Thursday, August 25, 2011

Shovels will never be ready

One reason why investing in Keynesian stimulus will not stimulate job growth is because of the long lag time between conceiving of a project and tip toeing through all the regulations to get approval for beginning construction. Plus you have to fight through the courts for all the environmentalist challenges to your project.
The easiest project to start is a road through a strip of desert with no people and none of the wildlife deemed vulnerable by environmentalists. Yet even this kind of infrastructure lay-up would take three years from conception until the start of construction, according to an executive at a global firm that advises on such projects. Draw the proposed road to run through an urban area or environmentally sensitive terrain, or assume that negotiations are necessary to acquire land, and 36 months easily turns into seven years of planning before the project is ready for a shovel.

Want to build a bridge? Preparing to create such an economic stimulant requires at least five years, assuming no complications. Mr. Obama may dream of another New Deal-era of big public projects, but he may not fully appreciate the innovations that have occurred in the past three-quarters of a century. At all levels of government, techniques for delaying construction while making it more costly have rapidly advanced, especially in the area of environmental review. It's possible that the massive Hoover Dam, completed in 1935, couldn't even be built today. "Damming rivers is a very touchy subject now," says our source, given the environmental concerns about impact on fish and other species.
So why would similar stimulus plans do any better in stimulating the economy this year than it did two and a half years ago?
This is one reason that America got so little new infrastructure out of the last stimulus. Re-paving existing roads, without offending any new constituencies, is one of the few activities that can be shovel-ready in a short time frame. And the well-publicized difficulties Team Obama had in finding "shovel-ready" projects for Stimulus I would only get worse in the sequel. In 2009 the feds were giving the money away. With a Republican House, the best that Mr. Obama can hope for is funding for his Banana Republic-style "infrastructure bank."

Will the same governors and mayors who couldn't find enough shovel-ready projects when the money was free now submit more requests for funding that they have to pay back?
But liberals are so wedded to the idea of a Keynesian style stimulus that they're ready to rinse and repeat what failed before in an attempt to demonstrate that the President is focused on jobs, jobs, jobs.

John Boehner has quietly changed
the style and operations of the House and has successfully out-maneuvered Barack Obama.