Why Nothing Is Shovel Ready Anymore: Part Two
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  • Jim.

    The problem isn’t even NIMBYs anymore… the nationalization of green organizations have led to people whose own backyards are thousands of miles away from the projects they deplore.

    Thes people are worse than Not In My BackYard activists. They are Build Absolutely Nothing Anywhere Near Anyone activists… they are BANANAs.

  • If you take away the red tape, you increase the possibilities for corruption, favoratism, and other abuse. Govt can be either inefficient or corrupt. It can also be both, but it can’t be neither.

  • An

    One of things I learned in life is if you have to get the incentives right. An illustration of this in the business world is the mortgage crisis. The Bankers did not inventory their loans and profit on the coupon payments as money was made on the selling of the security. Who cares about the quality or viability of the loan payment, as long as it fit Fannie/Freddie or AAA criteria.

    Nothing is shovel ready because the incentives are all wrong. Government projects always cost more because it does not make any sense to get them done or on time. The incentive in government is not to get things done, or make a profit. It is to exist.

  • An, do you have an explanation of why anything is finished anytime? The implication of your understanding would be that all public works projects would be the construction industry equivalent of Jarndyce v. Jarndyce.

    Govt can be either inefficient or corrupt. It can also be both, but it can’t be neither.

    Rubbish.

  • Mark

    Doesn’t sound like Kevin has ever experienced the glory of the processes installed over the last 50 years which require years of additional planning and report writing for large projects and then give multiple groups litigation veto (and extortion) rights. Notice that his preferred answer is to keep the processes but then give his favored projects waivers while leaving the rest of us mired in the system.

  • Gene

    I’ve never thought highly of Drum in the first place but if this is the quality of his thinking I can safely ignore him completely from now on.

  • Jacksonian Libertarian

    “From a Democratic, Keynesian perspective the answer has two parts: that the stimulus wasn’t big enough, and that for various reasons it didn’t hit fast enough.”

    This was never going to work anyway; Keynesian government spending doesn’t help the economy. In order to spend money the government must first take the money from the economy, either as taxes or borrowing from the credit markets. If borrowed the money is being taken from consumers and businesses who would have spent the money for productive reasons, while most government spending has no economic effect and is just wasted or worse forces compliance costs on the economy with new regulations, taxes, and fees.

    Japan has had 8 of these huge stimulus programs, and they have been in a deflationary depression for over 20 years. They have sucked all the capital out of their economy and their position is now hopeless.

    “There’s a reason it’s called Capitalism; it’s because Capital is what fuels it.” Jacksonian Libertarian

    When the government sucks the fuel out of the economy, the economy stops moving. This is how Herbert Hoover put us into Great Depression 1.0, this is how the Japanese did it, and this is how the Democrats and Obama put us into Great Depression 2.0 starting with their massive budget deficit of $485 Billion in the 2007 budget year (Oct 07- Sept 08) and continuing through this year with a $1.3 Trillion deficit this year. If Keynesian economics worked we would now have a rocking economy, but there is no evidence that it has ever worked anywhere at any time, and all the evidence points to the exact opposite.
    So the question is why the leftists continue to say we need these stimulus spending programs, when they have never worked? Someone needs to say “the Emperor has no clothes”.

  • dr kill

    Drum? If he ever was correct about anything it was an accident. Coyoteblog reads him so the rest of us don’t need to.

  • vanderleun

    Drum started out blathering on his own. Over the course of a few years he descended to Mother Jones. It’s been downhill ever since and he still hasn’t found his level. Hard to take him seriously? Impossible. Not an original thought or eve question in his entire career.

  • vanderleun

    Drum, like so many others, simply cannot see that it is his own locked-in habits of mind that produce his own defeats.

    “The preposterous-minded were cowed – they thought time would be given.
    There was no need of a steed nor a lance to pursue them;
    It was decreed their own deed, and not a chance, should undo them.
    The tares they had laughingly sown were ripe to the reaping.
    The trust they had leagued to disown was removed from their keeping.
    The eaters of other men’s bread, the exempted from hardship,
    The excusers of impotence fled, abdicating their wardship,
    For the hate they had taught through the State brought the State no defender,
    And it passed from the roll of the Nations in headlong surrender!”

  • Richard Treitel

    Singapore’s government is widely agreed to be efficient and uncorrupt. It’s that way because Dr. Lee wants it that way, and in Singapore, what Dr. Lee wants, Dr. Lee gets.

    You get the picture?

    I argue that a corrupt government is unlikely to be efficient. The classic way to extort a bribe is to delay a project that somebody wants in a hurry. There’s even a story of a Nigerian airliner that circled over the airport for tens of minutes while the pilot haggled with the air traffic controller.

  • Notice that his preferred answer is to keep the processes but then give his favored projects waivers while leaving the rest of us mired in the system.

