My Sunday Business Washington Post column is out. This morning, we look at repairing the infrastructure of the US, and the impact it could have on the ailing economy.

The print version had the somewhat alarmist (but accurate) headline The public investment we need to make now, for our competitiveness, our jobs and our safety; the online version is the brief but also accurate hedder Repairing infrastructure can help repair economy.

Here’s an excerpt from the column:

“If you have spent much time traveling around the United States, you likely have noticed that our infrastructure looks a bit worn and tired and in need of some refreshing. If you spend much time traveling around the world, however, you will notice that our infrastructure is shockingly bad. So bad that it’s not an exaggeration to declare it a national disgrace, a global embarrassment and a massive security risk.”

The Post also included a scorecard of the US infrastructure from American Society of Civil Engineers –  seeing it laid out like this is very telling:
click for ginormous version of print edition


If we are going to be deficit spending — and that is the US history of the past 40 years — then let’s leave behind an infrastructure that the private sector can build on. That is far more productive than giving trillions of dollars to reckless bankers, tax cuts for the wealthiest Americans, or a war of choice in Iraq.

Instead, we can create a country that equals the best of Germany, Japan and China. The alternative is the sort of Austery that is leading to an entire continental recession in Europe.

The choice is ours . . .


Repairing infrastructure can help repair economy
Barry Ritholtz
Washington Post, October 23 2011

Washington Post Sunday, October 23 2011 page G6 (PDF)

Category: Investing, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

80 Responses to “Repairing Infrastructure Can Help Economy”

  1. MayorQuimby says:

    I support this AFTER we clean out the excess credit which will necessitate TBTF ending. Until then, you would just be incurring even MORE debt to build roads and bridges to nowhere. Infrastructure is great in anticipation of economic growth but of that growth is not forthcoming you wasted all that money plus interest.

    It is 1927/1928. Excess credit is peaking. Defaults on student loans are rising. Prime foreclosures are as well. Until the crash and deflation come, there is no point.


    BR: They are not mutually exclusive, and do not need to be done sequentially.

  2. econimonium says:

    Well done Barry. All this talk of debt instead of jobs (because doing this adds jobs) is premature and foolish. Short term: boost jobs in a way that we get something out of it other than more financial engineering. After that start talking about reducing the deficit.

    And your solution is right on the money.

  3. sihaque says:

    So true, but in these days of party before country, a voice in the wilderness.

  4. Fredex says:

    Failing infrastructure is a symptom of corrupt government.

  5. MayorQuimby says:

    Barry- how would this be financed?


    BR: The full article references a (partial) funding source for each project

  6. YouthInAsia says:

    The American Society of Civil Engineers did the grading? Is it safe to assume we can bump all those grades by 1? This is like going to a barber and asking him if you need a haircut. I’ve been on a lot of roads, bridges, and in airports in the past couple months…including winding twisting mountain roads that were extremely lightly traveled. Never once did I think to myself…damn, our roads and infrastructure is garbage.

    Your anecdote may vary.

  7. Julia Chestnut says:

    The vast majority of our productive infrastructure has been privatized or has long ago been fully depreciated/reached the end of its productive life. We’ve got serious problems, and will face major hurdles competing VERY soon if we don’t retrofit a whole lot of our capacity to be more energy efficient. I agree wholeheartedly with your policy recommendation.

  8. louis says:

    Shelter infrastructure – F

    writedown principal, share future appreciation – Done.

  9. YouthInAsia

    Are you saying you believe the US infrastructure is generally in good shape? That our bridges are not crumbling, that our older most heavily trafficked airports are not hideous? And what of our inability to check port traffic? How many blackouts have we had the past decade? How safe is your drinking water?

    We can disagree about what do to about the problem, but to claim this country’s overall infrastructure is in good shape is simply absurd. You need to get out of the house more.

  10. Init4good says:

    In areas where the population is less dense, and areas where there are less extremes in temperature and rainfall (i.e. NOT the Northeast) the infrastructure may be just OK. Pretty much everywhere else it’s a mess.

  11. SOP says:

    2005 US Army Corp of Engineers – on Peak Oil and Infrastructure

    “We must act now to develop the technology and infrastructure necessary to transition to other energy sources…. The process should begin now.”

    … Basically, the best we found was that starting a worldwide crash program 20 years before the problem hits avoid serious problems. If you started 10 years before-hand, you are in a lot of trouble….

    As it turns out, we no longer have the 10 or 20 years that were two of our scenarios.”



  12. Transor Z says:

    Above-ground electrical grid in areas regularly subject to ice, hurricane, tornado. If the US ever decides to upgrade the power grid, please God let the prime contractors/system designers be European.

    High-speed rail upgrade is crazy expensive in the US because our rail system is so backwards.

    Budgeting for this at this moment would have to be justified under Keynesian principles through deficit spending. The GOP only allows massive deficit spending when they control the White House so that’s not going to happen.

  13. petessake says:

    Completely agree with the premise that our infrastructure needs improvement and updating. It’s ludicrous that a continental nation does not have same day rail coast to coast, etc. A robust national rail system is every bit as much in the public interest as are sea and air ports and highways. But youthinasia’s point is valid that we should never defer to an industry advocate to tell us how bad things are because the last thing we need are more wasteful infrastructure projects like were built by the Corps of Engineers, Bureau of Reclamation, TVA, former soil conservation service, etc. The last thing we need is the Keystone oil pipeline (whether federally or privately built), more “water” projects, etc., or interstate highways with exits every tenth of a mile (I-90 in Chicago) that exacerbate rather than relieve congestion. Do it – but a whole lot smarter and removed from the stench of local, regional, and national politics than occurred in the past.

  14. YouthInAsia says:


    I’m saying what does “good shape” mean? Relative to what? And are we talking in aggregate across the entire nation or are specific localities (likely around the largest cities) worse? And hideous airports? You’d like to force the taxpayer to make the airports…prettier?

    Let’s go right to a report card from the ACSE to see what I mean:

    “Motor vehicle crashes cost the U.S. $230 billion per year–$819 for each resident in medical costs, lost productivity, travel delays, workplace costs, insurance costs, and legal costs.1 These findings are clearly unacceptable”

    clearly unacceptable? The hell? It appears that in any given year, 1/3 to 1/2 of these are caused by…DRUNK DRIVING

    How about this, again from the report card:
    ” According to the Federal Highway Administration, while the percentage of VMT occurring on roads classified as having “good” ride quality has steadily improved, the percentage of “acceptable” ride quality steadily declined from 86.6% in 1995 to 84.9% in 2004, with the lowest acceptable ride quality found among urbanized roads at 72.4%. 2 These figures represent a failure to achieve significant increases in good and acceptable ride quality, particularly in heavily trafficked urbanized areas.”

    Good ride quality has improved? But, oh noes, acceptable is just a staggeringly low 84.9%? This is an atrocity.

    I began school in Raleigh in 1998 and I can tell you that the roads immediately around Triangle have been in a perpetual state of “improvement” since then and I can only imagine how long before 1998 the construction started. Hell, my entire path up I85/I40 from the Charlotte area to Raleigh has seen widening and repaving over that same time span. Again, this is just an anecdote.

    My point is, this whole “our infrastructure sucks” meme has now grown into a monster and I’ve yet to see an honest baseline for what “not sucking” is and what it is really going to cost to get there.


    BR: Here is the data:

    Across the U.S., where 3,538 bridges were closed in 2010

    The average U.S. bridge is 43 years old, while the average useful life is generally about 50 years, according to the highway agency. The agency said in 2006 that it would cost $140 billion to immediately repair every deficient bridge in the U.S. That’s more than three times what the U.S. government receives in taxes annually to pay for road, mass transit and bridge projects.

    The average U.S. bridge seven years from the end of its useful life, and one- fourth of 600,000 crossings classified by regulators as “structurally deficient.”

    Its not just that you are wrong — its that you are gloriously, absurdly, beyond any honest/intelligent debate wrong.

    And for that, you get the FAIL of the month !

  15. brianinla says:

    The ASCE grades are absurd. The water system in the US is a D-? Then what the hell would you grade Mexico, or most of the countries in Africa? Last I checked there isn’t a small city where 80% of the houses don’t have running water. The US is not just one tick away from an F grade. Just because the tap water in NYC doesn’t taste like Evian doesn’t mean we should redo the entire plumbing system.

