Tuesday, September 05, 2006

Inflationary Projects

In the last post I mentioned monetary injection through grand projects. Let's start by admitting the problems and providing some counters. I'll use some example grand projects to demonstrate those counters.

Problem one is that it's inevitably inflationary. Government sponsored grand projects are almost a casebook example of how to inject money into the system - either directly as wages or indirectly as contract payments. Directly managed projects can - and have - interfered with civilian businesses. Contracts defeat that, but are often both MORE expensive and get less money into worker's wallets. And getting money into worker's wallets is a critical reason for such a project. It's an intentional attack on unemployment AND an attempt to counter deflation. Oh - another strength of contracts is that if/when the government quits paying the industry is still there.

Problem two is that it's probably not directly cost efficient. Grand projects that need government financing tend to have payoffs on long timelines -- and they're also sustaining goals other than the bottom line. Consequently they seem wasteful to 'annual profit' standards. If they're keeping a large number of people employed - better yet, employed in something that will be a useful skill down the road - vs just sucking at the welfare teat, well, that's a bonus on several levels, but it may not be profitable. And while we're at it, sometimes the profit's indirect. As an example, consider the Tennessee Valley Authority. There are a lot of flaws with it. But due to its existence, the Tennessee Valley is NOT "poor ignorant crackers on a backwater in the nation's trading network." Instead, it contributes. And the people who live there are surprisingly well off. Not all of them, but a lot more than it would be if the valley hadn't been improved with roads and electricity and all that sort of thing.

A major project would work. Our government as it presently exists won't do it, and we'd have some nasty resistance from folk who don't believe in anything past "me and today." And it'd be inflationary - bad or good, it'd be that. There'd be waste and fraud and all the other things. But some projects...

The first, and to me the least desirable, would be rebuilding the Katrina Devastation. The biggest flaw is that the majority of the work would benefit one state - Louisiana. That has problems for a national program.

Something that could encompass the Katrina devastation but cover more states equitably would be a Southern version of the Tennessee Valley authority. That area is POOR, largely because it's underdeveloped with no logistics networks of note, and very little power support. There are draft plans so it wouldn't be a cold start. Again, it's got a problem in that it's regional - better than national, but still somewhat constrained.

Another project - and I admit to some personal desire - is a high-speed train network. It'd be EXPENSIVE. It'd be long-term. It'd hurt the airlines, and that's actually a negative. It'd push a lot of places toward mass transit, cutting into the fuel problem, which is good.

The main point here is that the projects have, from the simple accounting principle, a lot of downsides. But from the polity view they've advantages.

Not that it matters at this time. I can't see any major project being floated for at least three more years.

6 Comments:

Anonymous Prince Hydrajak said...

"It'd hurt the airlines, and that's actually a negative. "

No its not. The longer we try to keep a dead horse alive by flogging it, the more useful resources the dead horse uses that could save us from the coming emergency.

9/06/2006 1:45 PM  
Blogger Kirk said...

A hidden assumptions in there, I admit. As long as we're a largish nation we're going to need to be able to deploy forces swiftly to other parts of the world. Yes, I'm mixed about that due to its potential for abuse, but it is a necessity. And if that assumption is accepted, you have to have the means, and for now air is the swiftest. Not the only (and air isn't the only such program we have), but the swiftest.

I think airlines need restructuring, and there are a lot of problems with the way our government subsidizes them, but we need the airlines. The reason is an economic trick. Basically, it's a deal:

We can buy a bunch of aircraft and mostly have them sitting around. OR, we can subsidize someone else who buys a lot MORE aircraft and uses them a lot. That's cost efficiency on many levels.

9/07/2006 8:52 AM  
Anonymous Prince Hydrajak said...

"As long as we're a largish nation we're going to need to be able to deploy forces swiftly to other parts of the world."

Only if we insist on being an Empire.

9/07/2006 3:42 PM  
Blogger Kirk said...

No. Only as long as we are not and cannot be isolationist. Empiricism is only one reason to go 'over there'.

9/07/2006 4:50 PM  
Anonymous Prince Hydrajak said...

Kirk,

You know I'm not simple.

The 4th AD needs more than planes to move it.

Anything you send in just planes is going to get rolled over by any armoured enemy ANYWAY. Anything that a purely light infantry (plpane mobile) force can stop, probebly could have been stopped with a little bit of diplomacy and little bit of stuff from us and a little bit of stuff from NATO and a little bit of local stuff.

Its time for us to stop acting like the 8,000 lbs gorrilla. We are real good at breaking things but we haven't really fixed anything since 1945.

9/08/2006 11:58 AM  
Blogger Kirk said...

No, you're not simple. But you're missing some key points, I think. First let me get rid of the secondary point - re not since 1945, I'd disagree. If nothing else we seem to have pulled Bosnia back from the brink. There've been some ugly failures, but we're not batting zero.

To the main part, you're right and wrong. We need ships (and trains) to move the equipment of the 4th AD. But we also have to move the people. Believe it or not, moving the gear by ship/train and the people by airplane is an excellent compromise between efficiency and effectiveness. It's that 15 to 30 days that is the big deal here.

Soldiers crammed onto a ship can't train. They can't exercise very well -- not at 'troopship' densities (which is different from the densities the marines use). All this means they're not near as ready to fight as they come off the ship. And while you're transporting them you still have to feed them and otherwise care for them which is yet more stuff to carry.

Transporting the men on ships along with the gear also slows down the upload and download a bit. The stevedores get the stuff off the ship, but the stay yard can get pretty full unless someone who can 'take' the equipment can move it somewhere and start prepping it. That someone has to get there, get familiar with the deployment zone, and make necessary coordinations to include a place to eat and sleep and all that.

So by flying the troops you gain two to three days on each end PLUS you gain all but five days enroute that can be used to train and update and all that useful stuff. Basically, it gives the commanders more time. And that's a resource precious beyond all others.

9/08/2006 12:54 PM  

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