe it would be a good idea to keep a few inspectors just to ensure the interstate system is maintained, especially the portions that feed into neighboring states. California, for example, might find it expedient to put a high fare toll booth on the outbound lanes if the flight to sanity increases. These Federal inspectors would need both a carrot and a stick, which would argue for some Federal funding.

    BobStewartatHome (b2bab4)

  53. @kevin M:Sadly, this ignores about 100 other realities of our system such as it taking 5 years to open a taco stand in some cities and building a bridge would take about a century of approvals. UNLESS it is done by government.

    I addressed this already: if the government doesn’t let people do it, and that’s why it’s not done, the only way is for the government to allow private money to do it.

    Otherwise the government will confiscate money, which makes everyone poorer. Because the people who don’t want or need the bridge have to pay for it too.

    So, the question is “do we need the bridge?” If so, then there is economic benefit there, too.

    Not if the government builds it. The net benefit is negative.

    Gabriel Hanna (c791b9)

  54. How did we do this before 1937, I imagine states raised revenue, to come up with projects to do,

    narciso (d1f714)

  55. @narcisco:Golden Gate Bridge ended up being financed by private money.

    The Golden Gate Bridge and Highway District, authorized by an act of the California Legislature, was incorporated in 1928 as the official entity to design, construct, and finance the Golden Gate Bridge. However, after the Wall Street Crash of 1929, the District was unable to raise the construction funds, so it lobbied for a $30 million bond measure. The bonds were approved in November 1930, by votes in the counties affected by the bridge. The construction budget at the time of approval was $27 million. However, the District was unable to sell the bonds until 1932, when Amadeo Giannini, the founder of San Francisco–based Bank of America, agreed on behalf of his bank to buy the entire issue in order to help the local economy.

    Gabriel Hanna (c791b9)

  56. Ahh, personal insults! Where would nevertrumpers be without them?!

    Sorry about that. I was just annoyed because it seemed like you didn’t really try to understand the points I made in the post, and I spent a lot of time writing it.

    Patterico (115b1f)

  57. …But all of that is unseen. It requires imagination to realize that the money used to repair the window could have been used for other, more productive things.

    When government spends taxpayer money to build a bridge, the bridge is seen. It’s right there. You can see it with your eyes and feel it with your hands. But what is unseen is all the things that could have been done with the money that was instead taken from taxpayers to build the bridge. That money can be used for capital investments to build businesses and employ more people. You could use the money you keep to buy a car that you need to get to work. You could use it to pay for your child’s education. There’s all sorts of things the money could be spent on, besides the bridge.

    Some of the negative effects of sucking capital out to the private sector so the government can spend it can be directly seen. And no I’m not just talking about an ever-growing population of bureaucrats living it up on their six figure salaries in their million dollar DC area homes although that’s what you get when you launder money through Washington for these “infrastructure” projects. But besides that businesses go under when the government starts tearing up streets for union-pandering make-work projects. You just don’t get the traffic while construction drags on. It doesn’t matter how many “open during construction” signs. It’s just too much of hassle dealing with the construction itself. I avoid it.

    What’s even worse is if the infrastructure is a light rail project. Liberals have just as much of a religious belief in light rail as they do in other fictions such as the Middle East Peace Process and Anthropogenic Global Warming. Very few people actually use it relative to the overly-optimistic and always wrong projections. Basically the few people who actually would use it demand that everyone else subsidize their transportation.

    bobstewartathome provides an excellent synopsis of what a PITA light rail and indeed most public transportation is for most people in most of the country. Personally I’ve rarely used public transportation since leaving Japan. And the only reason I used it in Japan was because there was no other choice. Parking in the Tokyo-Yokohama is hard to find and expensive. Gas is expensive. I would have much preferred to drive door-to-door when I had to attend meetings in Tokyo but that wasn’t an option. The Japanese don’t take the subway because they like it. They call it “commuter hell.” When I was there the subway companies still hired people as “pushers.” Morning and evening rush hours these employees would shove the last few people they could onto the trains which were already so crowded you couldn’t lift your arms from your sides. Women especially hated it because while you couldn’t lift your arms, perverts found they could still grope women with their arms down by their sides. They couldn’t do anything about it; they couldn’t even turn around and see was feeling them up.

    The men didn’t like it either, but again they had no choice. There was no parking at their work but their companies would buy them subway passes. Driving and parking would have cost a fortune but the subway was free for them. So they put up with four hour commutes each way to and from work because of all the inconveniences built into the system.