    Same thing with a national park mountain road. It doesn’t have to have a pristine surface. Sure it’s nice, especially for biking, but resurfacing it won’t enhance productivity enough to recoup the costs.

    This is the equivalent of a Senator appropriating money towards 10 stealth bombers the Pentagon didn’t ask for. It creates jobs, it creates debt, and he and his friends get to skim off the top of every spending bill. I believe even if we spend $5T over the next 5 years solely going to infrastructure projects the ASCE will still find enough criticism to keep the current grades.


    BR: You think that 3rd world countries are the best comparison for arguing the US infrastructure is okay? Really?

  16. overanout says:

    YouthInAsia has a good point regarding who is doing the grading and it seems anytime the economy needs a push the cry goes up to spend on roadways and airports . Our national highway system has been built out and billions are being spent to maintain the existing structures so additional maintenance dollar are not going to generate the economic impact that creating the roadways, bridges and airports had in prior years. Upgrading the drinking water and electrical networks are critical and should always be a priority but that needs some thought at least in States such as Calif that has over built tract housing far away from employment centers as much of any new money would be spent by counties wanting to continue this trend by spending on infrastructure for new larger housing tracts far from employment centers requiring expensive commuter solutions, clearly not a good long term plan.


    BR: Some of you are arguing that unless you are an expert, you cannot comment on these things. And now you are arguing that the experts have an interest in the outcome.

    Not every professional trade group is the National Association of Realtors.

  17. leeward says:

    completely agree but how do you get past the inevitable arguments about how to get a good result for the investment? Both unions and special interests will be argued about all the way through the process. How do you build a big bridge (or a large water treatment plant) these days and do it both efficiently & effectively? We ok’d $800 billion to TARP in an (almost) overnight fit of fear but the likelihood of us throwing around big numbers easily for anyone is disappearing, especially if BofA’s downgrade prediction is correct.

  18. carleric says:

    Financing an infrastructure upgrade where needed and not supported by local financing for local upgrades can and should be done by following Ron Pauls’ prescription to eliminate needless, overbearing federal bureaucracies. Will it be done? Can you spell “sacred cows”? What exactly is it that the Departments of Education, DEA and energy deparments do anyway?

  19. dead hobo says:

    I recently purchased and installed a large natural gas powered Generac backup generator for my home. The electrical power grid in my area is in poor quality because the power company servicing my area has allowed it to become dilapidated and unreliable. It’s cheaper for them to patch up outages when they occur (reasonably often) than upgrade the infrastructure. This is a problem that frequently affects tens of thousands of neighbors at a time, not just my neighborhood. It’s an economic decision on their part to let the electrical grid decay and nobody can make them do otherwise. Hence my whole house backup generator. It cost several thousand dollars.

    While anyone with eyes can see the world is wearing out and maintenance is not a priority, it’s unrealistic to think anyone will actually do anything about it until it is a 110% necessity of an immediate nature. Then the challenge becomes who to stick with the bill, just as the power company stuck me with the bill for their neglect.

    Considering both parties are corrupt and inept, expecting government to do it is unrealistic and not worth wasting time on unless you enjoy fretting about things you can’t do anything about.

  20. Tobias Funke says:

    Queue all the “Civil Engineers did the grading, so it must be biased” comments. Until the grading is done by accountants, doctors or maybe auto mechanics – some people are going to assume that the need to address deteriorating infrastructure is just a fabricated make work program for engineers and builders. But of course if the grading is done by anyone other than builders or engineers, I don’t know what the grades would be based on, but it won’t be technical factors.

    Strangely this same reaction never seems to be so strong when it comes to:

    Defence contractors advocating for trillion dollar weapons systems, complete with national TV ad programs and billion dollar political lobbying machines – but yeah, they’re just doing it to help America and protect my kids right?

    Financial professionals recommending that the best way to build wealth is to put as much money into the equities markets as soon as possible, anything less would be negligent. So they advertise, get congress to change laws so to make funneling money to Wall Street the easiest thing to do with spare cash. But they only do this because they are trying to help America, it’s not about them, they are just trying to serve mankind (and grabbing a couple million annually in order to oversee the deterioration of people’s savings is totally reasonable, I am sure we can all agree on that – it would not be fair to tie any of these people’s compensation to their results).

    Of all the various stimulus spending choices that the U.S. has made to stimulate a slow economy – bailouts for banks, electronic medical records, extending unemployment benefits – it seems strange that there is so much resistance to spending on infrastructure when it will:

    create permanent assets that EVERYONE can use, every day
    create assets that improve quality of life, safety and the competitiveness of the WHOLE economy
    create or repair assets that will last for 50+ years
    create NEW jobs, not just maintain existing jobs
    cover the cost of deferred maintenance for the past 25-30 years

    I wonder how much of the resistance to infrastructure spending has to do with the fact that it is unlikely to create any billionaires or monopolies. Unlike bank bailouts and defense spending, the money is not going to funnel through the hands of a select 3-5 companies; it’s going to be paid out to builders, engineers and scientists working for hundreds of very large and very small companies, almost all of them making less than $150,000 per year. The vast majority of the firms doing the work will not be publicly traded, NYSE listed firms, they’ll just be local businesses of 2-2,000 people. It’s not sexy and there won’t be any celebrities. But it will address a very real need that is absolutely not going to go away with wishful thinking.

  21. RW says:

    We’ve wasted enough wealth fattening mega-corporations, oligarchs, the war machine and saving other countries by destroying them. It is time, long past time, to build our own country but, pace Transor Z, it didn’t happen when Republicans controlled the White House and it won’t happen now that they don’t; if one thing has become crystal clear over the past few decades it is that excessive borrowing and spending has never been a barrier, it is just that spending it on the common good is not a conservative value.

  22. Doofus says:

    Infrastructure investment is one of the most powerful long-term stimulants for economic growth. A recent report by RBS, referenced in this MarketWatch article, indicates that “infrastructure is the lifeblood of an economy”, and that

    “Countries which invest in infrastructure benefit from faster and safer transportation of goods, smooth functioning of industrial production, improved communication and business activity and more efficient allocation of labor” — all leading to enhanced productivity and competitiveness as well as higher consumption and economic growth, it said.

  23. MayorQuimby says:

    Amazing. You all think it is still the 20th century. Just pile on more debt and…VOILA! Instant prosperity!

    As if it were so simple.

    Fund this with debt and we will just go broke that much sooner. Look up empty cities in Spain or china on YouTube and see what happens when you build bridges and roads to nowhere.

    First we write off debts, then we set the stage for more growth.

  24. RW says:

    I had a similar experience to Dead Hobo: lived for some years with regional or neighborhood power outages; had a generator and a supply of fuel, water and freeze-dried too.

    In my case it was a rather rural area where electrification (and phone) didn’t really arrive for the masses until the Great Depression and only then because the government paid to build it.

    Like most other regions in the USA, a quasi-public company has run and maintained it since and I was told by older neighbors that worked fine for some time; system was fairly new and regulations saw to it that there was enough revenue to maintain, expand and profit.

    Time, decay and a few decades of privatization altered that situation considerably. The company was now for-profit and had to compete for power with other companies who lacked sufficient generation capacity. Shrinking profit margins and reduced regulation dictated the rest.

    By the time we moved away the system was in serious decline and power outages were increasingly severe.

    Don’t think government was the central problem there …except to the degree it failed to protect its citizens, and yes the corporation it allowed to be created and defined under its laws, from the consequences of a forseeable market failure.

  25. mathman says:

    Looks like we better repair some of our “agencies” too:

    RW: agreed, and by such Obama is a Republican (especially in light of his new free trade “deals”).

    First and foremost in line for upgrade or renewal should be our electrical grid and the most critical bridges and roads, with water treatment plants thrown in (again, on a triage basis). We need everyone to be invested in this though – not just Bechtel and Halliburton. This has to be done from the most local to the cities to the state and nationally – everyone (contractors, designers, planners, architects, physicists, electrical engineers, site labor, support staff, paper pushers and on and on) should be involved if its at all possible. That would get tax money flowing again, but it MUST STOP being wasted on things like corporate welfare for the gdmf oil companies and bailouts for mismanaged fu banks and hedge funds. Spend it on schools and after school programs, hospitals, education, social programs and the like to clean up neighborhoods and get the locals involved – they have to be included or it’s just more business as usual. EVERYONE has to benefit and everyone has to have a personal stake in it – (i’m thinking of how JFK inspired us during the space race years with his vision of how it was GOING TO BE – and we did it!) – or it won’t work. But we also want to take care of those who CAN’T participate too – the incarcerated, the elderly, the sick and dying, broken veterans of our stupid wars, the mentally impaired, the disabled (although many of them can participate – like Stephen Hawking – i’m referring to those who can’t due to their disability/disease/condition).

