Friday, February 18, 2011

Reject the “Jobs” Justification for Transportation Projects

I fully agree with Robert Poole's article which in part reads as follows:
  • On a tour of China, government officials took renown economist Milton Friedman to a major construction site, where Dr. Friedman expressed surprise at seeing legions of workers digging away with shovels. When his host responded that a major purpose of the project was to create jobs, Friedman replied that if that was the case, they should equip the workers with spoons instead of shovels.
  • That point was underscored in a report issued last month by the Bipartisan Policy Center. “Strengthening Connections Between Transportation Investments and Economic Growth”, written by economist Douglas Holtz-Eakin and civil engineering and urban planning expert Martin Wachs.
  • Instead of focusing on short-term construction job-creation, the authors argue for a focus on long-term returns from infrastructure investment. “Over the long-term, higher productivity—the ability to generate more output and income from each dollar of capital or hour of work—is the key to higher labor earnings and improved standards of living,” they write.
  • Hence, infrastructure policy should select projects that do the most to enhance long-term productivity—as did the creation of the Interstate Highway System, which dramatically lowered the cost of personal and freight transportation, leading to the world’s most productive logistics system.
Speaking of highways, three California Congressmen are asking that the funds of the California high speed boondoggle be diverted to correct the ills of SR 99. Part of their positions is as follows:
  • The economic and environmental benefits of SR 99 improvements are strongly contrasted by the uncertainty of California’s now infamous bullet train, which has been described by the national press as “the train to nowhere.” Providing the state the option to redirect high speed rail funding to SR 99 will give state and local leaders the opportunity to step-back from what is likely to become a bottomless pit of spending.
The bottom line is government needs to invest taxes in productive and necessary infrastructure. For Hawaii this means road repairs, water and sewer line repairs, and airport and harbor upgrades within our ability to borrow and pay. All these are necessary projects and with proper scheduling and financing they can get done without breaking the citizens' backs.

The airport modernization, and the Middle Street merge fix projects that Gov. Abercrombie wants to do should be done asap. The Mufi/Carlsisle rail boondoggle needs to be thrown in the trash. The accumulated rail funds should be used immediately for the Middle Street construction, the Honolulu airport upgrades and for the design of the secondary treatment facility mandated by the EPA for our Sand Island effluent treatment plant. Now these are construction and engineering jobs worth paying for.

1 comment:

Anonymous said...

Panos D. Prevedouros, Ph.D, Thank you for highlighting the truth about the concept of Jobs being the solution for Hawaii's Transportation infrastructure. This is not the solution reorganization is the better option at this time. But, such action requires true leadership and a legislature willing to make the hard decision that Mr. Poole and I share - reorganize the entire DOT as an independent Port Authority, and declare the entire State of Hawaii as a "Free Trade Zone".

Removal of the DOT's means of production, currently associated with or by other State Department, Contracting/Procurement, Human Resources, Budget/Fiscal, and most of all Entrepreneurship/Management and Leadership.

Currently, DOT revenues are considered "Special Funded", but its revenues etc. are manipulated to create surplus's or deficit's. Removal of the entire DOT structure will show representatives where/what the largest problems are in the Sate.

As a "Port Authority" the new organization can be structured in a manner that represents all parties concerned. But, more importantly the funds that the Department generates are reinvested in a truly business like manner which will lead to creativity, efficiency, and and infrastructure that can take full advantage of Hawaii's designation as a "Free Trade Zone". Under such a designation, Port Allen could be our Port of entry for goods and services in/out bound to Asia, Hilo the Port of entry for in/out bound goods/services destine for the mainland.

While the good or service is improved or turned into the finished product that can be labeled "Made in Hawaii or the USA". Improvements of the good/service can take place at any of the Islands because they can move freely between the Islands where the local expertise can be taken advantage of. Finally, the term Free on Board (FOB) will save shipping costs for both sender and receiver.

The idea has been floated several times, however are killed in committee because the DOT is considered the "Cash Cow" of the legislature.

Historically, Port Authorities are usually created when they become considered a major liability, which is becoming the case today and infrastructure that cannot be maintained properly. Because the DOT funds are being used to make our budget problems seem less than they are. Or, legislative approval of its CIP program is based on Jobs (short term) and/or are used as a feather in a legislatures cap. However, the reality is these projects do not improve the infrastructure, because the projects are installed to soon or too late and do not follow a current Master Plan, serving as Hawaii's vision for the future and updated as changes in a travelers needs or new technology occur.

Mr. Skinner, A.A.E., PhD, MBA, MS