    That is the way the Democratic Party does business. It is like breathing with them.

  • This was never going to work anyway; Keynesian government spending doesn’t help the economy.

    It would be more precise to say the multipliers have not been and generally are not very high (about 0.6 with regard to the most recent stimulus). The economy expands, but you do not get much bang for the buck.

    Japan has had 8 of these huge stimulus programs, and they have been in a deflationary depression for over 20 years.

    No. Japan has had stable prices since 1993. That has included periods of a year or two with mild declines in wholesale and consumer prices, followed by mild increases. They have had repeated mild recessions and generally low rates of economic growth, but no depression.

    They have sucked all the capital out of their economy and their position is now hopeless.

    No. The problem most of the countries of the industrial Orient face is a demographic one – younger cohorts smaller than older cohorts. The same problem is to be found in much of Europe (Britain, France, and Ireland the notable exceptions).

    When the government sucks the fuel out of the economy, the economy stops moving. This is how Herbert Hoover put us into Great Depression 1.0,

    No. The Administration and Congress maintained nominal public expenditure throughout the period running from 1929 to 1933. The proportionate size of the federal sector did increase as the economy contracted and most of the federal budget came to be financed by borrowing as revenues declined. Still, we are talking along the lines of the ratio of federal expenditure to domestic product increasing from 1.7% to 3.5%; at no time during the period from 1929 to 1941 did federal borrowing exceed 3.8% of gross domestic product.

    It should be noted the onset of the Depression took the form of an autonomous drop in aggregate demand in 1929-30 followed by three sets of banking crises (Nov. 1930-Feb. 1931, May 1931-Mar. 1932, Nov. 1932-Mar. 1933). The monetary base remained stable but you had an enormous drop in the quantum of M1. Otiose monetary policy – notably the failure of the United States to follow Britain off the gold standard in Sept. 1931 and the lack of a lender of last resort for small community banks – was the source of the severity of the contraction.

  • raf

    Another limiting factor is current capacity. How many companies are there with the kind of machinery used to construct highways? Scheduling subcontractors is a major limitor in project progress. No one can afford to speculatively make the kind of capital investment necessary to provide surge capacity needed for fast response to sudden “stimulus” spending authorization, nor would they likely have the confidence that such spending would continue long enough to provide payback on such investment. The current capacity is sustained by local and state road budgets and may even be jealously guarded by its owners through political “contacts.” Expansion by others might lead to competition, you know.

  • “If you take away the red tape, you increase the possibilities for corruption, favoratism, and other abuse.”

    Apparently you have never done business in Chicago, or Cook County. The red tape is the fount of all corruption… need a permit, see your Alderman…see your County Commissioner…oh, look, it is the inspector from the Department of ________, his palm sure seems itchy…

  • gringojay

    Permit Pusher is among the jobs to be “saved” at all costs – destined to be organized into the community of unions.

  • theBuckWheat

    When the economist F. A. Hayek gave his Nobel Award Lecture, his title was “The Pretence of Knowledge” in which he showed that no committee of experts can know enough to run an economy as efficiently as the myriad of participants in the free market can.

    When government is charged with doing any function that a private business can do, the results are predictable. It it not that government cannot be efficient, but that government is only efficient in terms that relate to government incentives which are often not the same as economic incentives.

    After all, look at what awards government gives out after a costly project goes over budget and off schedule. Those responsible for the boondoggle are often promoted and given a bonus trip to Las Vegas GSA retreat for their “bold leadership”.

    The curiosity is not that government only rarely is efficient like a private business is, but that how often citizens think that a government program or project they advocate and lobby for will only be run by competent bureaucrats who only have the best of intentions at heart, and who will be prompt and efficient in the same way that the local grocery or big box retailer is.

    Government is a political animal and it cannot be otherwise or else it must destroy our liberties and our property.

  • RS

    Progressives just don’t understand, when your standard is ZERO RISK, the only safe ground is that which is right beneath your feet.

    Moving is dangerous, so don’t move.

    Perhaps adding a few more environmental study requirements will speed things up.

  • MarkJ

    This little historical exercise in leftist insanity should be a cautionary tale to Kevin Drum:

    http://en.wikipedia.org/wiki/White_Sea_%E2%80%93_Baltic_Canal

  • pst314

    6 Gene “I’ve never thought highly of Drum in the first place but if this is the quality of his thinking I can safely ignore him completely from now on.”

    I know what you mean and agree, but in another sense other than the one you meant, we cannot afford to ignore people like Drum. To paraphrase a famous quote:

    “You may not be interested in leftism, but leftism is interested in you.”

  • bandit

    Drum’s solution is “simple”: Spend more money.

    It’s other people’s money so why tf not?