    Things are going to have to change radically to go on. i’m afraid that the choice has been made NOT to do this (ie. “Sonny, yer on yer own – Rev. Johnson in Blazing Saddles”) because i see no leadership and no investment in anything but the corporations agenda and the military industrial machine.

  26. b_thunder says:

    The government-paid infrastructure update has several CRITICAL problems

    1) Who decides on cost, picks contractors, and who will monitor the cost overruns?

    2) Who will decide what gets built? These guys? http://en.wikipedia.org/wiki/Gosplan ??? I don’t have to tell you how well GOSPLAN managed things…

    3) Who will check quality of the work done? They’ve expanded my local road from 2 to 4 lanes over 2009-2010. They’ve left it a lot more bumpier than it was to start with. And just one year later you basically need a RangeRover to go over the potholes and over bumps. The whole road needs to be rebuilt again! And it took them 15 months to build 150 yards of road surface. With the amount of idle machinery that i saw there, in China they would have built 150 miles by the time “our union guys” built 150 years… that need to be rebuilt 12 months later. Oh, and over that 15 months of construction, I hardly ever saw anyone working there. Especially between 8Am and 4PM. Most work was done between 4 and 7pm, during PM rush hour. But I’ll get back to the overtime issue later.

    4) “Shovel-ready” or “backdoor-bailout” – for over 3 years the Gov’t and the Fed have been pursuing the “backdoor bailout”policy for big banks. What will prevent Gov’t from doing the same for their friendly unions? Or friendly companies like Caterpillar?

    5) Why is it so expensive to build something here? With all that machinery and tools, it seems to me that even after adjusting for inflation it cost many times more to build something now than it used to be 50-60 years ago. Perhaps because everyone on those projects still makes well into 6 figures (with overtime which is totally fake – they don’t do sh*t during day so that they can add overtime that’s compensated @ 1.5X base pay.) The Fed will print that money, buy the Treasury-issued paper, and the construction industry will get paid.
    In the times of FALLING median wage, int he time when even official unemployment U3 is 9% and U6 is almost 17%, there’s no reason to pay them 6 figures. Until that time when salaries can reflect the market value of the skills of the construction workers (ie HS grads who are not physically handicapped) the infrastructure thing will be waaayyy too costly.

  27. judabomber says:


    Argee debt is a problem but should not be the focus right now. BR is making a great argument for something that, IMHO, should have been put in the stimulus bill in 2009.

    You must be a boomer with a job, worried about your benefits going away, no?

    I would agree with you if only the U.S. bond market was telling us we have a debt problem:


    When Uncle Sam can borrow for 30 yrs at 100 basis points over inflation, I would say the message is infrastructure (and by extension jobs) first, debt problem second…

  28. Sechel says:

    Agree that infrastructure spending would be far more effective than a Fed driven policy response, but not all spending is the same. Some projects have a higher ROI than others, and then you have those projects which are pure pork barrel. The last stimulus was really the Democrats saying, let’s spend money on all the things we weren’t allowed to for the last twenty years. With politicians being politicians and always spending with an eye toward the next election and rewarding patrons how does one enforce sensible spending?

  29. mathman says:

    b thunder:
    i agree with you that the way things are currently done is shot through with corruption of every kind. i can tell you stories about some the ironworkers i know and what they say is going on.

    i also agree that it will be monumentally expensive doing it this way, in fact any way you slice it the price will be comparable to military spending (hey, there’s a thought).

    It’s come down to the social fact though that you’re either included and survive (not thrive, mind you – that’s for the “special people”) or you aren’t and your world rapidly collapses. Do this to enough people and suddenly gangs pop up which are WAY larger than the police force – in fact they’re the majority population in a given area (and they’re all armed).

    Civilization is hanging by a thin veneer that’s already fraying. We don’t have much time. The next election isn’t going to help (make it a game show – pick your Republican!) and a sense of urgency is paramount to motivating people to things like this OWS movement. To them its all a bunch of “common”
    problems that we have to get done; so we put our heads together, everyone’s ideas welcome – we pick the best one by some kind of dialog and debate, compare and contrast without animosity, just insight and finding solutions – and then set it up and do it (volunteer labor that doesn’t get paid, all the materials are puchased with common funds or gotten by donations from like-minded businesspeople who are investing in their own future because its all for a common cause. Remember, this is all LOCAL.) i hope they have the time and succeed before chaos and anarchy arrives.

  30. JimRino says:

    Hong Kong is buying Electric Ultra-Capacitor Buses.
    It’s a shock to watch “foreign” movies anymore, London, Paris, etc… with their incredible Infrastructure, while Ours Rots.

    There’s a correlation here, When the Republican Party Rots though POOR leadership by the RICH then America ROTS.

    Are We Not Tired of Republicans Leading In REVERSE?

  31. hankest says:

    Even if you don’t believe doing infrastructure work will help fire up the economy, now is still the best time to do it.

    1) It will be cheaper for the federal gov’t or a small municipality to finance due to low interest rates.

    2) Due to the slowdown, the bids coming in response to RFPs will be much more competitive.

    3) If, like Mayor Quimbly, you want to wait until the economy fires up before doing this work, you’ll not only have to pay higher interest rates for financing, and receive higher bids, but you’ll also be by competing with private entities finally looking to hire contractors. Costing both public and private entities more $.

    Work has to be done. People need jobs. Now is probably as cheap as it’s going to get to finance and contract. Sounds like one of those “no brainers” you’re always hearing about.

  32. louis says:

    We have the Brown and Root, we just need the LBJ to get it done.

  33. Tobias Funke says:

    b-thunder –

    1) Generally it is a low bid business, the Contractor with the cheapest price gets picked. There are pluses and minuses to that (most notably that the lowest price may not come from the most qualified or compentent contractor), but it’s a pretty transparent process. It is a whole lot more transparent than most of the things funded by the federal government.

    3) Whoever the contracting agency is should be checking work quality. Work quality in construction is not and never will be perfect. I don’t think work quality in any industry is perfect. Sometimes people go to the hospital for surgery and the doctor operates on the wrong limb/kidney/lung – but we still send people to the hospital in spite of the mistakes. However, normally the person who created the error is held accountable (legally or financially). One thing that makes construction unique, especially road construction, is that thousands of critics pass through the work site everyday and see things they don’t like or think are stupid – and then infer incompetence because they see something that they disagree with. I would bet that if I could walk through your workplace a few days in a row I could find some wasteful effort and dysfunctional behavior.

    4) The way the federal government typically funds infrastructure is to take a big chunk of money, divide it between states, cities and counties – and let the locals pick the specifics of the project and the contractors. So the unions that everyone is so paranoid about have a lot of people they need to reach in order to corrupt the process. Compare this to Lloyd Blankfein calling the Treasury secretary at home and suggesting that the best thing for America is to shovel a couple hundred billion to Goldman and a few other firms; or Boeing calling the Secretary of Defense and suggesting that they should re-bid the multi-billion dollar fueling tanker project, in the interest of America of course. if you are really concerned about special interests there is a whole lot of low hanging fruit you can grab before you get to the influence of the local carpenters union.

    5) Permits, environmental compliance, worker safety, public involvement (not in my backyard, and community voting on how to build things). Everyone wanted to have a say in what we build and how we build it…and they got it! We don’t build things to meet the basic need for the lowest possible cost anymore. We build things that reflect the community priorities, concerns and interests. That’s an expensive process. Your claims about the massive wage fraud perpetrated by lowly high school graduates reflect that you have no idea what you are talking about. Most construction workers I know work far harder and leave much more lasting improvement behind them than 95% of the college educated office workers I work with. There are plenty of sales reps in the world with english degrees who make $150,000 but create no actual value in our economy, unless you consider calling leads and filling out sales orders and running the CRM “value”.

  34. whskyjack says:

    “With the amount of idle machinery that i saw there, in China they would have built 150 miles by the time “our union guys” built 150 years… that need to be rebuilt 12 months later”

    Wanna bet that it wasn’t done by union workers? Companies that do that kind of shoddy gone bankrupt rarely are.