    You might be willing to put up with this to maintain your livelihood but you’re not going to do it just to go out and eat. So I know people who had to close restaurants because while they may have survived the period of construction they couldn’t survive the fact that now that their street was closed to vehicular traffic because the liberals put in light rail their old customers were never coming back. There was simply much less customer traffic, and that reduction was going to be permanent.

    Steve57 (0b1dac)

  58. But a bridge is just such low-hanging fruit! Who benefits? The people who cross the bridge, and the people who buy things that have to cross the bridge. How do you know they benefit? They voluntarily fork over the toll. What should the toll be? Whatever the traffic will bear, not a penny more or less. What if the toll is too high? People will drive around, if they can, or take a ferry if they can’t.

    Absolutely no reason why bridges should be a Federal responsibility or even a civic one. You’d have to be an idiot to lose money on a bridge. Government, being abundantly supplied with idiots, manages to do this.

    Gabriel Hanna (c791b9)

  59. The second span of the Tacoma Narrows Bridge is a toll bridge, built under contract to the State, and the users are paying for it. They have an automatic billing system for regular users. You drive beneath some cameras and electronic devices, and the toll is deducted from your account. They also have the old style toll booths for those who want to spend another five or ten minutes on their trip. There was an issue with public agencies using he bridge, the police, ambulance and fire trucks mainly, but I believe they ended up paying their fares like everybody else.

    This is liable to become a cash cow, and I expect the fares will be collected long after the bridge is paid for. It would be reasonable to collect a much smaller fare to pay for maintenance, but the Democrats that infest the Puget Sound region have yet to find revenues from a tax (or user fee) that they couldn’t find a use for. Even if they have to resort to buying electric powered bicycles from Canada for use in downtown Seattle.

    BobStewartatHome (b2bab4)

  60. bridges are how you cross the river

    it has ever been thus

    but with Mr. Trump it will be even more so

    happyfeet (28a91b)

  61. Private toll roads were the norm until the federal government intentionally put them out of business in 1916. The link says private roads started making a comeback after 1992 when the policy against toll roads was reversed by Congress.

    Apparently private toll bridges were effectively banned in 1916 along with private roads. I suspect we haven’t seen private bridges built after 1992 because private entities can’t use eminent domain to get the land to build the bridges.

    DRJ (15874d)

  62. Speaking of roads back in the 1916 era, David Bain wrote a very touching and interesting book about tracing the remains of the original transcontinental railroad. Automobiles could parallel the track and a highway was created along its route in the early 1900s. But it was only for the very adventurous. Bain picks up this route and follows it best he could in 2000. The book is The Old Iron Road, and I recommend it highly. Bain also wrote Empire Express which is an authoritative account of the transcontinental railroad. I prefer Nothing Like It in the World as it is a bit more triumphal, but both of Bain’s books are worth reading.

    BobStewartatHome (b2bab4)

  63. Seriously, Patterico, if you can’t have everything you want nothing?

    Cugel (bbe1b7)

  64. If 2b) or 2c) are in operation, fine, the government should do it, but it will not “create jobs” regardless, because the government will destroy jobs by reallocating money from where people have voluntarily put it.

    Yes. This is why I don’t expect wars to be run efficiently or even competently, and am not dismayed or outraged when they are not. Because they have to be run by governments, and governments should be expected to mess things up. We fight wars not because they make economic sense but because if we don’t then we won’t have to worry about the economy, or much of anything else.

    Milhouse (40ca7b)

  65. Wash your mouth out with soap. The correct answer is, that the government should make people have a minimum number of windows.

    And then tax them.

    Milhouse (40ca7b)

  66. scaramucci’s interview on the other thread, suggests another alternative financing,

    narciso (d1f714)

  67. What should the toll be? Whatever the traffic will bear, not a penny more or less ….

    This is not a very definitive prescription. It is like saying that politics as the art of the possible. Whatever happened is apparently an example of artful politics. A monopolist would maximize his profit, and I suspect that is what you meant. A bridge is one of those things that has almost zero marginal costs, and it is rarely constrained by capacity. So a monopolist would be tempted to charge each customer just enough to make using whatever alternative exists unattractive, and this would be dependent upon the elasticity of the demand for the product transported over the bridge as well as the feasibility and cost of using that alternative route. A diamond merchant could opt for a row boat if the toll was too great, and he could transport a lot of diamonds that way, meaning the increased cost per diamond would be very small if the merchant planned his trips carefully. So the monopolist would charge just a bit less than the cost of renting a row boat to the diamond merchant. The same wouldn’t be true for a tanker truck full of gasoline. The bridge must be used, but the buyers of the gasoline on the other side of the bridge may have alternative sources, say barges, which would determine the price that the gasoline could be sold for, and this would determine what the monopolist could charge the gasoline truck. Basically, each customer who wished to travel over the bridge would have to provide the monopolist certain information which the monopolist would use to establish a rate for that customer.

