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Blue Blight Bloats Boston’s Big Dig

It turns out that Boston’s “Big Dig” construction project cost taxpayers much more than expected — and enormous bills for interest payments and mass transit are still rolling in.

Hailed at its inception as an example of “smart government” and proof that “government can still get things done,” the project was originally estimated to cost $2.8 billion. Thanks to corruption, construction mishaps and the usual friction on projects of this kind, the project took a decade longer than planned to complete, and was said at the time (December 2007) to have cost a total of $14.6 billion.

There was much shock and finger-pointing when these numbers came out, but as reports, those cost estimates were still much too low. By the time the whole mess is finished and accounted for, this beautiful proof of governmental competence and efficiency, this magnificent testimony to the ability of big infrastructure projects to turn the US around will end up costing about twice that much: at about $21 billion, the final cost will be about seven times the original estimate — an original estimate, by the way, so large that it blew peoples’ minds at the start.

Why the additional costs? Three big reasons.

First, so many entities borrowed so much money for the project through so many bond issues and other measures that the cost of the interest on the various loans connected to the project was both high and hard to calculate.

Second, the project went on so long that the ongoing depreciation of America’s currency inflated the cost. That’s a common problem in a country with an inflating currency. The lawsuits and regulatory blockages that drag out major construction projects in the United States today combined with the steady decline in the value of the dollar to turn what initially look like reasonable proposals into mind-boggling boondoggles.

And finally, the complicated political bargaining that went into the program, balancing city transit needs with the wishes of suburban legislators and placating the greens and other lobbies tacked on all kinds of extraneous project costs. Literally billions of dollars in mass transit spending was required in order to get the core highway project approved. Those projects, too, involved lots more borrowing and therefore lots of interest costs. And those projects, too, suffered from the incompetence, corruption, NIMBY lawsuits, regulatory roadblocks and general inefficiency of government construction projects.

Put it all together, and an expensive $2.8 billion dollar highway project morphs into a $21 billion regional disaster. Only there is still more to come. That $21 billion still doesn’t include up to about $5 billion of mass transit construction and interest costs, some from projects that are legally required but haven’t yet gotten underway. Some of these costs will likely go higher as well; figure about $26 billion as a likely figure.

America needs infrastructure work; having driven in Boston before and after the Big Dig, I have no doubt that something of this kind was badly needed. But it’s also clear that America’s creaking “infostructure” of institutions and procedures is not up to the job of managing projects like this one.

The Big Dig didn’t show that government can work; it showed just how broken our government systems are. There is a normal and irreducible friction to government work of any kind, but the mess in Massachusetts shows a system that simply can no longer execute complex projects in a timely way at a manageable expense.

If California’s high speed rail project runs into the same kinds of problems — and it will, dear readers, it will — heaven only knows how much it will cost by the time the last Wall Street bank clips the last coupon on the last construction bond.

The governments progressives have built can’t do the jobs progressives want government to do: that remains one of the hard core problems that is driving the blue social model to the wall.

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  • Bart Hall (Kansas, USA)

    Something similar almost killed Volkswagen back in the 1960s. Their classic Beetle, with its 36 HP air-cooled engine was a wonder of efficiency. You could even replace individual cylinders rather easily — a not-uncommon event for #3, related to oil-cooler problems.

    However, as they asked it to do more and more, over-designed and over-engineered every aspect of the car to meet ever-more-demanding customer desires … the engine couldn’t handle it all and they had nothing to replace it.

    Drive a VW diesel today and you’ll see they figured it out.

  • Everyman

    Ah, but you forget that the Central Artery – removed by the Big Dig project at such extraordinary cost (in part because the engineering involved was state-of-the-art because it had to be) – was once government’s solution to Boston’s automobile transportation problems. So government creates the undesirable condition – cutting the city off from its waterfront entirely for decades in the name of progress – and then comes back to “solve” that condition with yet another one that, if history is any lesson, will require much more government attention in the future. And they tell us that there can be no such thing as a perpetual motion machine due to the natural limitations of the laws of physics. Another set of laws that government ignores in order to perpetuate itself.

  • Ann

    I was in LA during the 94 earthquake. Thankfully there was a drought at the time or my apartment would have probably sunk into the ground because of liquefaction, however part of the 10 freeway close to me fell down. The mayor at the time, Dick Riordan, worked with the private sector and was able to get repairs done quickly (3 months) and under the original budget (that goes for all the damage that earthquake did). San Francisco was still working on the freeway that fell down in 89 and didn’t finish it until 2000.

    The LA subway debacle is another sad story though and a lesson in how strong and dysfunctional the LA city council is.

  • Bill Woods

    “That $21 billion still doesn’t include up to about $5 billion of mass transit construction and interest costs, some from projects that are legally required but haven’t yet gotten underway.”

    Here’s a simple partial fix: change the law, and cancel/defer those projects.

  • Jacksonian Libertarian

    It’s the “feedback of competition” that forces continuous improvements in Quality, Service, and Price in the private sector. It’s the lack of the “feedback of competition” that is the reason the Government Monopoly can never be the efficient entity the leftists dream of. And so the Government Monopoly will always be characterized by abysmal Quality, surly and rude Service, and delivered at a Price many times what the private sector would charge. Since the Government Monopoly cannot be Fixed, as it will always be a feedbackless Monopoly, the only way to make it more efficient is to limit it to only those things that only it can do.