  • Californio

    Read “Plunkitt of Tammany Hall”. And you wonder why things take so long? Everyone needs their “cut” – be it outright bribes or in the form of tribute to the various “gods” – the god of the environment, the god of the unions, the god of political transparency, the god of processes, the god of economic development (for the “correct” reasons). These are not evils in and of themselves, but try to satisfy them all AND have a project get completed fast? Ha! Like the old saying, “You want it cheap, fast and good? Pick any two.” Mr. Drum says – set aside cheap, money is no object! Thanks. Easy to spend other-peoples-money.

  • zhombre

    As muddled as Drum’s mind is, compared to a lefty scribbler like Matt Yglesias, he’s Maimonides.

  • WRM writes: “With one hand the left gives government greater and greater mandates, making its smooth, swift and efficient operation ever more necessary to social health. With the other, it hobbles and strangles the processes of government in progressively (pun intended) greater amounts of red tape. There is just no way that this mix can produce anything but frustration.”

    Those 2 sentences explain and describe our education system, along with the slowing speed of other “shovel ready” projects.

    There is no “reforming” these processes. There is only breaking them.

    Further, Drum’s advice of simply “spending more money” is already a proven failure. The more you spend, the less gets done, and rent-seekers drain the money needed to accomplish the task.

  • Harry

    Projects are not shovel ready because legislators do not want them to be. Legislatures pass ambiguous legislation authorizing projects because it gives them more political capital. Projects could be completed quickly if complete plans were written into law and legislation funding and approving projects took the following form: “X project (described in detail) is approved and is in full compliance with ‘y’ statutes and ‘z’ agencies shall issue necessary permits by ‘c’ date without hearing, comment, or rule-making. ‘F‘ contractor shall be paid ‘$‘ upon completion of the project (if completed by ‘q’, and shall be paid ‘.iiii%‘ less for each week the project is late without regard for the cause of the delay in completion.) Any judicial challenges regarding commencement or work on this project must be brought by ‘o’ date in ‘n’ court; no other court shall have jurisdiction over any issue arising from ‘x’ project. Parties who bring judicial matters against government agencies regarding this matter must pay the government’s litigation cost (regardless of outcome) and any private contractor’s litigation costs as well (regardless of outcome). Persons bringing litigation that delays this project must pay “$$$$” to contractor for each day the project is delayed regardless of the outcome of the litigation.”

  • Sam L.

    “The Reticulator says:
    July 5, 2012 at 2:45 pm

    If you take away the red tape, you increase the possibilities for corruption, favoratism, and other abuse. Govt can be either inefficient or corrupt. It can also be both, but it can’t be neither.”

    Shirley, you jest. Red tape is an inducement to bribes (Re: Kevin Drum, throw money at the problem…)

    “Relying on the government to do more and more, while also making the government more and more accountable to oversight and review by civil society is a recipe for stagnation and failure.” Seems to describe the blue model perfectly. “Progressive” = reactionary.


    raf says:
    July 6, 2012 at 10:52 am

    Another limiting factor is current capacity. How many companies are there with the kind of machinery used to construct highways? Scheduling subcontractors is a major limitor in project progress. No one can afford to speculatively make the kind of capital investment necessary to provide surge capacity needed for fast response to sudden “stimulus” spending authorization, nor would they likely have the confidence that such spending would continue long enough to provide payback on such investment. The current capacity is sustained by local and state road budgets and may even be jealously guarded by its owners through political “contacts.” Expansion by others might lead to competition, you know.” Why would any company own more machinery or have more employees than they need in these parlous times? Hiring employees these days is fraught with peril.

  • Kurmudge

    I cross the new Mississippi River bridge at least once a day, and was sitting in my office at the university a mile away at the exact time it collapsed.

    This one worked because there was a highly competent governor running the process who was committed to rebuilding and doing it right (the original bridge was an internal highway department design and was a horror of marginal structures work). He was aided by a national recognition that NEPA (Nat’l Env. Policy Act) “impact statements” to replace a prior bridge are not vital in this kind of situation. The Stillwater Bridge (Minnesota to Wisconsin over the St. Croix) just approved in the last year has been held up for 30 years by one enviro lawsuit after another, most pushed by people who don’t live anywhere near the area and would prefer that people didn’t exist to mess up Nature.

  • Ernst Blofeld

    If you’re cynical enough, you can view the hoop-jumping and regulation required to build anything as a form of rent-seeking. What class gets paid to do all the bureaucratic red tape-wrangling? College educated lawyers and bureaucrats and lobbyists and planners, that’s who, and on both sides of the fence. That these are the same people advocating the procedures for which they are paid is awfully convenient.

  • EricW

    Drum doesn’t even figure on the idiocy of looking to the Minnesota case: why are permits even necessary to simply replace a destroyed bridge? Was there a chance that the EPA would require that the bridge remain out indefinitely? If not, why require a permitting process? If there was such a chance, the entire process is idiotic. Getting a replacement bridge built in “only” 14 months by invoking massive federal and state legal and planning resources is not something to be proud of.