  35. arbitrage789 says:

    Those who are sincere in their assertion that infrastructure spending would be beneficial for the country should be willing to accept suspension of Davis-Bacon wages, and just give the work to the lowest bidder (even if they hire some illegals).

    OTOH, those who are merely shills for the labor unions will be unwilling to even discuss the issue.

    In addition, we’ve got to put the environmentalists on ice. We don’t need any 5-year studies to assess the environmental impact of a new bridge or highway.

    Last, I would like to see Obama make public a list of proposed infrastructure projects before… and I repeat… BEFORE the bill is voted on.

    Is it Obama’s money, or is it the people’s money?

  36. AtlasRocked says:

    The folks bragging about Europe being so well done are neglecting to mention Europe’s per capita debt is far worse than ours. Sort by per capita : http://en.wikipedia.org/wiki/External_debt_by_country .

    These governments, like the US, likely don’t count future obligations to pensions as real obligations either. so they, like the bankers, are hiding true costs of all this public works and public transportation, and benefits, behind a wall of obfuscation.

    Come on Barry – advocate for fiscal cleanup at **all** levels first, and stop trumpeting that these other governments are doing something wonderful that we lack here. All they are all doing, all 20 of the world’s top 20 western democracies, is playing shell games with the true costs of these benefits and public works projects. If you want all the goodies, jack the tax rates by 40%, that’s what it takes to pay for them, that’s how far we are behind.

    Then watch what happens to the GDP equation when you plug that in, and you’ll find out why Obama/Pelosi re-voted for the Bush tax rates.


    BR: Most of you guys seem to be partisan deficit peacocks.

    Where were you LAST presidency? Trillion dollar tax cuts, plus trillions of dollars for a war of choice in Iraq, and a new trillion entitlement program.

  37. bishophicks says:

    We’ve been hearing for decades that these kinds of projects need to be done, but that it’s just too expensive. The argument I use these days is “this is what it looks like when it’s cheap.” Weak economy, low to negative real interest rates, high unemployment, unused capacity, low demand, idle cash. You could hire millions of people to do useful work on projects with long term economic benefits without the problems you would create if the economy was growing at 5% and had a 6% unemployment rate.

    These things need to done if we want our economy to function efficiently and be competitive with the rest of the world. I’ve been through towns that have converted paved roads to gravel because they didn’t have the funds to repair and maintain the roads properly. We’ve got an economy with the potential to output over 16 trillion per year in goods and services, corporations sitting on 1.5 trillion in cash and a world that is offering to loan us money almost interest free but paved roads are becoming “too expensive”? Are you serious? Last time I checked my calendar it was the 21st century, not the 19th.

    If we’re going to continue to compete in the world economy we need to be able to move freight, cargo, people, electricity and information as efficiently as possible. That means well maintained roads and bridges, upgraded freight and cargo systems, a 21st century power grid, energy efficient buildings and a bleeding edge telecommunications system.

    Build it now. This is what cheap looks like.

  38. arbitrage789 says:

    Tobias Funke @ 2:07

    I don’t dispute your proposition that Lloyd Blankfein called the Treasury secretary at home to suggest shoveling a couple hundred billion to Goldman and others.

    But that doesn’t mean that we should be trusting Obama now.

    As you say, the way that it might work is to “take a big chunk of money, divide it between states, cities and counties…”

    I would say, O.K., let’s find out, SEVERAL WEEKS BEFORE the bill is voted on, which cities and counties will be getting money, and how much.

    If all the money is going to the “blue states”, the taxpayers should know that up front.

  39. wunsacon says:

    Why rebuild/improve infrastructure used by modes of transportation that we import by shoveling so much money out the door? Could we please attack the trade deficit, to reach a balance in trade?

    As for funding it, raise fossil fuel taxes by $1/gallon and (because that probably won’t cover it) print whatever extra money we need. Don’t “borrow” it into existence. Print it. If bondholders think they can find safer places for their money in this environment, let them try.

  40. johnnywalker says:

    Out here in the wild west, downing of overhead power lines by Santa Ana winds is a major cause of wildfires. I’m not saying that under-grounding the lines would prevent all wildfires, since there are other causes, and the native vegetation has a long evolutionary history of fire adaptation. However, under-grounding of the lines, while initially expensive, would help, and probably save money in the long run.

    Anecdotes are unreliable, but worth stating. My wife and I have travelled extensively in Europe in the last few years and it’s always shocking to come home to crowded and obsolete airports and poorly maintained roads. We were especially surprised at the excellent quality of the roads in Spain, which was well into the current financial difficulty when we visited.

  41. Molesworth says:

    Bravo Barry Ritholtz.
    In 2007 I was scheduled to fly to eastern Mongolia. USA to China by USA airline. China to UB and then east by 2 separate Mongolian airlines. I was frightened about what Mongolian airlines might be like. Sheesh Louise, they were both nicer than any USA airline I’ve been on in ages. Mongolia!
    Really drove home what’s happened. Does anyone wander through JFK airport and say, my what a great place USA is? It’s a dump.
    Driving through LA this week was a testament to shoddy bumpy crowded roads that inhibit productivity. We need real roads and real broadband to get this country back on track.

    Plus we need to teach our kids (and genXers) the meaning of compounding and how that backfires when they don’t pay off their credit card every month. Some say consumers over-leveraged bec they saw USA govt on a spending spree.
    From my vantage point, I saw folks who got endless credit card offers in the mail and thought that they really did qualify and that they really could afford it. No one taught them that paying the minimum was like living in a company town and spending at the company store.

    I agree we need to end TBTF.
    I agree we need tax reform: lower tax rates-eliminate loopholes.
    But do it all. Educate, reform & rebuild = Growth.

  42. the pearl says:

    A nationwide “Big Dig”. That should go well.

  43. wunsacon says:

    We import ~70% of our oil. The dependence of our transportation system on our MIC-guarded supply lines and friend-today-foe-tomorrow colony governors conflicts with so much of our publicly expressed values that it’s ridiculous. And I never hear anyone disagree with the idea that we should seek energy independence. (Anyone?) If so, then why don’t we do something about that first instead of bypassing it and favoring the (less popular(?) though still worth considering) “rebuild roads/bridges” idea, where government officials will hand out huge contracts to their owners? (Possibly a nationwide “Big Dig”, as the pearl describes it.) Can’t we pursue the goals more people share *first*?

  44. Tobias Funke says:

    @ The Pearl –

    Valid concern, but that’s not what is being proposed at all. The Big Dig was a massively complex and costly project, that is quite different than a program of small repair and replacement projects spread across the entire U.S. Replacing 100 bridges spread across the United States is in no way analagous to a project like the Big Dig. Even building a national passenger rail system is a completely different process

    @ arbitrage789 2:54 –

    Infrastructure funding has always included lists of funded projects, where the money goes has never been hard to keep track of. Every member of Congress and governor asks for their piece of the pie (even Sarah Palin did it despite vigorous denial after the fact). I don’t recall ever seeing an infrastructure bill that only funded projects in states with similar political views to the current president – Republican or Democrat.

  45. Neildsmith says:

    With all due respect… our infrastructure is just fine. Look, spend the money if you think putting a bunch of unemployed construction workers to work building stuff we don’t need is a good idea, but please let’s not pretend that any of this is going to do any good.

    The sad fact is this: Whatever the good intention… the results of our business and political policies over the last 40 years has been an unmitigated disaster for uneducated and financially illiterate Americans. Free trade wasn’t free. Productivity improvements led to job losses not shared wealth. The rising tide drowned the middle class. Americans gave up their unions and their pensions in favor of creative destruction and got far more destruction than creation. They trusted big business (and deregulation) to take good care of them and instead they got the finger and a kick in the head.

    We’ve been had. Watcha gonna do about it? Nothing. Americans don’t have the guts to do what they need to do. Please, Mr. Ritholz, stop pretending this silliness will help. It won’t… it just slows the decline and delays the inevitable.

    It must get worse to get better.


    BR: I wonder how regional this is? Maybe its the older cities, or large urban areas, etc?

    You cannot have seriously traveled the US or the world and come away with any conclusion that much of the USA is in damned poor condition.

    Seriously, what towns do you folks live in?

