What do yesterday's east coast earthquake, our infrastructure and antiquated Federal accounting systems have to do with jobs? A lot, it turns out.
The earthquake yesterday was the largest east coast trembler in 67 years. But earthquakes of moderate intensity are not rare. The U.S. Geological Survey counted an average of 1,300 earthquakes each year that range in magnitude from 5 to 5.9 on the Richter Scale. Yesterday's was on the high end, at 5.8. Earthquakes -- even in areas like the East Coast that is the middle of a tectonic plate -- happen regularly and should not come as a surprise.
The same is true of floods, hurricanes, tornadoes and huge snow storms. Natural disasters don't happen every day or every year, but they are definitely going to happen. And when they do they test our infrastructure.
If, as a society, when we let our infrastructure deteriorate -- or cut corners to build things on the cheap -- it often turns out that the cost of our neglect is much greater than if we had taken a more responsible, prudent course and built roads, and high rises, and levies and nuclear plants that are designed to survive the natural disasters that are all but certain to happen some day.
Just six years ago during Hurricane Katrina, the United States almost lost the entire city of New Orleans because we had skimped on investment in the levies that would have protected it from flooding.
The Japanese have faced an economic and human calamity because the nuclear plants at Fukushima were not built to survive a massive earthquake and tsunami.
When natural disasters like these strike, it's too late to invest the relatively modest amounts of money necessary to prevent catastrophic failures in our infrastructure that end up costing society many, many times more than it would have cost to prevent them. And that's just the disasters -- not ordinary wear and tear -- or investment in basic needs for our growing population.
We've seen the warning signs everywhere.
A major bridge in the middle of Minneapolis collapses without warning, killing 13 people and causing massive economic disruption.
Ancient water lines in the nation's capital rupture.
This spring the 80-year-old levy system along the Mississippi was so overstressed by rains that the river had to be temporarily shut to commercial traffic, costing the economy millions of dollars.
Because of failure to invest in public transportation and road improvements highways are becoming more and more congested, costing more millions in lost productivity.
The Chinese have plans to complete a 10,000-mile high speed rail system in the next decade, yet American plans for high speed rail are sidetracked by Republicans in Congress.
China is spending nine percent of its GDP on new infrastructure -- compared to only three percent in the U.S., although we have far greater resources.
Yet the Republican Congress -- and much of America's political elite -- has become so mesmerized by the "deficit debate" that it is on the verge of making the foolish decision to "save money" today by failing to invest in our infrastructure for tomorrow.
Much of this deficit talk is cloaked in the language of "responsibility" and fiscal discipline. We are told that we cannot borrow money that will have to be repaid by our children. But shortchanging investment in our nation's infrastructure is not doing any favors for the next generation. In fact it is "cover" -- to allow the wealthiest people in America to gorge themselves on more and more of our nation's wealth and income -- without contributing their fair share in taxes to support our common need and our common future.
Republican House leaders have proposed cutting investment in transportation infrastructure by two thirds. The Association of State Highway and Transportation Officials estimates that this proposal would cost America another 500,000 jobs.
People who claim that is "fiscally responsible" are engaging in the worst kind of Orwellian "Double Speak." Proposals like these involve the ultimate in irresponsibility to the next generation -- allowing the millionaires to consume today and neglecting the entire society's infrastructure that is needed to compete for the future.
It is the height of irresponsibility to leave our kids a public infrastructure that is collapsing and dangerous -- all because the richest among us want to continue to gorge themselves in multi-million dollar bonuses, huge executive salaries, and private jets to fly them off to opulent parties, or to and from their many homes.
Former Governor Ed Rendell of Pennsylvania has proposed that the earthquake be the occasion for America to retrofit all of its nuclear power plants to bring them up to the standards necessary to withstand serious seismic events. That would generate hundreds of thousands of new construction jobs.
The same could be said of massive numbers of additional infrastructure projects from school repair to park improvements, to sewer and water projects, to levy upgrades, to public transportation projects and high speed rail.
In the past, America built big things -- from the Interstate Highway system to the great dams. We can do it again.
One of the reasons why we fail to make these critical investments is the archaic accounting system of the Federal Government.
If you are a business and make an investment in plant and equipment, you don't count the outlay as an expenditure. When you build a plant, the money is not gone; after all, you have a new plant that is an asset with which you can create future revenue. So the new plant is recognized on the books as an asset and it is expensed over its useful life (or for tax purposes according to IRS depreciation rules).
