Relevant and even prescient commentary on news, politics and the economy.

A Finger Exercise for Dr. Black

The good doctor quotes the Paper of Record:

Garages near Yankee Stadium, built over the objections of Bronx neighbors appalled at losing parkland for yet more parking lots, turn out never to be more than 60 percent full, even on game days. The city has lost public space, the developers have lost a fortune.

and gets distracted a bit:

With something like a stadium the issue is a bit trickier, though it’s clear that they’ve stupidly erred on the side of way too much parking.

Let’s make this easy. We’ll ignore that it was never difficult to park at Yankee Stadium before. (Driving there is another issue.) Let’s just look at expectations of parking needs by Stadium Seating Capacity:

2008 – 56,936

Now – 50,291 (52,325 SRO)

Looks to me as if Seating Capacity is down more than 10% in the new ballpark. Now there are other changes—ticket prices raised, for instance, and I believe more corporate tax deductions “luxury boxes”—that might have affected the number of people who drive to Yankee Stadium positively.

But there were no other major infrastructure improvements: the 155th Street bridge that I used to walk to games over hasn’t been widened, the FDR and the Harlem River Drive are still the same, the bridges all have the same capacity (though the tolls went up on several of those, which might shift people from driving).

Given that, what would you expect to happen if you added parking capacity?

Corollary question: If you were a member of the neighborhood, and knew all of the above in advance, what would your reaction be to losing park space for commercial parking lots?

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Infrastructure gamesmanship puts wealthy ahead of jobs, good bridges, and country

By Linda Beale

Infrastructure gamesmanship puts wealthy ahead of jobs, good bridges, and country

For those who are paying attention to the House and Senate these days, it seems like a frustrating exercise.  Mostly it is one of watching the “do-nothing” Republicans find excuses for never requiring millionaires and billionaires to pay their fair share of taxes while making up excuses for not doing anything of the varied real approaches to stimulating the economy in ways that will create jobs for ordinary Americans.

Take the vote on the infrastructure bills.  The Senate leadership asked the Senate to vote for funding $60 billion of much needed infrastructure projects (just a tip of the iceberg of everything that is needed to bring this country’s infrastructure into nonembarassment).  The GOP refused, because it was funded by a de minimis tax on millionaires.

There’s no end to things that can be said about this further evidence of the craven state of the GOP in the US today.  Political advantage for the wealthy class is to be given primary importance, no matter what happens to the vast majority of Americans and the country we all love.  Jim Maule has it right, in The Tax and Spending Stalemate: Can It Destroy the Nation?, MauledAgain (Nov. 7, 2011).

When partisan loyalties mean more than the nation’s well-being, when money means more to wealthy “world citizens” than does the long-term physical security of the nation, and when protection of millionaires who fund campaign treasure chests means more than the lives and safety of the rest of America, the literal physical survival of the nation is imperiled. …

[A]s long as this absurd tax and spending stalemate continues, where decisions are not made on the merits of the issue but on the partisan attachments of supposedly public servants, the nation and its infrastructure, the nation and the health of its citizens, the nation and its economy, will continue to stagnate, deteriorate, and crumble. The question now is how close we are to the point of no return.

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Water

Ten great cities dying of thirst in Wallstreet 24/7 points to a problem already serious in some cases, and during the 2007/2008 drought made readily apparent – our lack of will to address water infrastructure problems and replacement, and our use of water that is outstripping sources.

This report by Ceres and Water Asset Management (link repaired) shows that few participants in the
bond market—including investors, bond rating agencies, and the utilities themselves—
are accounting for growing water scarcity, legal conflicts and other threats in their
analyses. Some are even inadvertently encouraging risk by rewarding pricing and
infrastructure plans that encourage increased water use despite near-term supply
constraints. By overlooking these critical factors, all involved are allowing water risk to grow—and remain hidden—in the bond market.

Obsidianwings carries a post on water:

While the Republicans celebrate their historical victories, the Democrats lick their wounds, the bankers count their bonus money, and the rest of us try to hold on to our jobs, homes, and retirement savings, some large US cities are facing a real challenge:

They’re running out of water. (see above link)

No water is a real problem.

And not just an “I can’t water my lawn” problem. A”my city can’t generate electricity”, or “these millions of acres can no longer be productive agricultural land” problem, or “it’s going to cost me five times as much for water next year” problem.

Or, a “this city can no longer support it’s population” problem.

