Infrastructure Cult Math
We're being asked to spend tens of billions by people who can't seem to be able to do second grade math.
In investigating the map in yesterday's post, I came across an organization called the Transportation Construction Coalition. I appreciate that, unlike other members of the Infrastructure Cult, they are honest about who they are (emphasis mine):
Established in 1996, the Transportation Construction Coalition (TCC) includes 31 national associations and labor unions with a direct market interest in the federal transportation programs.
The home page of their website had a number of infographics taken from a 2014 study by "internationally-recognized IHS Global" that supposedly show the "many economic benefits of federal highway and transit investment programs", a rather laughable assertion given what they put forth.
Exhibit A: $1 is greater than 74 cents
For every $1 "invested" by the federal government in transportation, it gets 74 cents in tax revenue in return.
And this is a good thing because.....?
Only a certified member of the Infrastructure Cult would trumpet a negative 26% return-on-investment as a good thing.
How many highway contractors would buy that new paving machine if they expected to lose 26% on the investment?
How are we supposed to maintain this stuff if we have a negative ROI?
Exhibit B: $37 billion is less than $50 billion
This is a variation on Exhibit A, but since they split it out into two graphics, I'll do the same.
So we spend $50 billion and we get $31 billion in income tax and $6 billion in corporate tax. That's $37 billion which, as my second grader will confidently tell you, is less than $50 billion.
Again, this is a good investment because.....?
Infrastructure spending is supposedly the driver of the economy. We don't build highways just to build them. Even if we broke even on these investments, they are supposed to do so much more.
When we build a highway, it needs to create growth in many multiples of the investment. How else do we fund education, public safety, parks, recreation and all the other things government is supposed to do, let alone maintain the highway itself.
The high-returning transportation investments were made decades ago. We're far past scraping the bottom of the barrel and are now financially cannibalizing our transportation system with really bad investments.
Exhibit C: $1 is more than 35 cents
I've done this math in other places. The federal government total tax take is about 17.5% of GDP. That means, according to this graphic, for every dollar the federal government spends, it gets back between 31.5 cents and 35 cents.
Why do we invest in highway and mass transit? These investments are a means to an end (growth, jobs and prosperity), not an end unto themselves (as the Infrastructure Cult would have us believe).
We make investments in transportation so we can grow the economy and have medicare, social security, national defense, etc.... In other words, our transportation investments need to return to the treasury multiple times what we "invest" if they are to matter. We're so far into diminishing returns that each investment now makes us poorer.
Exhibit D: $9.6 billion is less than $42.5 billion
The federal government spent $53 billion in 2014 on highways and transit. If we increase that by 5% annually for 5 years, here's what that means.
- Year 1: $55.7 billion
- Year 2: $58.4 billion
- Year 3: $61.4 billion
- Year 4: $64.4 billion
- Year 5: $67.6 billion
That means we'd spend an additional $42.5 billion above the $53 billion baseline to create, according to this graphic, an additional $9.6 billion in GDP.
To show how ridiculous these numbers are, the companion jobs graphic suggests that between 78,000 and 122,000 new jobs would be created from all this spending.
That would mean each new job -- direct, indirect and induced -- would cost between $350,000 and $545,000.
Like almost all of the transportation propaganda out there today, this web site is a farce. The only thing redeemable about it is that they've actually come the closest to accurately representing how horribly negative the return on investment is for transportation spending in this country. I know it sounds crazy to many of you out there because it is so bizarre, but we would be better off never building another thing again than continuing down this fast track to insolvency.
#nonewroads