But when the Federal Government invests in a highway or a levy -- that have decades of useful life -- it immediately counts these outlays as an expense. It is accounted for the same way you would a salary or reimbursement for a meal. The Federal Government has no capital budget -- no way to account for assets that offset its investments.
That has two important implications.
First, even when the Federal Government makes investments that will massively improve the economic circumstances of future generations, these investments increase the "deficit" the same way current expenditures do. So even if the Federal Government had billions of dollars of new productive assets to show for its investments -- new buildings or schools or levies -- no one would know it. Those assets simply wouldn't count against the calculation of the "deficit." That creates a political disincentive to invest in the future.
Second, the lack of a capital budget does not provide us a way to measure the level of investment made by the Federal Government as compared with its level of consumption. That is a huge problem, since the relationship of investment to consumption is a critical element in creating long-term economic growth.
In economics there is a qualitative difference between the two. Consumption involves spending on goods and services we consume -- use up -- to satisfy our needs. Investment involves spending on assets -- on tools -- on plant and equipment or skills -- that will allow us to create more goods and services in the future.
Highways, public transportation, airports, water systems, sewer lines, levies and power plants, windmills, the Internet (which was originally created by the Federal Government), the GPS system -- all are assets that allow us to create goods and services in the future -- to create future wealth. The same is true of less tangible assets like education. Education is not consumption. It is investment in "human capital" that is the most important foundation of future economic growth.
We are being irresponsible to our kids if we do not invest in these things.
Finally, investing in infrastructure today is exactly what is needed to jumpstart our economy and put people back to work. By refusing to do so, we are wasting the talent and energy of 14 million Americans who could be doing productive work.
My wife, Congresswoman Jan Schakowsky, has proposed legislation that would create 2.3 million new jobs over each of the next two years, doing critical things that need to be done. Much of that work involves improving infrastructure -- especially our schools and parks.
Her bill would cost $237 billion over two years -- which could be paid for entirely by increasing the tax rates of millionaires and billionaires to levels slightly lower than they were early in the Reagan Administration. The bill would reduce the unemployment rate by 1.3%. It would be guaranteed to produce 2.3 million jobs because the money is metered out to states, local governments and other agencies only when it is tied to a job.
The proposed Infrastructure Bank is another approach that would substantially increase investment in infrastructure -- and generate millions of jobs over time -- by leveraging private investment with Federal infrastructure dollars.
Yesterday's earthquake should be nature's wake-up call to Washington. It's as if Mother Nature reached out and shook Washington and said, "Pay attention -- wake up from your near-hypnotic fixation on short-term 'deficit reduction.' Stop short-changing critical investments in your economy."
Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on Amazon.com. He is a partner in Democracy Partners. Follow him on Twitter @rbcreamer.
Follow Robert Creamer on Twitter: www.twitter.com/rbcreamer
Harry Shearer: "Katrina" Plus Six
The word "levy" is typically a verb, and it means to impose something, usually a fine, fee, or tax. "The County Board of Supervisors decided to levy a tax upon developers today" would be an example of the correct usage. The active present-tense word is "levies", as in "The government levies taxes upon imported cars."
Other than trying to clear up this confusion, I have no disagreement with the point of the article. :-)
** = approximately 172 milliseconds, or 1/6 of a second; CERN scientists have managed to hold antihydrogen protons for that long
And more importantly, money is not something that can be "found", as if it is a stand-alone money that can be lying around somewhere for us to use.
In our system it is created ex nihilo out of debt, yours and mine and the Federal governments, which boils done eventually to your debt and my debt to a banking elite who like to live high on the hog.
http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=161
This article raises some very important points about how statistics can lie...our methods of calculating inflation, GDP and DEBT are all totally worthless. We say that skyrocketing health care costs add to our GDP instead of subtracting from the health of our citizens, yet building roads doesn't add to the value of our assets?
I have one other consideration that should be examined. It would take care of a lot of immigration problems as well as unemployment and education issues. Consider that being a full-fledged citizen of this country required some public service...two years in the army seems to be ok for young men who were drafted in the past...why don't women have the same obligation to serve? It doesn't have to be in the military, but we need to provide room and board and a bit of spending money to people while they perform public service works.
You get what you pay for.
Americans have never been good at looking at or planing for the long haul. We are too short sighted and into immediate gratification. We're also stingy.