This country and its economy has, to a great degree, been living off of infrastructure built years ago. Decades ago. It’s wearing out, being used up, being overwhelmed by the increasing demand being put on it. It will take effort, and costs money – a lot of money – to rebuild.

I’m not seeing that happening. We have a reduced tax base because the FIRE sector blew the economy up, and because we’ve moved all of the non-tech middle class jobs offshore. It’s worth a Congressperson’s political life to suggest raising tax rates, on anyone, in any form, for any reason.

World bank and water describes the transnational ownership and distribution trade in water infrastructure, distribution, and human dimension for access to water for drinking and sanitation.

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A Sentence Worthy of the WSJ Editorial Page

We can only hope that the special Infrastructure supplement in today’s edition of The Pink One was written and/or edited by a PwC, not an FT, employee.  Otherwise, how are we to explain Michael Peel’s curious declaration in “Unweaving a Tangled Web” that:

…[there is a] continued prevalence of corruption around the complex, lucrative, and transnational global infrastructure industry, despite limited efforts in the past few years to root it out. [emphasis mine]

Let’s see: complex (difficult to understand and therefore regulate), lucrative, transnational (easier to create transactions and translational exposures), and facing “limited efforts” at control.  Would anyone—even William Easterly—even consider the possibility that this is not an area more subject than most to regulatory capture at best, and corruption as the norm?

Other sentences we should expect from Mr. Peel:

SEC enforcement officials remain overburdened and behind despite Christopher (“Uh, two plus two?  Pass me a calculator.”) Cox having been replaced as its Chair.

BP leadership still want their lives back despite their recent ability to capture almost 10% of the oil escaping from their Deep Horizon drilling site.

Chernobyl-area lumber sales continue to be made primarily in the grey market to unsuspecting customers despite the leak that irradiated those trees being almost twenty years old.

Feel free to add your own in  the comments section.

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Industrial policy is not just green technology or an electric car…

The New Yorker gives us a small look into policy in china other than the currency peg:

The Problem Statement

U.S. manufacturing’s competitive status is increasingly challenged by other economies. Established industrialized nations such as Japan, Germany, Korea and Taiwan are developing state-of-the-art technologies, which range across all areas of manufacturing from electronics to discrete parts. Products based on technologies that originated in the U.S. economy, such as semiconductors and robotics, are increasingly both developed and produced elsewhere.

Emerging economies, such as China, are acquiring manufacturing capability through modest R&D intensities, tax and other incentives for foreign direct investment, and intellectual property theft. This second group then competes through low-cost labor and the use of exchange rate manipulation along with tariff and non-tariff barriers.

However, emerging technology-based economies have the long-term goal of attaining world-class status as innovators, which means they are not content to operate at the low-technology, labor-intensive portion of manufacturing. China already is producing 30,000 patents annually and its patent application rate trails only the United States and Japan.1 Finally, event the huge U.S. lead in biopharmaceuticals is now under attack, as an increasing number of economies invest in supporting science and technology infrastructures and provide financial incentives for foreign direct investment in this rapidly expanding technology.

The combined long-term impact on the U.S. economy of investments by both established and newly industrialized economies has been the offshoring of substantial portions of U.S. manufacturing supply chains—first the labor-intensive industries but now the high-tech ones, as well.

In the years that followed, the government pumped billions of dollars into labs and universities and enterprises, on projects ranging from cloning to underwater robots. Then, in 2001, Chinese officials abruptly expanded one program in particular: energy technology. The reasons were clear. Once the largest oil exporter in East Asia, China was now adding more than two thousand cars a day and importing millions of barrels; its energy security hinged on a flotilla of tankers stretched across distant seas. Meanwhile, China was getting nearly eighty per cent of its electricity from coal, which was rendering the air in much of the country unbreathable and hastening climate changes that could undermine China’s future stability. Rising sea levels were on pace to create more refugees in China than in any other country, even Bangladesh.

In 2006, Chinese leaders redoubled their commitment to new energy technology; they boosted funding for research and set targets for installing wind turbines, solar panels, hydroelectric dams, and other renewable sources of energy that were higher than goals in the United States. China doubled its wind-power capacity that year, then doubled it again the next year, and the year after. The country had virtually no solar industry in 2003; five years later, it was manufacturing more solar cells than any other country, winning customers from foreign companies that had invented the technology in the first place. As President Hu Jintao, a political heir of Deng Xiaoping, put it in October of this year, China must “seize preëmptive opportunities in the new round of the global energy revolution.”