    I have to question the argument that the Big Dig was needed, as these big government projects are seen by the politicians and bureaucrats as glittering bright opportunities for graft and the development of systems of patronage. Why do you think the California High Speed Rail project is so hard to kill? The studies say it’s an economic loser, polling shows Californian’s don’t want it, the project has had to be scaled back over and over, and still the thing won’t DIE! It’s because all those involved are salivating for all that graft and patronage, that they just got to have it.

  • lump

    Yes we can hate on big gov and it’s inefficient nature but what are the alternatives. Your telling me private industry has never fleeced tax payerlook
    s on projects? Look at defense contractor..

  • Kris

    “an expensive $2.8 billion dollar highway project morphs into a $21 billion regional disaster. Only there is still more to come.”

    Yet more stimulus. All for the best. Keep diggin’.

  • Richard Treitel

    I see this more as a piece of log-rolling that the Emperor Caligula would have recognised. He, or possibly Tiberius before him, announced and began construction to build a grand project — a new aqueduct to Rome — but after he had done the easy part it became clear that some valleys were going to have to bridged at considerable cost, and work slowed down. Claudius was left to choose between disavowing the project and finishing it. The rest is … history.

    I’m willing to believe that Blue habits such as paying the “prevailing” wage can double the cost of a project, but to multiply it tenfold takes nothing more than good ol’ lying to the voters about the overall cost, much as NASA did with the Space Station. Such habits are independent of political colour. I don’t believe that the people who planned the Big Dig were unaware of the environmental laws or the other issues you mention; they just chose to say nothing to the voters about them.

  • TycheSD

    According to folks in Seattle, who are studying various projects around the country because of something they’re doing, “Manyexperts feel that private companies had too much power in Boston, leading to management issues.”

    Maybe Boston/Massachusetts officials should have supervised things better or assumed more responsibility for final outcome instead of relying on private companies to bring projects in at budget.

  • TycheSD

    Lump – that’s exactly what happened in this project. These weren’t government workers. They were employed by people like defense contractors.

    In fact, we are now learning that building projects supervised by the Defense Department in Iraq were way over budget.

  • TycheSD

    The WPA was undoubtedly much more efficient than the private-business operated Big Dig.

    “Is WPA administration efficient?
    Impartial investigations have found it so. For example, after making a comprehensive survey of unemployment relief, the magazine Fortune reported that the WPA as an organization “functions with an efficiency of which any industrialist would be proud.”

  • QET

    As a MA resident who drives the Turnpike every day and pays the ever-increasing tolls needed to pay down the Big Dig bill, here is my takeaway: forget the Big Dig as a discrete project and consider what it says about the Blue model of governance generally.

    The Blue model involves escalating government expensitures and only works politically because its partisans produce “numbers” that purport to show how more government spending on something results in a net savings to society in some fashion. In other words, the more government spends, the more it saves. Serious people throw these numbers around as though the matter is settled. Just take ACA as the latest example. Yet the government not only misunderestimated the Big Dig costs, but did so by a preposterously large margin. The latest estimate will likely be revised, again, in another year or two.

    And still the Blue model partisans expect the rest of us to evaluate enormous state spending initiatives–ACA, e.g.–on the basis of numbers produced by the same government that couldn’t even get close to a correct estimate for an ordinary–if large–infrastructure project. Serious people act as if doubt of those numbers is some sort of denial of reality. We are all expected to just fall in with the government estimates.

    Once begun, we end up committed to the project no matter what the real costs turn out to be, and this is precisely the goal of those Blue model partisans who portray themselves as mere analysts and policy wonks.

    The experience of the Big Dig alone ought to be sufficient reason to avoid any further massive government spending initiatives (stimulus, ACA, whatever).

  • The Reticulator

    @lamp: “Yes we can hate on big gov and it’s inefficient nature but what are the alternatives. Your telling me private industry has never fleeced tax payerlook
    s on projects? Look at defense contractor..”

    Actually he’s not telling you that. Let literacy be your friend.

    As to the WPA’s inefficiency, that program was in the 1930s. Society was very different then. You couldn’t repeat it now. And the organization may have been efficient, but that doesn’t mean the program was efficient. But even the good aspects couldn’t be replicated in the 2010s.

  • Xmas

    The cost of the project ballooned along with the scope of the project. The Central Artery replacement was the justification, but eventually became only a small part of the project.

    The big problem was that the project had very poor oversight from the beginning. The Governors in power during the project (Weld, Cellucci and Swift, all Republicans, btw) did little to control the project. Swift actually fought with the Mass Turnpike Authority after they were given oversight of the project. The MTA started digging into the contracts, looking for ways of clawing back payments or fining various contractors and replacing Bechtel as the lead contractor. So Swift pushed out the investigating board members and replaced them with more compliant lackeys. (Lookup ‘Christy Mihos’ and ‘Jordan Levy’ for more info.)

    Anyway, we in Boston can thank Tip O’Neill for the project. His political clout was so great, the project was funded long after he died.

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