  46. b_thunder says:

    Dear Tobias Funke,

    We do not live in the perfect world, so if/when Lloyd were to call the Treasury Secretary, they both need to be locked up with Bernie Madoff. Instead, it’s the Treasury Secretary who used to make dozens of calls to Lloyd during the 2008 crisis. So, let’s fix this the multi-trillion dollar corruption before creating new one – i.e. the government is now basically owned by finance, insurance, pharma, lawyer and defense lobbies. Put them out of business, and I bet you $100 to $1 that a) we will have enough $$ to fund infrastructure , and b) the *real* median wage will go back up!

    3) Whoever the contracting agency is should be checking work quality – as if they have a clue. It’s not their money, so even if they were more competent it wouldn’t matter. The folks who awarded my old IT contract to a lowest-bid chop-shot had no effing clue about IT. and 6 months later the “winning bidder” asked for 25% more due to total f*&^-up, and got it. And 1 year later – another 25%. In the end it cost gov’t over 30% more than what we were asking, and the work didn’t get done b/c most qualified employees quit when they were facing 20-40% paycut due to lowest-bid nature of the contract. Yes, the greedy pay TWICE!

    “Most construction workers I know work far harder and leave much more lasting improvement behind them than 95% of the college educated office workers I work with.”

    Ok, the avg. NY city subway electrician who does maintenance int he tunnels arrives at the “central office” around :8:30-9am.
    He changes clothes and gets orders by 9:30
    He takes subway (now off-peak schedule) to get to his destination – 10:30 to 11am he’s there.
    12 to 1 (or more likely to 1:30) is lunch
    around 3pm they take train back to the “central”
    4:30-5 – change of clothes, shower, “clock-out”
    total time working: 3 to 4 hours per day.
    salary: $50 to 70K (as of 10 years ago) plus awesome benefits.
    requirements: HS + pass city exam

    we have plenty of unemployed folks. Let’s employ them on PUBLICLY FUNDED infrastructure jobs, and lets not pay them $100K. We don’t have to.

  47. pesherb says:

    Barry, I can’t agree more in particular on the broadband. It is ironic to see how countries around the world – especially in South-East Asia – leverage the made-in-the-USA invention. For quite some time Japan, China and Korea all have governmentally designed, approved and sponsored programs to develop smart nations where all things are connected and communicate in real time. While the US interstate highway system is a good example, governments of those countries were quick to realize the imperative of having information highways to advance their economies. In the US other than the DoD nobody at the federal level seems to be interested or involved that much. And yes, no market participant other than the Uncle Sam himself will be able to take on that sort of a challenge. The smart infrastructure can only and must be implemented by the government. Keep in mind so that if we start now the US at the national level could well be somewhere between 10 to 15 years behind our oriental neighbors.
    Now is the question – what we the people can do to make the necessary change happen? Thanks.

  48. the pearl says:

    @ Tobias Funke,

    Barry mentioned $2.2 Trillion. That will be a coast to coast money grab with politicians dangling big juicy sides of meat above tigers with all different stripes. This would be the greatest political money grab in the history of the country. It will make the bank bailouts and the corruption involved there look like a girl scout bake sale. This all sounds intelligent and practical in the pages of an editorial, but when it comes to implementation..good luck. You’ll be close to $4 Trillion and plenty of useless projects by the time this all ends, if it ever does.

  49. AtlasRocked says:

    BR: Yes the Bush presidency was a disaster, I quit the Republican party and joined the Libertarian party.

    I was actually trying to spark a discussion on how to fix things moving forward, not yet another “blame Bush” response. Partisan indeed.

    Moving forward, if the federal government is not even following GAPP standards in reporting fiscal data, then any amount of spending you suggest cannot be clearly weighed in value to what is being spent already, right? Why would you want to advocate for us to work with cloudy, deceptive, non-standard bookkeeping in the US govt? It’s like working with a known, faulty checkbook. If social security is an obligation, it should go on the debt balance sheet, bro, that’s standard accounting practice right?

    Banks? Mark to market now.

    Defaults: Let them roll through.

    Japan has shown us what happens when defaults aren’t allowed: Permanent malaise.

    Let’s get back to the fundamentals of good bookkeeping first, then figure out how to fix it all.


    BR: Good for you — I wish more GOP members wised up and did the same.

    I’ve identified myself as a “Jacob Javitz Republican,” fiscally conservative, socially progressive — a group that no longer is in existence, and would be shunned by the present loons claiming to be Republicans.

  50. drewburn says:

    I’m strongly with Barry. We need not just to repair infrastructure, but add it. I would also note that Barry missed some key bits, though he touched on these. For example: the Great Lakes and Mississippi systems of locks transport billions (it dwarfs individual freeways or railroads.) Oh, and that’s another thing: The railroad system depended on the government for eminent domain. I would also note that outside our own country, American money created massive productivity gains with infrastructure. For example, the Panama Canal (enormous in inflation adjusted dollars.) Go back far enough, the Eire Canal, etc.

    And nowadays? Try building a nuclear power plant without federal loans guarantees. Won’t happen. Private enterprise will not shoulder the risk. And in truth, relative to someone’s comment, very, very little of our infrastructure is in private hands. Sure, a few tollroads and airports have been privatized. That’s small potatoes.

  51. HungryHoneyBadger says:

    Where DOES all the toll money and airport land fee money go?

    I see a lot of regional differences….

    Northeast infrastructure blows….

    Most other places it’s OK.

  52. MrBean says:

    Mr Ritholtz, you appeal to authority, the civil engineers say it is so, there fore it must be so. That is a rather poor argument. Yes they are not the Nar, but that does not mean they are without bias. I was a professional Class A driver, pulled flat beds over the 48. I did heavy haul, oversize, and everything else a flat bed could carry. I will back my expertise to yours any day of the week. I have run close to a million miles, you drive that much? The roads are not in that bad a shape. Yes, I-80 from the border of Nev to Sacrament is horrid, but to SF, it is a good road. I-5 is in very good shape. I-90 into NYC is very bad but not as bad as that section of I-80 I mention. I-95 has its good and bad sections. And I have driven enough US highways to know what is good and bad. Unless you drive commercially, you cannot know the general or specific condition of all the roads across America.

    Will pouring billions and trillions into infrastructure turn around the economy? What are you smoking? The few people that do become employed are not the workers from BofA that will be laid off. And they won’t be the IT staff or the accountants or the clerks or the many millions of others who are unemployed. Can you operate a back-hoe, a grader, a dozer? Think you can drive an 18 wheeler with a half million combine and an 14 foot wide load down the road? Please, don’t insult my intelligence. Infrastructure repair only benefits the contractors, the unions, and the politicians. Prevailing wage scales will be paid, that means all you now union employees will not get a job. Got to join that union and they control the hiring.

    But more than that, the cost buys us very little. On the other hand I see that no one seems to know that the SF/Oakland Bay bridge expansion – they constructed a second bridge, was contracted out to the Chinese. Oh, you didn’t read about that? The constructed the sections of the bridge, floated them over the Pacific to SF, and then hoisted them in position. Mostly Chinese labor. Whoops, didn’t see that. You want to see more people leave the unemployemnt ranks, then take away the extensions of unemployment insurance. Allow the wage structure to sink to the levels world wide, because that is who we are competing with. The good times are over, there are no more high wage jobs that require little education or training. That is the new world order and to pretend differently is to indulge in fantasy.

    More than that, there is one iron law of the universe that cannot be ignored. Debt must be either repaid or repudiated. There is not alternative, no third way, no cheating your way out of it, it will be obeyed. We have kicked the can about as far as we have road and unless we build a few more miles of it, we are at the end. And more to the point, much of that infrastructure use to be private untiul the politicains were convinced that by making it all public there would be this great revenue stream. How many sports arenas pay the public a profit? Any guesses? Yet it is considered good business by a city or county to subsidise a sports team because it supposedly brings money into the community. Really? Where are the studies that prove these are really cash cows for government? Cuo buno? The owners and players. Who loses? The public.

    This idea has been trotted out and disproved many times before. Stop the madness, stop the idea that public works will solve our problems. One cannot buy one’s way out of a depression by borrowing money.

  53. Futuredome says:

    lol at those whining over “corruption”. Capitalism is ALL about corruption. The nature of market liberalism and rule of the capital owner amazes me. What for the love of Odin, is the fascination with those people you have? They are parasitical and devalue nations.

    By weakening and not expanding our infrastructure, we are lowering our GDP and creating more long term debt. You want to pay down debt, you spend ‘debt” on infrastructure.

