Even as California governor Gavin Newsome blames the state’s high-speed rail debacle on the consultants, President Trump and congressional Democrats have tenatively agreed to spend $2 trillion on infrastructure. Some have drawn the wrong lesson from California’s problems, suggesting that government should do everything itself, that privatization is wasteful, and government control is efficient.
In fact, it’s not the consultants, stupid! Nor is it the private sector in general, which has incentives to be efficient so long as it has to rely on market forces rather than a big-government sugar daddy. As the Cato Institute’s David Boaz points out, the real problem is the iron triangle of bureaucrats, elected officials, and private interests (including consultants, contractors, and unions) who benefit from big-government programs. All of them work together to get the programs approved and then have plausible deniability when things inevitably go wrong.
No one should have been surprised that the California project cost far more than originally projected. Wendell Cox and Joseph Vranich predicted it months before voters went to the polls in 2008 (and even their high estimate of $61 billion — $71 billion in today’s dollars — turned out to be low). As the Antiplanner has shown, almost every passenger rail project built by government in the last half century has had a large cost overrun.
It wasn’t just consultants who were promoting the project back in 2008. One of the biggest proponents at the time was the mayor of San Francisco, whose name happened to be Gavin Newsom. “We absolutely need this,” he said in 2007. Newsom can blame the overruns on the consultants, but he was a willing partner and as a San Francisco resident he was fully aware of all the cost overruns associated with BART, San Francisco’s Central Subway, and other rail projects there.
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In the 2016 presidential campaign, the Democrats advocated a $275 billion infrastructure program and Trump trumped them by promising to spend double that amount. Now they have agreed to compromise by spending a mere $2 trillion. It’s all very vague, but clearly all three legs of the iron triangle are salivating at the prospect and hoping no one remembers what happened in California.
Remember the Antiplanner’s cardinal rule of infrastructure: the best-maintained infrastructure is infrastructure that is paid for out of user fees. The United States will no doubt spend $2 trillion on infrastructure in the next few years, but that money will be best spent if none of it comes from the federal government. Instead, it should all come from private companies and state and local agencies that receive their funding exclusively from user fees.
Note: I know I said the Antiplanner would go to two posts a week, but when important news stories come out I’ll add to that.
A trillion here/ there. The day they audit the Pentagon is the day I’ll believe it.
We don’t need an infrastructure deal. We surely don’t need anymore bridges or highways, we have plenty of infrastructure, what we need is overall maintenance to fix what’s currently dilapidated instead of a wish list of new projects with little positive return. In the long run the federal government needs to get out of the infrastructure business and leave those responsibilities to the states. Regardless of what we wish for; The Era of big government infrastructure is coming to an close; we don’t have the money anymore, it’s gone, down a financial black and it’s not coming back. We’re gonna have to make new arrangements.?
https://www.youtube.com/watch?v=LHacDYj8KZM