Tag Archives: infrastructure

Uncomfortable Parallels

I realize that this blog has become something of a “downer,” and I apologize in advance for this particular post.

The other day, I was trying to cheer myself up by thinking of times in U.S. and world history when the prospects seemed bleak but the challenges were ultimately surmounted–the civil war, the 60s, etc. Then I thought about the Dark Ages, so I did a bit of googling. It appears that there is a fair amount of scholarly bickering about how long and how “dark” the Dark Ages actually were, but what made me sit up and take notice was an article on a history site titled “The Five Major Causes of the Dark Ages.”

According to the article, those five causes were 1) the fall of the Roman Empire; 2) the little Ice Age; 3)Famine; 4) the Black Plague; and 5) a lack of good roads.

If you think of the last century or so as an “American Age” during which the U.S. has dominated the world in much the same way that Rome dominated its time,  America’s current retreat from international leadership becomes especially ominous. It was concerning when George W. Bush’s cowboy demeanor and war in Iraq incurred the strong disapproval of many of our allies, but that faded with the international popularity of Obama .

Trump’s ignorance and bellicosity–not to mention the embarrassing buffoonery that has generated barely veiled personal disdain from world leaders–has diminished America’s stature, undermined important alliances and generated pushback from longtime allies. Books and articles comparing the current status of the U.S. to Rome are proliferating.

We are unlikely to see an Ice Age, but we are increasingly likely to see dramatic environmental degradation, thanks to the current administration’s anti-science unwillingness to confront climate change. (Gotta keep those fossil fuel donors happy!) Current predictions include warnings that areas of the globe where millions of people now live will become uninhabitable–or “best case” (!)– that huge portions of the earth that are currently being cultivated will become unsuitable for farming and food production. Famine, anyone?

I don’t know enough about medical science or the likelihood of pandemics to form an opinion, so let’s assume that isn’t a major threat (although millions of migrants and not enough food sounds like a breeding ground for epidemics).

But a lack of good roads?

We’re there. For years, America has allowed its infrastructure to decay–we wouldn’t want to pay taxes to fix those crumbling roads and bridges. We especially wouldn’t want to tax those “makers” whose corporations have profited from an infrastructure that has allowed them to receive raw materials and ship finished goods….

You’d think that intelligent self-interest would cause us to modify behaviors that are so obviously destructive. Take climate change: if we act to protect the environment, and the scientists are all wrong, we’ll just end up with clean air and drinkable water. Bummer. If we don’t act, and the scientists are right, welcome to the Dark Ages. Much bigger bummer.

Or take infrastructure. When those profitable companies that are fat and happy using their tax breaks to buy back their stock suddenly face major expenses or even a complete inability to do business due to failing roads and bridges or the degradation of the electrical grid, who are they going to blame? (We know the answer to that one….)

Wasn’t it Santayana who said “Those who don’t know their history are doomed to repeat it?”

 

 

 

 

 

 

Taxes and the Common Good

I know “real Amuricans” sneer at the notion that we might learn from the experiences of other countries. Universal healthcare? A commie plot! Decent mass transit? People who can’t afford–or don’t want– cars shouldn’t be coddled! A comprehensive social safety net? You are a commie!

Every so often, however, a “real American” finds living in a country that actually offers these and other subversive services is pretty attractive. Vox recently published an essay by one such person, whose job and that of his wife requires that they split their time between Wisconsin and “high tax” Sweden.

My wife and I have been dividing our time between jobs in Sweden and Wisconsin for the past dozen years, and I’m here to tell you that taxes in Sweden are not that high. To my surprise, I found that there are lots of things to love about the Swedish tax system. Swedish taxes are easy to pay, rational, and efficient. Best of all, rather than take away opportunities, Swedish taxes expand them.

The writer goes on to list things he loves about Swedish taxes. No kidding.

It turns out the average Swede pays less than 27 percent of his or her income in direct taxes. As I’ve written elsewhere, my wife and I pay about 22 percent of our US income in taxes. Our Swedish income tax was 31 percent. So, yes, our income taxes in Sweden were higher than in the US, but we still paid less than one-third in tax.

And you get far more for your taxes than you do in the US. In Sweden, college is free and students get a housing stipend. A colleague’s daughter, Kerstin, just completed a five-year dental program. Her family paid nothing for her education.

