Job Creation, Obama Style

To give Mr. Obama his due, that is one stubborn man. He doesn’t care what anyone thinks, it’s his way and the highways, the railways, and the runways. Pretend politics don’t matter (they do), and let’s examine his latest idea on “job creation,” which is to spend “over $50 Billion” (which will be pork-bellied up to at least $70 Bn by the time it gets through Congress, if it does) on “…rebuilding 150,000 miles of roads; building and maintaining 4,000 miles of rail lines and 150 miles of airport runways, and installing a new air navigation system to reduce travel times and delays.”

What kind of jobs might those projects create, who could benefit, are any of the ideas themselves laudable, and what effect will they have on the economy and stock market if implemented? Is there anything in there which suggests going long anything other than concrete, asphalt, and steel — if those? Let’s not be pessimistic and partisan, here, let’s at least look at the man’s ideas before we bury our faces in our hands and whimper for our mothers and Lee Iacocca.

Railways. What railways, where, serving what purpose? Another Amtrak, perchance? If there be a bigger waste of transportation dollars than passenger rail, I don’t know what it is, particularly what is known as “light passenger rail” which is detested by all except those who have no intention of using it and those who think there should be rail transportation from Las Vegas to Los Angeles.

New commercial rail? From where to where to carry what cargo? It isn’t as though we are building a lot of new factories. 4000 miles of rail would cross the continent and go pretty much from New York to Florida as well. What do I know about trains? Quite a bit. I’m not 20 miles from Hearne, “the cross roads of Texas,” where all the moguls lived a hundred years ago because the rail lines East to West and North to South intersect there. We move lots of freight by train in Texas. Restoring American railroads for the transportation of freight would be a fine idea, since it is faster, cheaper, and more energy-efficient. It saves wear and tear on the roads. I’ve ridden one from San Francisco to Texas (miserably uncomfortable) and from Rome to Frankfurt (ditto) but choo-choos haul cars, oil, and grain just fine. Besides, I’ve read Atlas Shrugged at least two dozen times.

Rebuilding 150,000 miles of roads? He’s joking, right? Again, from where to where, serving what purpose? As of 2002 there were 42,793 miles of Interstate in America. At the current price of building roads most of the entire sum would be required to replace just those and the project would snarl traffic beyond redemption for years, adding to transit time, gasoline consumption, and road rage. If we figure a million a mile (read the road signs, people; that’s conservative) we come up with $42,793,000,000. Borrowed dollars. Plus cost overruns, no doubt. Still, they could recycle the expensive signs bragging about current “stimulus” projects…

150 miles of runways is an interesting project for those who don’t know anything about where airports are situated, zoning laws, public outrage, noise abatement programs, changes which would be required to terminals, and the government’s own quaint interference in almost everything. The “environmental impact studies” alone would be quite time-consuming. I can believe that Washington, New York City, Chicago, Denver, Atlanta, D/FW, HOU, and LAX would appreciate some more runways of a mile to three miles each but it would surprise me very much if even one of those cities had any idea where to put them, including Henry Cisneros’ disaster 30 miles out from Denver. If we start constructing new airports we’re talking real money, waste, and inconvenience.

Well…what about investing in Mr. Mowan’s Amalgamated Switching? Look at the wording again: “installing a new air navigation system to reduce travel times and delays.” Uh…the problem isn’t that pilots don’t know how to get from LAX to Hobby by way of Albuquerque, non-stop from NYC to SF, or even Love to CLL in a puddle jumper. It isn’t that new machinery would draw straighter lines through the sky to arrive at shorter distances from point A to various points B, C, and/or D. The very thought of reconfiguring all of the flight paths to accomodate new electronic gadgets (which might or might not work) gives me an even stronger urge never to get on another airplane as long as I live, and up until this point I was exempting private ‘planes, which will let me smoke. Unless everyone is flying on autopilot all the way, sooner or later some experienced pilots would end up on their regular routes and drop metal and people all over the landscape.

