Infrastructure…build, baby, build!

Posted: October 18, 2011 in Economy, Jobs, Politics

The Problem

Two facts. First, the collective infrastructure in our country is falling apart. Bridges, freeways, railways, schools, water lines, the power grid, nuclear power plants, gas refineries, the bulk of the individual components within this collection of elements that make up our infrastructure are 20 to 50 years old. Second, we are facing a distinct lack of jobs in our country, a condition that has and will continue to repress any attempt at an economic recovery. Nobody disputes these two facts.

The Solution

The Federal government (along with State and local governments) is trying to figure out how to stimulate the economy to create jobs and bring down unemployment. Personally, I feel they are going at it the wrong way. Let’s look at just who is out of work. Granted, this downturn has affected pretty much every sector of the economy, but construction, real estate, banking, and industries that have involvement in that field (i.e. equipment manufacturers, local governments, etc.) have definitely borne the brunt of the job cuts. These are the people who are also having the biggest difficulty finding new work, for two reasons. First, there is little to no activity in this sector. Second, the experience and skills that most of these unemployed have do not lend themselves to easy cross-training into those few areas of the economy that still show signs of life. I’m not saying that we should simply create jobs to give these people an easy way out of unemployment (and I consider myself to be one of “these people”), but there is a genuine need for repair, upgrading, reconstruction, etc. of our infrastructure, and it has the potential to be a long term effort. This is where the key is. It isn’t just a “make work” program like the old Cold War Soviet jokes about people counting trees in Siberia. A lot of it is direct work for government agencies, but the bulk of these facilities are existing, and any new facilities proposed under such a program would likely be justified (new ethanol refineries, new schools, smart grid power distribution, etc.), so it is “legitimate” work. Plus, this gives everyone the opportunity to create, encourage, develop, implement green technologies, increased energy efficiency, and potentially lessen our dependence on foreign oil. Obviously, this will require the spending of massive amounts of public funds, and will likely increase our national debt substantially. The thing a lot of people don’t want to admit is that this is how we’ve managed to recover from pretty much every economic downturn we’ve suffered. The construction of the interstate system. The moon shot and space race. The Cold War. These are all examples of the federal government underwriting the efforts of private companies to develop something, be it a road, a space ship, or a missile defense system. Have there been problems? Of course. Combine money and power and there will always be some people who will try to put themselves ahead of the public good…despite the fact that in most cases these same people would’ve made out nearly as good if they played by the rules, and those who went to prison (looking at you, former US Rep from San Diego, Randy “Duke” Cunningham) ultimately came out far worse than if they’d played by the rules.

How To Do It

There are different nuances that will apply to the different industries…it most certainly isn’t a one-size fits all approach. That being said, for the most part it will not involve government agencies hiring lots of people for their payrolls. As I have noted previously, jobs permanently dependent on public funding (i.e. government employees) are simply not sustainable, so we’re not looking to create massive construction departments within Caltrans or the State University of New York system. Also, we don’t want the government attempting to create industries via direct subsidies. Solyndra is a perfect example of how a government program shouldn’t simply attempt to create an industry.

Regarding the actual construction of the infrastructure, there needs to be a long-term funding program (i.e. a 6 year highway bill) that construction firms can bid on. Private companies generally are more efficient and cost effective than government agencies, and they tend to generate more economic activity. The long-term nature of this program would give them assurance that there would be steady activity that they could bank on…invest in people, invest in equipment, make long-term plans.

Regarding the inevitable “green” element of this, this is where we go back to the space race/Cold War approach. Government provides a description, parameters, whatever for what they’re looking for (smart grid, more efficient cars, whatever), and provide funding for the research and development element of it. This allows companies to figure out what is viable both from a development perspective as well as a use/implementation perspective. The government then has the opportunity to establish the primary demand for the new technology (wind power, hydrogen fuel cell cars, etc.). This serves two purposes. First, it provides a revenue stream for the providers of these new technologies. Second, it provides a sense of stability that encourages a support network to develop around the technology. A prime example of this would be alternative fuel cars. The average car today can drive 300 miles on a tank of fuel, someone is rarely more than a few miles from a refueling station, and it takes just a few minutes to refuel the vehicle and travel another 300 miles. Hydrogen fuel cell cars have the potential to travel 300 miles on a tank, and it takes less than 5 minutes to refuel them. The problem is that hydrogen filling stations are very few and far between. Pure electric vehicles such as the Nissan Leaf or the Tesla Roadster can “refill” (recharge) on pretty much any plug you can find in any building, but their range typically does not exceed 100 miles on a charge and it can take several hours at best to get a partial charge. Government providing a set of standards or operating criteria and letting the auto manufacturers develop products that comply with those criteria would be the preferable step. To provide the proper support and encourage proper establishment of the technology, government would be a primary user/purchaser of the technology. All city and county vehicles would utilize this new technology, and the government would encourage the development of “refueling” facilities in support of this new technology. By providing stability of revenues for the developers and a useability experience consistent with what the general public can be accepting of, it will encourage the widespread implementation of this new technology. Furthermore, private investment (meaning purchase of these new vehicles) will ramp up and lessen the need for continued public underwriting of the effort…much as has occurred with regular gasoline powered cars.

To make all of this work, it will require not just money, but elected officials and policy makers being willing to leave politics behind, as well as investors and business owners willing to not be greedy and actually put the money into development. If we can agree to avoid the short-term, instant gratification disease that usually accompanies these types of efforts (see defense contractors in the 80s and 90s), I genuinely feel that everyone will come out better than they went into it.


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