A China born again green can be hard to imagine, especially for people who live here. After four years in Beijing, I’ve learned how to gauge the pollution before I open the curtains; by dawn on the smoggiest days, the lungs ache.

David Sandalow, the U.S. Assistant Secretary of Energy for Policy and International Affairs, has been to China five times in five months. He told me, “China’s investment in clean energy is extraordinary.” For America, he added, the implication is clear: “Unless the U.S. makes investments, we are not competitive in the clean-tech sector in the years and decades to come.”

China is already buying and installing the world’s most efficient transmission lines—“an area where China has actually moved ahead of the U.S.,” according to Deborah Seligsohn, a senior fellow at the World Resources Institute. In the next decade, China plans to install wind-power equipment capable of generating nearly five times the power of the Three Gorges Dam, the world’s largest producer.

The prospect of a future powered by the sun and the wind is so appealing that it obscures a less charming fact: coal is going nowhere soon. Even the most optimistic forecasts agree that China and the United States, for the foreseeable future, will remain ravenous consumers. (China burns more coal than America, Europe, and Japan combined.) As Julio Friedmann, an energy expert at the Lawrence Livermore National Laboratory, near San Francisco, told me, “The decisions that China and the U.S. make in the next five years in the coal sector will determine the future of this century.”

When Albert Lin, an American energy entrepreneur on the board of Future Fuels, a Texas-based power-plant developer, set out to find a gasifier for a pioneering new plant that is designed to spew less greenhouse gas, he figured that he would buy one from G.E. or Shell. Then his engineers tested the Xi’an version. It was “the absolute best we’ve seen,” Lin told me. (Lin said that the “secret sauce” in the Chinese design is a clever bit of engineering that recycles the heat created by the gasifier to convert yet more coal into gas.) His company licensed the Chinese design, marking one of the first instances of Chinese coal technology’s coming to America. “Fifteen or twenty years ago, anyone you asked would have said that Western technologies in coal gasification were superior to anything in China,” Lin said. “Now, I think, that claim is not true.”

The Obama Administration is busy repairing the energy legacy of its predecessor. The stimulus package passed in February put more than thirty-eight billion dollars into the Department of Energy for renewable-energy projects—including four hundred million for ARPA-E, the agency that Bush opposed. (It also allocated a billion dollars toward reviving FutureGen, though a final decision is pending.)

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CGI Yesterday: Interlude

I don’t have my notes all together from yesterday, but Lance Mannion hits most of the second half of the day with this, this, this, and this post.

Especially check out the last one. One panelist’s description yesterday of putting glasses on a child yesterday was as if it were directly out of the opening of Lawrence Norfolk’s Lemprière’s Dictionary:

The lenses sucked his eye-balls through the frames, dashed them into the first elected object. The stove. He was in the flames. They were licking greedily at him…behind the flames two eyes caught his, an horrible, misshapen face, a twisted body, eyes black with ancient cruelties, the legs curling and unfurling at him, like serpents. I see you John Lemprière, hissed from each mouth. Erichthonius. Curling and unfurling like snakes. Like flames. Just flames. Flames in a stove in a room. A room between Minerva’s shrine and Vulcan’s forge.

‘Welcome to the visible world, John Lemprière.’ …

Lempière shivered and blinked. The stove was but a stove, the room but a room….Lemprière could see.

People who have seen miracles want to see them again, not the mention the effect on people for whom seeing is a miracle.

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Ready, Steady — Go?

The U.S. Conference of Mayors presents a (by no means all-inclusive) list of shovel-ready projects, including $11 billion in Public Transit(over $600 million in demand from Charlotte alone, which recently passed NYC in drive-time to work and has seen its drivers vote with their train passes) and over $30B in Energy projects.

Search through it. Find your favorites.

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Is Larry Summers an Infrastructure Spending Skeptic?

by Tom Bozzo

whose Facebook status currently reads, “Tom is feeling an unaccustomed sense of not-shame, at least pending some action on the economics, energy/environment, and transportation fronts.”

Meanwhile, over at FDL, they find Rep. Peter DeFazio saying:

I think [Obama]’s ill-advised by Larry Summers.[*] Larry Summers hates infrastructure.