In Sweden, tax forms are simple, and they come already filled out. The author points out that tax-preparation services cost American taxpayers more than $32 billion per year–not to mention hours of citizens’ time and effort.

And in Sweden, there are no property taxes.

When the conservative government, favoring lower taxes, came to power in Sweden in 2006 one of its first steps was abolish the property tax and replace it with a fixed fee. The real estate fee for services is 7,112 SEK per house ($825 at current exchange rates).

This is the same for everyone no matter what the assessed value of the dwelling. The fee is $12 a month for our co-op apartment in Stockholm. If we owned the same property in Madison, our taxes would be $18,000 a year.

There are sales taxes in Sweden, and they’re high, but even then the author finds mitigating factors:

Sales taxes are high in Sweden, but you don’t see them, and that makes them easier to pay. If something costs 100 kronor, you pay the 100 kronor! Only when you look at the receipt do you see that it costs 80 kronor and 20 kronor for VAT (value-added tax). Many things are taxed at lower rates — 12 percent to have dinner out or buy groceries, 6 percent (only half a percent higher than our sales tax in Madison) for books and tickets to cultural events and in-country travel. Health related items: zero percent.

It is true that sales taxes are regressive; poor people pay a higher proportion of their income in this tax. In the US, a 25 percent sales tax would have to be offset with some kind of subsidies for our many poor. But because Sweden has a narrower income distribution, its sales tax is less regressive than in the US.

A fascinating difference between the U.S. and Sweden is that, in Sweden, if the government wants to encourage an activity, they don’t do it through the tax code.

One of the reasons US income tax preparation is so awful is that we try to reward certain activities by providing a tax deduction. If you do some good deed (like putting in a solar panel) and if you can find the receipt and documentation…, then you can list a number on Form H, line 36, that will lower your taxes.

Does this feel good? Do you feel rewarded for your solar panel?  Or is it just another damn number on a tax form?

If the Swedish government wants you to do something, they give you the money. For example: Having children is good for the society and costs parents money. In the US, you get a deduction on your income tax for dependents. In Sweden, you get a check every month and you can use it to buy shoes. For one child you get $120 a month and up to $620 for four children. Every parent gets a check.

The most persuasive argument for Sweden’s approach (at least, from my perspective) is that the taxes generate income used to provide collective goods that make life better and less costly for citizens.

Not having to pay for college gives the best and the brightest the opportunity to attend any school they choose — equalizing opportunity on merit, not parents’ wealth.

It’s not just college. Public amenities like parks and hiking trails, excellent and frequent public transportation, and–oh yes– universal health care.

Paradoxically it turns out the bloated, heavily lobbied, privatized US system spends more tax money ($4,437) per person than Sweden’s socialized health care ($3,184).

This is due to Swedish efficiency rather than poor service. I do get to choose my doctor, have high-quality care a short walk from my home, same-day appointments and short waits when I walk in unannounced.

Keep chanting “We’re number one! We’re number one.” Maybe we’ll convince someone besides ourselves..

Getting From Here to There…and Back

The age of driverless cars and trucks is rapidly approaching. Literally millions of Americans make their livings driving vehicles–trucks, Ubers, taxis, school buses…the list is long, and the consequences of those massive job losses will be severe and unprecedented.

I have no policy prescriptions to offer that might mitigate that job loss disaster. But I do have a response to those transit skeptics who oppose improving city public transportation systems because they claim self-driving cars will make those systems unnecessary.They don’t seem to understand that whether or not someone actually has to drive their car is utterly irrelevant.

What is relevant is that good, reliable public transportation–whether driven by a human or a computer–makes automobile ownership less necessary, and automobiles take a huge chunk out of most household budgets.

A recent article in Resilience, written by an American now living in Ireland, makes an effective case for public transportation.

The healthiest cities in the world have one thing in common; a network of trains, trolleys, trams, subways, buses, and other ways of getting around that don’t depend on everyone having a personal vehicle. Such services save everyone money, use less energy, generate less exhaust to pollute the air and less rubbish to pollute the water and soil. They tip the balance of power on roads, making them light with cars and bustling with humans — walkers, bicyclists and sidewalk vendors. Cities with healthy bus and rail systems feel like neighbourhoods threaded with capillary streets, rather than rows of buildings built alongside highways.