It would really help if there were anyone in the Cabinet who had ever run a simple household on an average American income and had learned to assess needs, set priorities, and work within a budget. But do let’s see how Mr. O proposes to pay for this: “Obama said the proposal would be fully paid for. In an earlier briefing for reporters, administration officials said Obama would pay for the program by asking lawmakers to close tax breaks for oil and gas companies and multinational corporations.” Whee! There is a wingdinger of an idea. We’ll raise costs for oil and gas companies breaking an immutable law of economics: you cannot make manufacturers and businessmen pay taxes out of their profits. The increased costs are invariably passed on to consumers or compensated for by moving to countries with friendlier business environments. That’s why the 2008 $2.25 quart jar of Hellman’s Mayonnaise now costs $3.95 and contains 30 ounces. The Oil and Gas people have already had leases cancelled and new vast areas declared off-limits for drilling, and face the same tax increases the rest of us do 1/1/11.

“But the JOBS, Mrs. Traynham! Think of the jobs.” Okay. What jobs? Heavy equipment operators. Probably some extra shifts pouring the rail (have you noticed the price of steel lately?), more Union jobs. Undocumented workers holding STOP signs at $28/hour. A few draftsmen and engineers. A few more people mixing concrete and asphalt. All of those people we see lounging along the road while a few others work, apparently doing nothing other than wearing day-glo orange vests and hard hats. None of those jobs are permanent, and every last project is subject to corruption and bid manipulation. When the project is finished, the job is gone — and the unemployment compensation begins. The only jobs which will remain long afterwards are government administrative ones. Look at government agencies which persist decades after the original reason ceased to be.

In May we took the Interstate from central Texas to Charleston, South Carolina. Yes, some of it — notably in Louisiana which has probably had to skimp following Katrina — had stretches in pretty bumpity shape. What impressed me most, though, was that not a quarter of a mile the whole trip passed without seeing at least one hunk of rubber thrown off a retread tire. That told me two things: the states haven’t got crews to spare to clear road hazards, and Americans are hurting. There are already more than ample funds allocated for roads (such as the forty-two cents a gallon tax on gasoline), and I think we need a good definition of “rebuilding.”

Permanent jobs are not based upon repairs or increasing unnecessary bits of infrastructure for the sake of appearing to be doing something and rewarding voter blocks. Lest you think I am a die-hard Republican, dear readers, I would feel exactly the same way had such projects been promulgated by Dubya, Ronald Reagan, Teddy Roosevelt, or Donald Duck. Bad economics is bad economics, and such proposals lead to increased joblessness, squandering resources, and reduced tax collection.

Instead of increasing taxes on the O&G people and multinationals and subjecting those of us who do the consumer spending to bigger strains on our checkbooks, how much of a “tax holiday” could we have for sixty billion? That has been suggested, and we wouldn’t have to borrow it, pay interest on it, or try to extort it inefficiently from the citizenry. $60 Bn imaginary dollars spent on make-work projects, filtered inefficiently through bureaucracy, won’t begin to get the stalled economy rolling, but $60 Bn in the hands of employed consumers and employers would be spent, re-spent, and spent again many times, and taxed on most of the transactions.

Put a moratorium on withholding, extend the Bush tax cuts permanently, don’t bail out anyone else, get serious about cutting “social services” drastically, and promise the American people — meaning it — that no taxes will be raised for two years at any level, and let’s see if Reaganomics won’t work once again with even that much stability and access to captal. Only this time let’s don’t spend the gusher of revenue that comes in, stick the surplus in a real Social Security fund Congress can’t touch. We have plenty of taxes already to run more government than anyone needs and far more than we want.

If we really want to get serious before nothing will work, over the next two years reduce government jobs by a minimum of 25% and reduce the salaries of the rest of the 40% of those employed who work in government at some level (either as a sub-contractor or as an almost unfirable direct hire) to prevailing market wages in the private sector. Tell everyone under 45 the truth, that SS is just another tax and to make better provisions for their own futures. Raise eligibility age, end SS for any reason other than actual retirement after having qualified, and no more increases for anyone, anywhere, until the budget balances. Life is tough all over, people. Get used to it. Get rid of everything unreasonable and unnecessary from the Department of Agriculture to the Department of Education, to Medicaid to wage and price controls…and stop foreign aid and close and defend the borders.

Well, yeah, we’d have riots in the streets over welfare and other “entitlement” programs, but at the rate we’re slipping into third world status we’re going to have those anyway because they cannot be paid for much longer even with unlimited imaginary money.

Linda Brady Traynham
Whiskey & Gunpowder

September 7, 2010

The Daily Reckoning