There is no such thing as a free lunch.
Really too bad. We're paying for it now. We'll never get it back, which is too bad. Hauling freight by rail is more efficient and in the future will be much more cost effective than trucking. Especially not that peak oil has come and gone.
Kennedy looked at the long haul when he wanted man on the moon. Too bad it ended there.
When we build infrastructure we KNOW it must be maintained, we KNOW it must be replaced (rust never stops), we know it has to be modernized on a schedule.
When our so-called leaders do not plan for this KNOWN issue, it is a simple lack of effective governance - an act of laziness and stupidity.
Because we know that these things must be maintained and replaced when they are built.
Every freshman engineer knows the cost of Engineering Economics.
Apparently, this idea is far too complex for our so-called legislative leaders.
The cost of recovering from deferred maintenance is considerably higher than regular maintenance.
The risk of failure increases from lack of maintenance.
The risk of failure and damage increases from extending the useful life of an asset beyond its years.
Can you imagine still driving a 1965 Ford Falcon? Well, that's pretty much the technology level of nuclear power plants. There is far better, and safer technology now. But, to keep the profits of the companies that operate those facilities high - and the executive salaries very high - our legislators let the maintenance of these facilities slide.
The laws of corporations and liability need to be changed to hold the Boards and Officers of these companies criminally liable for the damage they cause when the play this dangerous, foolish game.
That is why I find the debt crisis amusing, coming from Congress. A Congress that is far more interested in light fare and sound bites in order to push a ridiculous agenda. However, Congress is worried about our children and grandchildren, but fails to pay for the roads and buildings today.
I go out on the road, I want to know what I'm driving on is safe. Right now, it's not.
Usually when a major disaster like Katrina occurs and wipes out a city, it motivates others to think about disaster prevention in their geographies. There are huge job creation opportunities when we think about such things as building and improving infrastructure.
We can find opportunities to save lives and create jobs just about everywhere in the US by making roads safer, we can probably even employ hundreds of people by installing seat belts in school buses.
Or, Spend a billion now to save nine billion in 10 years...
Between 2007-2009, the US lost an estimated 8 million jobs. Jobs that are never coming back. Republicans keep saying we need to lower taxes to encourage job creation. That doesn't work. We spend money to put into another 'persons' pocket, instead of it going back into the economy. The US would be better served by taking care of our own house instead of trying to clean up someone elses. People who work in their own communities to improve that community's infrastructure, will spend the money in that community, thus improving that community's economy. It has been proven.
The suggestions here would work, it's been proven to work in the past. But in todays political climate, anything that will help the lower 51% of earners, opposed to the top 2%, or will improve the US economically, will be voted against by the current batch of Congressional Republicans.
China spends more per GDP (but less in absolute terms - - - when a person has weak facts, they resort to statistical tricks) because they HAVE no infrastructure. They are building essentially from scratch. Get real.
New Orleans never should have been allowed to grow to become a major city located 20 feet below sea level. That is INSANE. With the Midwest floods, no matter what the levies did, interruptions in commercial shipping were inevitable. You can fight the Mississippi all you want and you will NEVER win. We can live with nature nearly for free, or spend trillions fighting a losing battle against Her.
"We are being irresponsible to our kids if we do not invest in these things." - - - Rubbish! We are being irresponsible if we squander money on pork. Do the projects that have a real world business case analysis to support them, not fantasies.
"... what is needed to jumpstart our economy and put people back to work. "
Anyone who believes this simply doesn't understand what has malfunctioned in the US and world economies.
I'm not opposed to infrastructure projects, I'm simply very highly suspect of the timing and the current widespread interested, by those on the Left, in hiring construction workers. If an infrastructure project is worthy, it was worthy three years ago and it will be worthy three years from now. I believe that the term "investment" has been taken and used for their own purposes by those of a particular political leaning.
There is one infrastructure project I would wholeheartedly endorse (as if anyone really cares what I endorse) and that would be a nationwide Smart Grid and 200 or so GenIII+ nuclear plants so we could decommission our 100 obsolescent plants and at the same time double our nuclear capacity (to half of what France and Japan have).
Regards.
In the US, I think it would be reasonable to say that a middle class family either owns their own home, or could do so if they wished. Two cars and two TV sets. Medical insurance for First World level treatment and the ability to send their children to college.
I don't know if "middle class" in other nations would equate to that level of prosperity.
China is an enigma that will be a while yet in unfolding.