    This is the way the railroads were run, and it leads to fairly massive societal costs. It might be so inefficient that building a competitive bridge run by an independent entity would be justified. In such a competitive market, each bridge owner would be driven to charge a cost approximating the marginal cost, and this could lead to greatly increased usage as well as much greater societal wealth. Of course the monopolist would fight the construction of the competitive bridge tooth and nail, probably using zoning laws and environmental regulations developed specifically to protect the monopolist by friendly politicians, but we would all be better off if he loses. This is an example of why “free markets” benefit society. Who knows, the furor over the Keystone pipeline might be an example of this if we knew the motives of those who are paying for the opposition to the development.

    BobStewartatHome (b2bab4)

  68. @BobStewart@Home:Basically, each customer who wished to travel over the bridge would have to provide the monopolist certain information which the monopolist would use to establish a rate for that customer.

    I think the added botheration of finely splitting up one’s bridge traffic that way would seriously decrease the utility of the bridge and hence increase that of alternatives… it would be much easier to charge an “average” rate, probably per axle like the 520 bridge has.

    I doubt a bridge owner would ever have a monopoly, unless, as you hint, he got the government involved, which we are hypothesizing is not happening. Without the help of the government it is simply impossible that no competition for bridge traffic could exist.

    The railroads in real life were of course supported by government, with a few exceptions.

    Gabriel Hanna (c791b9)

  69. @BobStewart: Your mention of Old Iron Road reminded me of something.

    Out on the Snake River, before the dams went in, there was a big problem getting wheat down into the canyon for the boats to transport it out. The farmers near Mayview (it’s along the river, a few miles from Lewiston) first tried chutes, but the wheat got scorched and unusable. So they built a gravity-powered tramway, with full carts coming down the canyon pulling up the empty carts. By WWII it wasn’t used anymore and the rails were taken up for scrap.

    Few years ago I was on the river with a friend and we found the old tramway and we hiked up it as far as we could get. Not much left of it but I did take home an iron spike, smaller than that used for full-sized railroads. Never did start down from the Mayview side where the yard and buildings were, always meant to. Someday.

    Gabriel Hanna (c791b9)

  70. Mayview Tramway in operation, 1935. Obviously pre-OSHA.

    People can do things for themselves. A Dark Age is not so much that you forgot how to do something, but that you forgot it was possible to do that thing.

    Gabriel Hanna (c791b9)

  71. The Tramway reminded me of Zorba the Greek! Great story, thanks.

    BobStewartatHome (b2bab4)

  72. BobStewart,

    You might be interested in watching Horatio’s Drive, which is a documentary by Ken Burns about Dr Horation Nelson Jackson’s 1903 automobile trip across the country.

    Cruz Supporter (102c9a)

  73. Whoops, obviously, his name was Horatio — not “Horation.”
    There are little clips of the PBS documentary available for free at YouTube.

    Cruz Supporter (102c9a)

  74. The Tramway reminded me of Zorba the Greek!

    You know that Anthony Quinn was Mexican, right? Even in early 20th century Crete ….

    nk (dbc370)

  75. Nk, save those zings for the 70s TV master and the sandwich man.

    urbanleftbehind (847a06)

  76. You know that Anthony Quinn was Mexican, right?

    Didn’t Omar Sharif have to play every foreigner at some point? Like even Genghis Khan and Dr Zhivago in the same year?

    Not sure the relevance to infrastructure programs.

    Gabriel Hanna (4f5ff1)

  77. #78 Gabriel Hanna, our friend nk is obsessed with ethnicity.
    “The Irish do this …,” “The Italians talk like this …,” and “The Latvians cook asparagus like that …” (LOL)

    Cruz Supporter (102c9a)

  78. “Well, how would you like to kiss my sister’s black cat’s ass?”

    — Crazy Lee (Bo Hopkins), The Wild Bunch, 1969

    nk (dbc370)

  79. I believe it was CayleyGraph (353727) — 11/11/2016 @ 2:34 pm who brought up the broken windows.

    felipe (023cc9)

  80. By the way, I see people arguing elsewhere that Trump is simply encouraging “private financing” through “tax credits” to accomplish all this. But a Wall Street Journal article casts a lot of doubt on that idea. If something can make money in the private sector, why do we need government involvement at all?