  • Kristo Miettinen

    Drum’s solution makes sense if you believe, as Drum seems to believe, that there is just a fixed amount of process that has to occur per project, and that if you throw resources at a project then you can execute that finite amount of work more quickly.

    But in government culture the amount of process depends critically on what each agency or reviewer is saying: “yes (permit)”, or “no (deny)”. The more agencies that say “no” (or “we’ll have to look at that more closely”) the slower the process, because each approver becomes an obstacle to be bought off, and each obstacle is looking at the other ones to make sure it doesn’t settle for too little. The more money you throw at the process, the more there is to bargain for, and the slower it all happens.

    Small cheap projects are either permitted or denied, but either way little to no effort is expended on the decision because the money just isn’t there either way. The more money there is to be negotiated over, the more agencies become interested, and the slower the process of dividing spoils becomes.

    The Minneapolis bridge was an exception not because so much was spent on the resource side coordinating things, but because it would have been political suicide to stand in the way of the obvious and necessary. No waivers were neeeded because all parties were committed to permitting the construction to begin with.

  • Marty

    If you want to know the problem at a deep level, go back to the Drum article and read the comments.

    No one gives a dam about reality and facts any more, everyone just wants to prove their debating points and one-up the “other side.”

    Write that large across the entire government and much of society and the economy, and there’s a very fundamental part of why it’s so hard to get anything done–so many people aren’t interested in doing anything beyond scoring symbolic victories and racking up points.

  • Corlyss

    “Why Nothing Is Shovel Ready Anymore?”

    It’s not 1933 anymore. The Modern Administrative State has made enormous strides in clotting the system in the intervening 80 years.

  • Corlyss

    @ Marty
    “No one gives a dam about reality and facts any more,”

    That certainly is true of the trendy lefty True Believers that subscribe to Mother Jones and no doubt populate its website.

  • willis

    If the answer is to fast track all the projects why are they in need of a fast tracking mechanism to start with?

  • willis

    One more thing, does anyone have a list of the Obama Administration shovel-ready jobs, and their related price tags, that have been submitted for whatever approvals and their status in the approval process?

  • Harun

    These guys are all writers who have never had to work at a real job ever.

    They have never spent a year trying to get import permits for bird seed.

    They have never tried to construct a building, etc.

    Their production is very simple..buy an apple, write, send to editor via email, then its magically published on the internet in seconds.

  • Harun

    Meanwhile, in Canada they are passing laws that actually do streamline these procedures.

    http://www.canadianenergylaw.com/2012/04/articles/regulatory/federal-government-announces-reforms-to-the-federal-environmental-assessment-process/

    Do you think Drum approves?

  • b

    “And government, especially at the state and local level, isn’t exactly rolling in money these days.”

    Except, wait a minute, if you look at local, state, and federal budgets, by and large they are higher than ever.

  • teapartydoc

    Watched China Clipper the other day. Made in 1936 smack dab in the middle of the Great Depression. Lots of “shovel ready” jobs and fast project building then. Oakland Bay bridge and Golden Gate finished within a year of each other. Dam projects that could never be done today. The film itself was about the struggle to build trans-oceanic airline travel, and much of it rested on getting government postage carrying contracts. More Keynesianism. But we know now that it wasn’t working then, either, and that it wasn’t until the 1947 congress reversed much of the new deal and unleashed the power of American manufacturing on a world that had had most of it’s manufacturing base destroyed that the USA recovered. Keynesianism didn’t even work under the best of circumstances. Why should anyone expect it to now?

  • srp

    I hope our host won’t mind my linking to two posts that bear directly on the subject at hand. First, we have the surprising role of historians as potential rent-seekers in the development process:

    https://strategyprofs.wordpress.com/2012/05/10/the-history-tax/

    Then we have the government caught in its own web even as it tries to extricate itself.

    https://strategyprofs.wordpress.com/2012/05/15/excessive-government-paperwork-meta-edition/

  • More Keynesianism. But we know now that it wasn’t working then, either, and that it wasn’t until the 1947 congress reversed much of the new deal and unleashed the power of American manufacturing on a world that had had most of it’s manufacturing

    Once more with feeling. Whatever was working or not, per capita income in this country had by 1941 exceeded the levels of 1929. The labor market remained badly injured. In the intervening years, public sector borrowing had been at its peak during the 1935/36 fiscal year, when it stood at 3.8% of domestic product. Massive public sector borrowing was characteristic not of the Depression but of the 2d World War (during which time the labor market also recovered).

    Perhaps it might occur to Kevin Drum that it is a poor idea to construct institutions and and procedures in such a way as to optimize the income of attorneys. Limit the universe of people with standing to sue and hit up plaintiffs for defendant’s costs in select circumstances.

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