And some of these other economists — they were very much part of creating the problem, now they’re going to solve the problem? And they don’t like infrastructure. So they want to have a consumer driven recovery.

Others in the econoblogiverse ought to know (or at least offer a well-educated guess) as to whether DeFazio is right about Summers. Paging Prof. DeLong? A little more rant below the fold.

Whatever the case with Summers, the sentiments DeFazio mentions are kicking around notionally respectable provinces of the profession. E.g. Plus it’s easy to find rail- and transit-phobic op-eds arguing that because 90% of commuters drive even the transit funding under the SAFETEA-LU regime is too generous.

The underlying problem is that helicoptering money to “consumers” by way of tax cuts or lump-sum grants a la last year’s stimulus payments does little or nothing to help satisfy demands that are latent due to incomplete markets. Give me $100 and I can drive to Chicago for the day, not insignificantly because past public infrastructure spending built the roads from here to there. Give everyone in Madison $100 and it still does sod all for extending the Amtrak Hiawatha service, seeing as the city was cut off from such passenger rail network as still exists in the upper Midwest and reconnecting it requires a substantial investment. Maybe in libertarian fantasyland, there are no such things as collective action problems, but elsewhere overcoming them may be considered to be a useful function of government.

I’ve argued, and will say again, that it isn’t necessarily desirable to rely too heavily on the stimulus for rail and transit expansion, partly because useful large expenditures a la CA and Midwest high-speed rail aren’t necessarily very good as short-term stimulus [**] and partly because it may be politically undesirable to foster the impression that the expenditures are only worthwhile when the economy is in extremis. (Plugging holes blown in transit agencies budgets is another matter entirely.) So I’m agnostic pending information on what the surface transportation bill to follow SAFETEA-LU will look like. If rail and transit get short shrift there, then I’ll be putting my analyst on danger money (baby).

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[*] At least I wouldn’t expect (a) that Summers’s advisory role is telling President Obama what he wants to hear under pain of banishment, or that (b) the advisory role implies that the Summers view of anything is necessarily the Obama view.

[**] But committing funds to be spent in the near if not immediate future may nevertheless signal to firms that it’s safe to expand or at least not contract.

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Oberstar on ‘Use it or Lose It’ Stimulus Provisions

Tom Bozzo

Via TrafficWorld:

According to the House Transportation and Infrastructure Committee, 50 percent of funds provided to states will be required to be obligated within 90 days.

Within 180 days of enactment, states must submit a program of projects outlining how the remaining 50 percent of the projects will be obligated within one year of enactment, according to the committee’s proposal.

On the face of it, this looks good for projects that are in advanced stages of planning but not quite spade-ready — which may answer how to quickly obligate big bucks (by U.S. standards) for transit, passenger rail, and other projects more complicated than road repairs. It also suggests that the $85 billion amount being floated is an amount to be obligated in one calendar year rather than two (or the next one-and-a-half fiscal years).

Meanwhile, John Boehner rounded up his merry band of economists against the stimulus. When the #2 commenter on the (rather low-wattage*) list of skeptics is Donald Luskin, you’re in trouble.

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* And as a low-wattage economist myself, I use the term advisedly.

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Infrastructure Stimulus Amounts

Tom Bozzo

Around election time, the House Transportation and Infrastructure Committee had identified $45 billion in ready-to-go infrastructure projects a stimulus package. Now TrafficWorld reports that the Committee now is looking at $85 billion:

The recommendations, outlined in a Dec. 12 memo, include $30 billion for highways and bridges, $12 billion for transit, $4.9 billion for passenger rail, $5 billion for airports, $14.3 billion for environmental infrastructure, $7 billion for the U.S. Army Corps of Engineers and $10 billion for federal buildings, according to the committee.

To put this amount in perspective, under SAFETEA-LU, the highway and transit funding bill in effect through FY09, federal highway and transit expenditures run around $60 billion/year ($284 billion for FY05-FY09), so $42 billion on highways and transit is a pretty big increment.

That’s not to say that $100 billion/year is necessarily a large amount of money to spend in the less-short term, especially if we want things like vastly improved transit and passenger rail systems and considering some of the things $100B/year were spent on during the Bush administration. Politically, it seems to me that it would be better to fund the medium-term projects outside the stimulus package in a FY10+ infrastructure bill to follow SAFETEA-LU, which just so happens to be due this year. If the projects are valuable — and many are or will be — then then they should not be funded only in case of economic emergency.

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