    Patterico (115b1f)

  81. I’d like to share with you an idea I had that shows, mathematically, how capitalism works better than any other possible alternative.

    Imagine you are playing a game.

    In this game there are 100 squares tiles. Under a random tile is a special mark. If you guess the right tile, you get $1,000 dollars. For each guess you must pay $9. There are several possible scenarios to play the game:

    Scenario 1: If you guess the same tile 100 times, you will probably win, statistically speaking, once. Meaning after 100 rounds of guesses (the tiles are mixed up between guesses), you will have spent $900, but receive $1,000, which would yield a tidy profit of $100. In this game you can’t lose, but only if you play long enough, and your return is not great. Of course you could always get lucky, but probably not.

    Scenario 2: The rules of the game are such that you can bet on as many tiles as you like each round. So if I put down $9 on every tile, I would spend $900 each round, but gain $1,000, with the same net profit of $100. However, over 100 rounds of guessing, I would gain $10,000 in profit, not just the $100 as in the first scenario. This is 100 times more profitable than Scenario 1, and guaranteed to win every single time with no risk. Another way to say this is I am investing more, and getting more back as a result.

    Scenario 3: Naturally, the IDEAL solution is to be able to pick the right tile each time. I would then spend only $9 to get $1,000 each round, resulting in a profit of $99,100 over 100 rounds, assuming I always pick right. However, there is no way for me to know which tile has the special mark. So there is a very small chance of this occurring, even if I think I am a very good guesser.

    Scenario 4: Now, if I don’t have $900 to invest each round myself, I might enlist 100 separate people to put $9 on each tile. Therefore, during each round, there are 99 losers and one winner. And the winner gets $1,000 for his $9 bet. The group as a whole wins, and those winnings get spread around to more and more people as the game progresses, but on each round the money is concentrated with one lucky winner. Again, the group wins $10,000 over the course of 100 rounds.

    Scenario 5: Scenario 4 just seems wrong somehow. So I decide to tax the winners and distribute the money to the losers. Ergo, we make an agreement with an insurance company – the winner gives all the money to the insurance company. Each losing player then gets $7 back from the insurance company, each round, and the winner gets $250. So the adjusted odds are 99% chance of losing $2, and a 1% chance of winning $250. To put it another way, 100 people spend $900 each round. They receive $943 back. The extra $57 goes to the insurance company. Ergo, at the end of the game, the players will have lost $5,700 to the insurance company, but gained $10,000, for a net gain of $4,300.

    Scenario 1 and 2 represent free markets. 1 is undercapitalized, while 2 is full capitalized with no competition. Scenario 3 is a command and control economy. Scenario 4 is a free market with competition. Scenario 5 is socialism, with the insurance company being the government.

    As near as I can tell, this mathematically explains everything we see in the world regarding the operation of various economies. Command and control economies inevitable go bust because they cannot guess the right answer to every question. Socialist economies produce less pain for the players, but far less wealth. In fact if the insurance costs are two high, you can actually produce a loss rather than a profit.

    Well capitalized free market economies consistently out perform, and over time produce far higher levels of wealth for everyone.

    Tenn (131b65)

  82. in the end, taking money from the taxpayers for infrastructure

    But it mostly, if it comess to pass, won’t be taken from the texpayers.

    It would actually add to the deficit.

    This is considered good borrowing. After all, states and cities borrow money to pay for infrastructure.

    New York Times columnist is so sure the money will be borrowed that he endorses it:

    http://www.nytimes.com/2016/11/14/opinion/trump-slump-coming.html

    True, handing out windfalls to rich people and companies that will probably sit on a lot of the money is a bad, low-bang-for-the-buck way to boost the economy, and I have my doubts about whether the promised surge in infrastructure spending will really happen. But an accidental, badly designed stimulus would still, in the short run, be better than no stimulus at all.

    In short, don’t expect an immediate Trump slump.

    Sammy Finkelman (643dcd)

  83. And I should add, the economy is a bit of a guessing game.

    Say I am a window manufacturer. I’m just starting out, how many windows do I make? I don’t actually know. So I build 10,000 units. That month I sell only 8,000 units. So…what next? Maybe I decide to make 8,000 the next month. Or I decide to lower my prices. Or I decide to advertise more to increase sales. Or I try and get my windows for sale over a wider area. Or I sponsor a little league team to get more baseballs through windows. Or all of the above, since I don’t actually know the precise reason I only sold 8,000 and not 10,000 windows in my first month.

    Capitalism is about guessing, over and over. In fact, we are trying every single answer to a problem to see what works. Businesses confronted with this problem try every possible solution till they find one that works.

    Tenn (131b65)


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