Crisis/Short-Term Funding

We’ve all seen it, over and over.  A bridge collapses, usually over a river.  Or here in Iron County, a landslide closes a state highway, and it takes eight months moving a huge chunk of  mountainside to repair the damage and re-open the road. All across the country, we have infrastructure teetering on the edge of collapse, with the potential to kill people and cause millions, if not hundreds of millions, of dollars in damage in each case. But nothing gets done until there’s a crisis, and then what’s done is often only the cheapest acceptable fix.

In the case of the landslide here, the eight-month closure was the third that has closed the highway in the twenty years we’ve lived here.  Independent engineers who’ve studied the road suggest that it should have been built on the other side of the canyon where the rock and ground are more stable.  They even suggested it after the last eight month closure and repair that added more than a 100 mile detour to the commutes, delivery routes, and local cargo haulage trips of local residents, businesses, and tourists.  The state highway department turned that proposal down, claiming it was too expensive.  Yet, if the highway had been built where the better engineers suggested, that section wouldn’t have to be rebuilt every five to ten years, and the overall cost to taxpayers would be less, not to mention the possibility of reducing fatalities.

Yet pretty much everywhere in the United States, and likely elsewhere in the world, since I doubt human nature changes that much once one crosses borders – with a few possible exceptions – the same sort of deferred maintenance or “do it cheap now” attitude prevails with regard to the basic structures of society, despite the fact that spending a few more dollars now would save more dollars and lives later.

Why?  Because there seems to be an attitude that keeping taxes as low as possible is prudent.  It’s not.  Keeping taxes as low as possible when calculating costs and expenditures over a twenty or thirty year period is prudent, but keeping them as low as possible every year and deferring every possible maintenance or construction project until something has to be done only results in higher taxes… and higher costs on the community.

There’s an old saying that expresses the point succinctly – “penny wise and pound foolish” – but sayings like that are somehow out of date, which is ironic since it’s usually the Republicans who are looking to cut government spending, even while they keep saying the support traditional values.

 

6 thoughts on “Crisis/Short-Term Funding”

  1. Wayne Kernochan says:

    I can’t keep from commenting on this one. One of the difficulties I haven’t seen noted with cost/benefit, payback period, or ROI analysis is what I call the “infrastructure problem”. It runs like this: two choices of material to build a road. One costs $40 initially, $10 every ten years to repair. The other costs $20 initially, $10 every 5 years to repair. Whatever the inflation/discount rate, the result is that most governments and businesses will choose option 2 — although option 1 is cheaper starting about 20 years from now.

    Now suppose we revisit the problem in, say, 10 years. Now the cost of sticking with option 2 is, say, $20 in 10 years, while the cost of option 1 is $50 (costs of install plus cost of maintenance 10 years from now), and the crossover point is about 40 years from now. Effectively, choosing an infrastructure makes switching less desirable.

    An extreme would be the “climate change” choice. In that case, not only does the “cheaper maintenance” get ignored as externalities (i.e., the government supplies the infrastructure), but we can conjecture a “worst consequences” scenario in which the choice to the business or government is between better benefits now and destruction in 20-60 years. Typical analysis in that case tells us that option 2 is better; but few would choose option 2 if they really understood that they would die after 20 years.

    Of course, it’s an interesting experiment to extend that time frame, so that it’s, say, 60 years or 100 years, in which case it’s your and others’ descendants that pay the price.

    Just a thought …

    1. Daze says:

      Even the “cheaper, but dead in 20 years” option might be chosen if you think:

      – “it’s what God intended, these are the latter days”

      or

      – “someone will come up with a fix for that by then”

      Fortunately for the world and humanity, hardly anyone thinks like that???

      1. Wayne Kernochan says:

        @Daze: you shouldn’t trigger my bloviating reflex 🙂

        With regard to the “it’s what God intended” crowd, I feel that the strongest answer is: do you believe that God created and monitors/can alter the universe (including Earth)? Then the Earth, properly understood, is our best way of understanding God — and scientific analysis of the workings of the universe/Earth, well confirmed, is therefore the closest we can come to God, and is to be chosen over the words of any man-written Book when the two conflict. Therefore, when some book talks of “latter days” and the science talks of a threat to humanity and the world via climate change with likely destruction of more than Biblical scale, it is the ultimate insult to the God one claims to worship to fail to heed Its word to our world via the unfolding of the universe.

        I find that when someone thinks of “someone will come up with a fix for that by then”, they are thinking of something like the atom bomb. Meanwhile, everyone understands that nuclear fusion, if achieved, would be far preferable, with effectively no waste to worry about. Governments — not business, because business can see the upfront costs are huge and the viability of any one approach is unclear — have been trying to simply achieve breakeven in nuclear fission for at least 50 years. We are still clearly at least 15 years away from any mass use, and there is no reason to think that it won’t be another 50 years beyond that until nuclear fusion actually works. In other words, we really need nuclear fusion right now in order to supplement wind and solar where these are not appropriate or adequate (e.g., England can’t do solar because it’s too rainy right now). And yet, we’ve been looking for the fix for 50 years, and we’re not near the answer. I could cite other examples, but that’s the most obvious. No, a lot of the time we don’t technology our way out of a mess — we just muddle along as is. And in the case of climate change, Ken Caldeira, the best expert on possible technological fixes, says that there are none that don’t have really bad side consequences.

        1. Daze says:

          One small aside on the last bit @Wayne.

          We have 10x250W solar panels on the roof of our house in London. In March they managed to generate somewhat more than 200KWH through the rain, which is getting on for double the predicted yield in the business case for putting them up there.

  2. Plovdiv says:

    Oh dear,
    We really are incredibly shortsighted at times, and it seems to be getting worse. It says a lot that in countries such as India they are still using infrastructure built in the 19th century, because it was built to last, although t is now creaking very loudly and persistently. We don’t seem to be able to get it into our heads that in order to save in the long run, we have to spend now, as this will avoid huge costs in the future. This is just common sense, which is an attribute that seems to have died out, or is at the very least in its twighlight years.

  3. Grey says:

    One factor left out here is that infrastructure spending during the financial crisis was made into a political football.

    The Tea Party line denounced it as socialist excess(!) and/or ‘just more unpayable charges on the national credit card.’ The mainstream GOP, paralyzed by the 2008 Obama victory (and to some extent by the Tea Party), wouldn’t act on formerly uncontroversial construction spending. (Many a cynic felt the GOP wouldn’t pass any law that would help the economy recover; given the GOP had no positive legislative agenda to advance, it could only beat Obama in the next round if the economy took him down with it. Given the disastrous hit to the construction industry by the housing bust, stifling infrastructure spending was a safe way to ensure a large portion of the unemployed stayed that way.)

    There have certainly always been disagreements about the best way to do infrastructure spending, but not the total shutdown seen here.

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