The Infrastructure Myth 4

MARTA rail system map.

MARTA – The rail system to nowhere. Blue lines are highways and freeways.

Infrastructure, infrastructure
Where are you?
Pave a road, fix a bridge
Dig a hole, too

The Man says it’s all the same
One job like another
But they won’t generate money
Like tax-cutting all over

OK. It’s bad poetry, but I am trying to make a point. Let’s see if I can do this another way.

  • All infrastructure spending does not give the same economic results. Fixing old infrastructure does not generate new jobs or other economic activity. All you are doing with most of the infrastructure  projects is fixing something that should have been fixed long ago.
  • New infrastructure spending may or may not generate jobs or additional economic activity. Just because somebody in government thinks a new road or bridge is needed, the project will probably be more political payoff than business oriented like most of the recent federal stimulus package.
  • Just because you are spending lots of money buying concrete, asphalt, and foreign steel does not mean that you are creating permanent jobs. The recent stimulus spending on infrastructure funneled money to construction unions, and unionized companies.

Someone on Fox News the other day relayed some words from Massachusetts Senatorial Candidate and claimed Native American tribe member, Elizabeth Warren. Our American Indian Harvard Professor wants us to be  more like China, who is spending more on infrastructure as a percentage of GDP than the US.

Here is another Harvard professor that doesn’t understand basic economics. What a surprise. The one thing this brilliant college professor didn’t mention is that China is perhaps a century behind on building roads, bridges, power plants, and water control infrastructure.

The US infrastructure is mature, and just adding more does not guarantee more business activity. Let the electorate decide where it is needed. A government is usually not very good at the job.

As an example, a recent series of tax initiatives for transportation infrastructure projects for different areas in Georgia were soundly defeated yesterday. The state was divided into T-SPLOST regions with the ten county Atlanta Metro Area being Region 3. A look at the project list is interesting.

Hundreds of millions of dollars in MARTA projects were proposed. Approximately $354,000,000 was proposed in rail and electric system refurbishing. This sounds like maintenance to me. Residents of Fulton County and Dekalb County have been paying a one cent sales tax for MARTA since the early 1970’s and this work should have been done under the current funding.

Fifty percent of the one cent tax revenue was supposed to go to capital projects, of which few have happened. Instead, MARTA operates at a  perpetual deficit. Many of the more than 4,000 employees are represented by the Amalgamated Transportation Union.

The only people for the initiative were people currently living in the city of Atlanta. There were all sorts of bike paths and niceties for those residents. The NAACP called it racist because some white people would benefit. Suburbanites voted against it because there was little to help with their traffic. Rural residents voted against it because they don’t care about the city of Atlanta, anyway.

The T-SPLOST proposal would have added an additional one cent sales tax, causing Fulton and Dekalb residents to pay a two percent transportation sales tax. Most people thought this was BS. About 63 percent of the voters statewide opposed the initiatives, and that should be a strong message that we are on to their bankrupting management of the public’s largess.

So, the benefits of infrastructure spending are fleeting in the USA, especially given the bleak performance by the federal, state, and local governments. It is obvious that the best way to stimulate the economy is an all around tax cut to all taxpayers.

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4 comments

  1. “Approximately $354,000,000 was proposed in rail and electric system refurbishing.”

    Aren’t rail and electrical systems privately owned in Georgia?

    Good to see that the people of Georgia are paying attention. It’s not just the Democrats that like to spend money, is it?

  2. Sorry I was not specific on that count. The MARTA rail cars are run be an internal electric system, which is fed from the Georgia Power system at various points. It is the internal MARTA system they are going to work on. GA Power has nothing to do with the internal system except they sell bulk power. MARTA is a public transportation company, and Georgia Power is a unit of the Southern Company, an investor owned utility holding company.

  3. The US infrastructure is mature, and just adding more does not guarantee more business activity.

    Good point.

    Of course, the government doesn’t have any real money. Instead, the government has only the money that it prints and the money the government has extracted from the pockets of the taxpayers.

    In my view, all this government promotion of fix the the infrastructure is yet another excuse to “tax the rich” and another method of redistributing the wealth.

  4. “yet another excuse to “tax the rich” and another method of redistributing the wealth.”

    Yep. It is all about taking our money and putting it in someone else’s pocket.

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