    Yet, it is so corrupt, the environmentalists are horrible. Wah wah and more wah. Destroying the national government and setting the conditions for a permanantly smaller economy and enslaved laborers doesn’t work people. It creates the conditions for conservatism and socialism to merge like it did in Germany. The great power always takes the biggest fall.

  54. Long term says:

    BR, terrific closing. (and article)

  55. Neildsmith says:

    Mr. Ritholz wrote in reply to a post above: “You cannot have seriously traveled the US or the world and come away with any conclusion that much of the USA is in damned poor condition.”

    I have lived in the midwest nearly all my life save for a few years in FL and DC. Pretty airports don’t impress me. Brussels and Hamburg airports (my most recent world travel) are dives too.

    Beyond that minor point… the progressive instinct to try something… anything… to alleve the suffering is, at this point, counter-productive. Barack Obama winning the next election – or not – is irrelevant. Democratic contol of congress in 2013 is also irrelevant. They won’t do a darn thing their wealthy friends oppose. It must get worse to get better. Not enough are yet mobilized to make a difference.

    If you think political posturing is necessary so you can assign blame to conservatives, then fine. Posture away! But more bailouts and free money to those who are lost only pacify those suffering in the short term without providing real hope for the long term. The progressive social agenda has, sadly, become an excuse to perpetuate the status quo: decline and inequality. It’s time for tough love so that your kids have a chance at some sort of decent life.


    BR: I was just in Brussels, and the airport was fine. Haven’t been in Hamburg recently, but I was in Berlin — another fine (if small) airport). And do we want to discuss the roads in Germany . . . ?

  56. Plangineer says:

    Barry- Thank you for your voice of reason. As a civil engineer who has worked on local infrastructure report cards, I can honestly say that these are comprehensive, unbiased evaluations based on existing data sources. If you’re really interested, please read the full reports. With regard to the discussion of benchmarks and anecdotal evidence, I would like to remind everyone that we are still perceived as the superpower of the wold; to compare our infrastructure to third-world countries is absurd. Let’s not consider comparisons to Bolivia, Honduras, Tanzania or even Spain but rather Berlin, Hong Kong, Tokyo and Shanghai. Our infrastructure after all, effects are quality of life and global competitiveness. We have an expectation in this country for clean, safe, PLENTIFUL and affordable drinking water when you turn on the faucet, 24/7 uninterrupted electricity and safe roads and bridges to go anywhere we want to go. Yet why is it that the fastest high speed rail networks are in Europe and Asia? Why are the fastest cell phone networks likewise in Asia? As an engineer, if I want to work on the design of the tallest building in the world, I need to go to Asia or the Middle East. We are falling behind the rest of the world in many aspects with regard to our infrastructure.

    The American Society of Civil Engineers is a 503C and we have debated amongst our profession whether to change this so we can have a stronger lobbying effort. The consensus has been that we should remain a 503C and serve as trusted, professional, unbiased technical advisers rather than just another lobbying interest. Unfortunately, we must sometimes contend with politician’s pork-barrel projects like bridges to nowhere. But as engineers, we know that the maintenance and preservation of our infrastructure is truly in need. The solution is simple: Put infrastructure spending projects back into the hands of engineers at the State and local levels and update the antiquated funding sources to a more realistic user fee. We haven’t had an increase to the federal gas tax since 1993 yet people are driving more fuel efficient vehicles further distances. Our purchasing power has decreased due to inflation and higher material costs while our infrastructure needs have greatly increased. Look at what the Chinese are doing with regard to copper, steel and other resources. Our infrastructure, like the baby-boomers who built much of it, is aging and we’re going to need to find a way to generate additional revenue to take care of it all. The condition of our infrastructure and our elderly are two important considerations when evaluating standards of living and global competitiveness. We mustn’t allow complacency and political idiocy to cause us to fall further behind.

  57. Neildsmith says:

    “I can honestly say that these are comprehensive, unbiased evaluations based on existing data sources.”

    My cynicism has left me unable to take this comment seriously. Are we really supposed to believe that the “American Society of Civil Engineers” is honestly concerned about anything but the profits of construction companies? I believe the financiers call this “talking your book”.

    I’m so sad to admit that the greed and corruption of our business and political elites have left me unwilling to believe any “evaluation” coming from… anyone.

  58. Thor says:

    MQ – Who says we have to finance it? Why is THAT the only option you have for a solution? We pay for it by taxing the rich, and the companies who do not currently pay taxes.

    Listen buddy, no one here gives a shit about that broken record, fox inspired, OCD enhanced right wing party drivel you spout here day in and day out without end. Give it a rest already, you are outclassed. Enough already, we don’t need people like you mucking up what really needs to get done here.

  59. GeorgeBurnsWasRight says:

    I think it’s pretty clear that the US has major infrastructure problems, particularly with bridges almost everywhere, as well as with water and other pipes in older urban areas. You can defer maintenance, but it usually just increases the total cost when you finally fix it. Plus no one factors in the fact that you have lost productivity costs and damages to property and people as a result of doing nothing.

    Does anyone really believe we’ll have gobs more money in, say five years or even ten years, than we do now?

    Fix the dang infrastructure! Or alternately, admit that our country is an economic failure and all that’s left is devolve completely into wealthy barons and peasants.

  60. GeorgeBurnsWasRight says:

    To Thunder and all the others who complain that construction workers, teachers, etc. are being overpaid:

    If it’s such great money for so little work, why aren’t you doing it?

    I’ve never had anyone respond to this question. Please, someone, make my day with a reasoned response.

  61. Thor says:

    Wunsacon – As for funding it, raise fossil fuel taxes by $1/gallon and (because that probably won’t cover it)

    No need to raise a tax that is (once again) going to hit the lower classes the hardest. Tax the rich, tax the trillions Americans companies are sitting on right now, they’re certainly not using it to build factories or raise wages, if they’re not going to make that money productive for society then tax the shit out of it and maybe they will. The wealthy have unarguably benefited the most over the last 30 years and they are clearly not using that money to “create jobs” so tax it. We’ve ALREADY done this, it was called the 1950′s. Sheesh, it amazes me that people like MQ are even given a voice in the MSM. Never mind are the loudest voices. Enough is enough.

    Wuns – that wasn’t directed at you buddy, :-) you just got me thinking is all!

  62. brianinla says:

    Harrisburg, PA is bankrupt because of a trash-to-energy incinerator. Jefferson County, AL is bankrupt because of a sewer overhaul and the accompanying bonds and derivatives fiasco. Ask the residents there if investing in infrastructure was a good move.

    Plangineer first you say don’t compare the US to third world countries but then list mega-cities like Berlin and Tokyo. What does that even mean? You can’t compare all of the US to Berlin. Does Harrisburg need to be like Berlin? Do the residents need to pay higher utility bills to give it an ‘A’ rating by the ASCE?

    The Free Lunch Society wants to dump the bills onto the Federal Government (and consequently a continuously diluted currency and loss of purchasing power), but it’s all good as long as the drive to the Hampton’s is as pothole-free as possible.

  63. jd351 says:

    @ BR

    BR: Most of you guys seem to be partisan deficit peacocks.

    Where were you LAST presidency? Trillion dollar tax cuts, plus trillions of dollars for a war of choice in Iraq, and a new trillion entitlement program.

    BR: Nicely said. The problem is these people will not admit their ideology is a complete failure. I still have friends who think the conservatives GOP is right on everything and if the whole country would just follow everything would be ok. When presented with the facts from the last 10 yrs , they simply blame everything on Obama, and the liberals. They just dismiss facts, just like most of the people on this blog. Now I know the Democrats are not any better. I tend to be in the camp of Jacob Jarvitz, however his voice of reason and facts no longer exist in our discourse. The bottom line is you just can’t fix stupid. Not in Washington DC, or the American voter or people on this blog. Best thing to do is keep the powder dry.

  64. Bridget says:

    Germany, I’ll give you, but outside select areas in a few major cities, China is a third world country. And a lot of their new stuff is shoddy, empty, or both. Japan has been infrastructured into the largest debt in the world, and it’s economy has stagnated for decades.

