The Most Important Graph in the World

Monday, August 9, 2010

The Big Lie: Highway Projects Help the US Economy

Net international investment Position of the U...Image via Wikipedia

One of the hardest things to notice is when something that used to be true is no longer.

When America was a young country of abundant natural resources and few people, transportation projects that enabled shipment of goods -- canals, plank roads, and turnpikes -- provided a huge economic stimulus, as those projects enabled those abundant natural resources to reach their markets in the East and in the greater world beyond.

And when America industrialized, transportation projects both fed and profited from our new mechanized prowess. Railroads, heavily subsidized, generated huge returns for their owners and (indirectly) for the nation as a whole, enabling our factories to supply the world with goods, even as the mechanized reapers also began to make the Midwest the granary of the world.

Thus, the mental link was forged in the minds of many: transportation projects create long-term economic benefits.

But note: what is true of a producing country is not true of a country that is primarily a consumer. In America of the late 20th and early 21st Centuries, the country that realizes most of the benefits of our freight transportation projects is China, with Japan, Taiwan, India, and Indonesia following up.

Because today, freight COMES to the US, and containers leave empty. That means that all the hot air that the state and federal highway departments emit about the economic benefits of transportation investments is both true and terribly misleading. Transportation projects continue to help manufacturers and sellers, as they historically have.

What has to change is our willful blindness to our new reality that, as a consuming nation that has offshored its manufacturing base and runs a staggering monthly trade deficit (see graphic), each new project sold for its "freight mobility" benefits is really just another vein being opened in the American national body politic. Spending on highways not only just helps the nations selling us goods more than us, it also strengthens our addiction to petroleum, which further runs up our trade deficits. This way lies madness and economic collapse.

Just up the road in Portland, a gigantic multibillion dollar boondoggle known as the "Columbia River Crossing" is being sold as critical for freight mobility. Even if replacing the existing spans with a megabridge would actually increase freight capacity, it's crucial for us to ask, "Does America benefit when imported plastic crap and cars bought with borrowed money reach US markets faster?" To ask the question is to answer it: of course not.

Of course, none of this matters to the Oregon and Washington Highway Departments, salivating over the prospect of having billions of dollars of contracts to let and administer and lots of jobs for the consulting engineering firms, so you can be sure that they will continue to sell the "freight mobility" benefits of their work, confident that most people won't give it a second thought, even as they help bankrupt the country they claim to want to help.

UPDATE: June 2010 trade deficit wider than expected:
WASHINGTON — The U.S. trade deficit surged in June to the highest level since October 2008 and imports of foreign consumer goods hit an all-time high. But U.S. exports faltered, representing a setback for American manufacturers. . . .