    Our parents and grandparents built the Interstate Highway System, not with a giant slush fund aka “infrastructure bank” for the likes of Obama to dish out to his bundlers, cronies, and union supporters, but with an actual plan for what they were going to do and how they were going to do it. The National Interstate Highways And Defense Act of 1956, to be precise. When Obama can show me that he has an actual plan, what precisely he expects to accomplish and how, a funding mechanism, (one that preferably includes lots of real savings from elsewhere in the budget) and assurances that we will have something to show for it other than bankrupt solar manufacturers and bridges to nowhere, I’m listening. Until then, fuggedaboutit.

  65. InterestedObserver says:

    @ BR – “Now I know the Democrats are not any better”

    I’d tend to classify myself as a “Tip O’Neill” democrat (I guess we both tend to refer back to home turf…), and I’d have to agree.

    If you can start with the premise that both sides of the fence can have decent ideas, and sometimes the ideas drawn from the extreme camps have merit in places as well, progress can happen. By the same token, sometimes you also have to acknowledge that some of the plans you implemented really didn’t work out as desired. Of course, doing that is political suicide. Heck, getting new information and changing your view seems to lead to that result as well. Sheesh…, it might be simpler to never change your mind, but it’s not terribly pragmatic for us mere mortals.

    Unfortunately, stupid (on either side) is a very harsh mistress…


  66. river says:

    Also, a civil engineer, but not a member of ASCE. I do structural design of commercial structures, so don’t really do anything with infrastructure. But just a couple of quick points . . .

    1) These report cards I believe were first put out in 2002. So this isn’t something that came about because of the bad economy, these reports have been out during the last “boom” as something that needed to be done.

    2) Things have a design life, deal with it. Bridges deal with fatigue, which is the repeated loading and unloading of welds and members. Rebar in bridges rust (aided by the salts put onto roads in the winter) and spall off the surrounding concrete. Pipes put in the ground in the 30′s and 40′s are not as strong as they are nowadays. There are examples of failures of these kinds of systems in the news. Not long after 9/11, a steam pipe exploded in NYC and people thought it was a terrorist attack. Then they found out it was just an old pipe, so they weren’t afraid anymore. (http://www.ny1.com/content/top_stories/71803/at-least-one-dead–30-injured-in-manhattan-steam-pipe-explosion)

    A couple years ago, a natural gas pipe exploded under a neighborhood in San Francisco area. Again, old pipe. http://en.wikipedia.org/wiki/2010_San_Bruno_pipeline_explosion

    “In January 2011, federal investigators reported that they found numerous defective welds in the pipeline. The thickness of the pipe varied, and some welds did not penetrate the pipes completely. As PG&E increased the pressure in the pipes to meet growing energy demand, the defective welds were further weakened until their failure. As the pipeline was installed in 1956, modern testing methods such as X-rays were not able to detect the problem.”

    Again, things get old and wear out. Deal with it.

  67. Thor says:

    Our parents and grandparents built the Interstate Highway System, not with a giant slush fund aka “infrastructure bank” for the likes of Obama to dish out to his bundlers, cronies, and union supporters, but with an actual plan for what they were going to do and how they were going to do it. The National Interstate Highways And Defense Act of 1956, to be precise

    Yes, and how did they do that? With a top tax bracket of 90%, that’s how. Care to throw your weight around on that one? I’m not sure it makes much sense to knock the president for not having a “plan” when the reality of the situation is that an extreme fringe group of a declining system is asking for more tax breaks for the wealthy and corporations.

  68. Bridget says:

    They actually did it with taxes on gasoline and diesel fuel. And a plan.

  69. leveut says:

    So. What’s the deal with the socalled Highway Trust Fund, and what is it supposed to be used for? Is it used for that?

    Why doesn’t the US have high speed rail like Europe? Let me see…Europe is older with highly concentrated population centers that are not separated by the usual distances our are; the US made a policy decision that people would not be prohibited from moving outside central cities; railroad rights of way are not straight enough and the governments haven’t got quite enough nerve, yet, to condemn and expropriate the property necessary for high speed right of way, although Rick Perry was proselytizing for it in Texas, the Trans Texas Corridor–how well did that work, and Texas has lots of open space; oh yeah, how much money for it so “normal people” like Joe Biden, when Senator, can cut a few minutes off their ride. And speaking of slow rail service, how many “subway” and light rail systems lived up to their pre-funding and construction press releases?

    Electric power system–power is pretty reliable, but there are some big defects with the grids and their interconnectivity, their susceptibility to computer attack, their susceptibility to Solar Flare. Of course, if the greenies get their way, there won’t be enough power to transmit over the grid. Wind and solar won’t substitute for base load power for years, yet, coal and nuclear are being stifled in the face of rising electricity demand. Where is the power to come from to power all those theoretical electric cars, and the server farms for the internet?

    Water and Sewer–I wonder if the largest polluters of waterways, aside from farm fertilizer, remains federal, state, and local government facilities, i.e. sewage. How long has it been since the Clean Water Act with its quality standards was passed? How many cities have been run by Republicans? Water pipes–did DC ever replace the lead water supply pipes? Are any of Boston’s water distribution pipes less than fifty years old? Would the money Boston spent on the Big Dig have been better spent renovating its water and sewer systems?

    Re the engineers, yeah, civil engineers would be the ones to make an assessment, but I have to wonder what the standards are that they used. What would be an A rated road? For example, would it have to have embedded electronics for the new computer controlled car systems to take the driving from the drivers? Would an A rated sewer system have to handle all storm water and remove all birth control chemicals from treated water? Engineers can have a tendency to gold plate their belts and suspenders.

    Politicians. Even in the Ritholtzian World of spending on infrastructure, things must be traded one for another… all things are not possible. Not guns and butter. Infrastructure and social programs? What politician will make choices and suffer the voting consequences?

    An engineer asks: Yet why is it that the fastest high speed rail networks are in Europe and Asia? Why are the fastest cell phone networks likewise in Asia? As an engineer, if I want to work on the design of the tallest building in the world, I need to go to Asia or the Middle East. We are falling behind the rest of the world in many aspects with regard to our infrastructure.

    The fastest rail networks are there because of history and, even more so, government power. The fastest cell phone networks are in Asia, because they never could afford reliable landlines. We are falling behind in infrastructure because the tallest buildings are in Asia and Middle East? How does that work?

    The Big Dig. What was the final cost? 15 bill? What was the budget at the beginning? 1 bill? Yeah, we need a whole lot more of that.

    Assorted freeway construction projects in Texas and, California, ahead of schedule and underbudget. Well designed projects whose designed was fixed–no change orders, whose bidding was savvy–including incentives for performance ahead of schedule in addition to penalties for slow performance, and who had full cooperation for those whose cooperation was necessary. See e.g. the recent I5 bridge removal in LA.

    The basic problem with all this is that it is, at the present time, it seems to me, to be pie in the sky, a highly desireable utopia, an alternate reality, in which there are no environmentalist wackos to require environmental impact statements on the effects of road dust on subterranean blindfish, there are politicians who actually know something about public works projects rather than being elected for their ability to give jobs on the city payroll to friends and relatives and supporters, Congresses and legislatures who promise public works and then siphon the money off to stupid things, and social programs.

    The reality is, this kind of stuff is not glamorous. It is unexciting grunt work, although there are those that love it, to think and plan about sewage all day etc. And, for federal, state, and local administrations, it is work doing it. Work that takes away from junkets, and press conferences, and spending, and more spending, and more spending, and attacking those who oppose the spending.

    Hmph. My fingers are tired. Oh, just one more thing.

    Yeah Geo W Bush and the Republicans did institute a new entitlement, the Medicare Drug Program. Yeah it was irresponsible. And, yeah, the Democrats opposed it. But the Democrats opposed it because…IT DIDN’T SPEND ENOUGH, IT WAS TOO SMALL.

  70. AtlasRocked says:

    @BR: You wrote: I’ve identified myself as a “Jacob Javitz Republican,” fiscally conservative, socially progressive — a group that no longer is in existence, and would be shunned by the present loons claiming to be Republicans.

    Why spend a moment discussing any party at all? You cite me as partisan, yet you tag every idea according to which party it might have emerged from, or make comments about party affiliation of the writer? Why not examine ideas for contemporary and historical examples of success, regardless of party?

    Notice this chart identifies the bad results starting in the Reagan/O’Neill era, improving during Clinton/Gingrich, then going south during Bush and accelerating during Obama. All the parties are guilty of deficit spending, ok? Tax cuts work a little better than overspending, but all exhibit failure. and have you noticed all the European nations are swimming in debt deeper than ours? Common denominator?: All are socialist-leaning democracies. Even Plato said democracy is a failure, that was 2400 years ago. We need to be a Republic again. Cancel Amendment 17.

    I urge you to advocate for either 40% spending cut or a 40% tax increase, that’s the only way we solve this. Otherwise the interest payments will force us to cut spending anyway. Starting at gov’t, and working all the way down in business, we have to cut the spending and let the defaults happen.

    Failure is a necessity in business, it’s how they change and learn. Eliminate failure, you slow down change. We asked for a gov’t that lets no one fail, and this is it. No one is failing, but everyone is falling behind.


    BR: On your last point, we totally agree. The Bailouts were disastrous.

  71. DeDude says:

    The question is whether you should buy low and with cash back, or buy high without cash back rebates. It’s a no brainer. Currently we can buy infrastructure at lower prices because of the depressed economy, and we get cash back rebates because we don’t have to pay unemployment compensation if we put people to work.

  72. DeDude says:

    Forgot to mention the 0% interest financing (on top of the lowered prices and cash back rebates). But I guess some people still would rather wait until prices goes back to normal, and the cash rebates and 0% interest financing goes away. You wouldn’t want to get it to cheap would you?

  73. number2son says:

    Jefferson County, AL is bankrupt because of a sewer overhaul and the accompanying bonds and derivatives fiasco.

    Brianinla, your argument is a post hoc fallacy that is all too common for what passes for reasonable discussion these days.

    It was the derivatives disaster, and only the derivatives disaster, that caused the Jefferson County bankruptcy.

    Other comments have mentioned the recent infrastructure disasters in the Bay Area (where I am). PG&E is to blame for the San Bruno explosion and that goes to managerial greed and incompetence and no-existent regulatory oversight. The Bay Bridge construction is particularly ironic to me as I live just 1/2 mile from what is currently the 3rd largest casting foundry in the U.S. Not that they could produce the steel for that bridge, but they are literally operating in the shadow of the bridge (which has been under construction for almost 10 years).

    Why not mention the bankruptcy of Vallejo, CA? This was the first prominent civic bankruptcy post housing boom and it had absolutely nothing to do with spending on public works, but rather the result of the implosion of the housing market and unsustainable pension liabilities for city workers (where the former raised the alarm about the latter). In a time when city and state governments around the country are facing dramatically reduced tax revenues due to the recession and the housing crisis, a lot of places are under stress.

    Here’s a question for BR or other familiar with the workings of the bond markets – why aren’t they or bond insurers suffering their share of the pain? Or are they? Or should they and they aren’t and why?


    BR: Cause they all blew up from Derivative exposure years ago: FGIC, MBIA, AMBAK — all got destroyed

  74. Julia Chestnut says:


    Engelskirchen, Germany had a waste to energy plant in 1986 when I was there. At the time, it was something of a test project – but had been in operation a number of years and was doing well. I knew the plant supervisor, and he was really excited about the direction that the technology was going and all the process innovations that they were making at the plant.

    1986. In a small-to-medium city, I’d say a good deal smaller than Harrisburg. SOOOOO. . . . don’t give me any nonsense about there being a problem with one measly little waste to energy plant. Something ELSE went wrong there, just like tons of places have managed to lay sewer culvert without destroying the county – at this point, I think we all know what happened in Jefferson County, and certainly not for the first time.

    What is wrong here is that we no longer do projects for the PUBLIC GOOD. If somebody doesn’t line their pockets fabulously, it won’t happen. Rent extraction is so horrifically endemic that we’re apparently paralyzed to do anything that will benefit the public at large – afterall, some of them might not deserve it, right?

    We’re drowning here, and people keep complaining that boats we could get into are kicking up wake. How about we try to haul ourselves into some damn boat?

  75. AtlasRocked says:

    @jd351: “conservatives GOP is right on everything and if the whole country would just follow everything would be ok.”

    I bet if I talked to these same people you are they would say you completely misstated their thoughts. I don’t know of a single conservative or GOP member that like the fiscal and and social spending policies of the Bush/Delay era at all.

    Please, listen to them a little closer and try to accurately understand what they are saying. Repeat it back to them for clarity. Then provide some direct quotes for us to prove what you’re saying is accurate. I bet you can’t find a single quote that comes close to what you’re saying.

  76. Petey Wheatstraw says:

    AtlasRocked Says:

    “I bet if I talked to these same people you are they would say you completely misstated their thoughts. I don’t know of a single conservative or GOP member that like the fiscal and and social spending policies of the Bush/Delay era at all.”

    But they voted for it (twice), and cheered it on in real time. Same with the deregulation and supply side/trickle down economic policies that planted the seeds of financial failure. Same goes for the ascendency of the military/industrial complex and its endless wars and torture-is-good meme. Same goes for the hatred of science and fact, the pandering to the religious right, the tax cuts for the wealthy non-job creators, jingoism masquerading as patriotism, the advancement of corporatism uber alles, and the wholesale abandonment of the Rule of Law, as set forth in our “quaint” constitution.

    Where were your protestors? Where were your dissenters? Where TF were you and your group of “self-made men,” when all of this shit was happening?

    You are what you are, and what you are is weak and cowardly.

    “I bet you can’t find a single quote that comes close to what you’re saying.”

    Why don’t you show us a GOP member or candidate that isn’t currently pushing for more of the same as a cure for what ails us?

  77. bear_in_mind says:


    You’re right on the mark! Anyone with a long view of history can see the critical importance of infrastructure. The WPA built libraries, schools, hospitals, post offices, highways, bridges, roads, sidewalks, fire stations, courthouses, airports, reservoirs, municipal railways, parks, stadiums, playgrounds, and much more.

    To get a sense of the WPA’s impact, this project has begun archiving the many projects completed in California: http://livingnewdeal.berkeley.edu/map/

    Since that time, American’s have come to take these assets for granted… as if these things always existed and no one had to invest anything in their creation. And likewise, the benefits are seemingly assumed to be perpetual, as if others’ sacrifices were the birthright of today’s citizens. Freud, Adler and Maslow would have a field day with this!

    What’s surprising to me is the depth and degree of the cognitive dissonance from the trolls. I can’t tell if they know they’re full of beans or have honestly been infected with an apathy that America is doomed; and that anarchy is fait accompli. They seem committed to a worldview that by encouraging and facilitating the collapse of government, private industry will fill the void and society will flourish in a natural state. Talk about magical thinking. It’s like “Jack and the Beanstalk”, writ large.

    I can partly understand apathy in younger generations (ages 18-35), who’ve been raised in an environment where government and civic engagement have been under constant assault by extremists such as Grover Nordquist, who has repeatedly stated: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” I suspect that when people hear such rhetoric again and again, it’s easy to believe there’s merit to it. It certainly hasn’t helped that progressives have so meekly articulated their legacy to society.

    What I find particularly incongruent, however, is how many of the same people who vociferously want to shrink American government, are equally passionate about destroying, then rebuilding, the infrastructure and government of far-flung countries such as Iraq and Afghanistan.

    It strikes me there’s a parallel to the bailout of the big banks; namely, in both cases American taxpayers back-stopped all the financial risk, while private industry reaped all the profits. These ventures probably booked most of their profits to offshore entities to minimize tax revenue for American citizens… many of whom contributed the ultimate sacrifice for the U.S. military, and in exchange, corporations reap the treasure.

    It leaves me with one puzzling question: Why do these groups want to destroy and rebuild other countries, but not want to rebuild America?

  78. [...] Repairing Infrastructure Can Help Economy (ritholtz.com) [...]

  79. bob4grave says:


    Barry, I recently saw this issue first-hand. Some entrepreneurs from Finland were here to discuss wave energy with me–a technology that involves a gently rocking door in the surf instead of rotating propellors that chop wildlife. Megawatts of inexpensive renewable energy from an environmentally friendly technology that is already invented and ready for implementation under the water on any seacoast with a good surf. Great news, right?

    We have little interest in this country in any alternate energy investment except windmills and fracking. After trying in vain to get US attention at any investment level, they went back to Europe and are generating energy of the coast of Portugal. How can we move ahead in critical areas if we can’t be bothered by them?


  80. Crumbling Bridges’ $140B Tab Leaves Business Paying

    Across the U.S., where 3,538 bridges were closed in 2010

    The average U.S. bridge seven years from the end of its useful life, and one- fourth of 600,000 crossings classified by regulators as “structurally deficient,”