We think of Ireland as having progressed in recent decades, but a hundred years ago trains covered much more of Ireland, with perhaps twice as many lines as there are now. A map of Dublin in the 1920s, likewise, would show a spaghetti-explosion of streetcar lines winding through the narrow streets, pulled by horses at first, and later powered by overhead lines. The recent construction of light rail systems like the Luas were promoted as a next great step forward in transportation, but like most Great Steps Forward, it was merely restoring a tiny piece of what we once had.

The USA used to be the same; for more than a hundred years cities there were networked with a web of streetcars that acted as a circulatory system from one end of a city to the other, as well as buses that filled in the gaps.  Streetcars and buses seem slow to modern eyes only because we compare them to a car on the Autobahn; compare them to a car in the city and they were often faster.

The author notes, with regret, that many cities have begun to regard public transportation as expendable, since it doesn’t make headlines or make money for elites. The people most dependent upon public transit don’t hire lobbyists or make “meaningful” political contributions, and in an era where “tax” is a dirty word and municipalities are starving for income, that lack of political clout makes it easy to defund transit.  When that happens, it not only inconveniences middle-income people who depend upon transit, it also isolates and strands thousands of poor, elderly and vulnerable people.

And it privileges automobiles in ways that we now recognize are both costly and unhealthy.

I know that from experience, for I grew up in the USA, a nation that once had trolleys and streetcars in every major city and most minor ones. According to historian Bradford Snell, 90 percent of all trips in the 1920s were by rail; only 10 percent of Americans needed a car. My grandmother and grandfather met on the St Louis trolley, the one Judy Garland sang an ode to in “Meet Me in St. Louis,” and said most people never needed to drive.

After World War II, however, my country’s cities were transformed; most of the streetcar lines were reduced, sold, cancelled and destroyed, many by a coalition of car, tire, oil and truck companies. Those companies were found guilty of criminal conspiracy in 1951, and fined a pittance, long after the damage was done. Snell believes the corporations were not just trying to monopolise streetcar lines – the actual charge – but consciously conspiring to transform America to a car-dependent society. When they bought out the streetcars they didn’t just tighten belts – they destroyed the infrastructure, ripping the rails out of the streets and paving over their grooves, effectively salting the earth.

Our cities are now built around the fact that there is about one car for every American. Half of all urban space exists for cars, the other half for people. Many newer suburbs don’t have sidewalks, since the expectation is that people will leave their homes mainly to get inside cars. Many new minivans have televisions, a feature that assumes children will spend a hefty chunk of their childhood in the back seat.

Since most train lines were ripped up in the USA, Ireland and most other Western countries, many people must rely on buses. My native USA’s buses are less readily available than most other countries. In many cities I’ve been in, bus lines habitually run late or not at all, and can be expensive for the financially-strapped people most likely to need them. In many places they carry a stigma of poverty, or require people to wait in unsafe neighbourhoods.

Taking public transportation to the job is an amenity that bolsters our sense of being part of a public, unlike commuting (usually alone and at substantial cost) in one’s own car. The author’s final point is worth emphasizing:

Critics of public transportation accuse such systems of not making money. But how much money did the road in front of your house make last year? How much money does our asphalt make, or our electric wires, or our sewage pipes? The questions are ridiculous because these are not moneymaking enterprises; they are basic infrastructure, one of the legitimate reasons for paying taxes or having a government.

 

The Looters Have Arrived

Wednesday, I posted about the “partnership” approach Trump proposes to take to infrastructure repair.

Paul Krugman had a recent description of that plan, which he concludes is not about public investment, but about ripping off taxpayers.

Trumpists are touting the idea of a big infrastructure build, and some Democrats are making conciliatory noises about working with the new regime on that front. But remember who you’re dealing with: if you invest anything with this guy, be it money or reputation, you are at great risk of being scammed.

So, what do we know about the Trump infrastructure plan, such as it is? Crucially, it’s not a plan to borrow $1 trillion and spend it on much-needed projects — which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects — with the aid of a huge tax credit that gives them back 82 percent of the equity they put in. To compensate for the small sliver of additional equity and the interest on their borrowing, the private investors then have to somehow make profits on the assets they end up owning.

The description of this rip-off reminded me rather forcefully of the “looters” described by Ayn Rand in  Atlas Shrugged.

I have frequently been bemused by the actions of politicians and others who claim to have been influenced by Rand’s philosophy (and who all seem to see themselves as one of her protagonists. Remember those “I am John Galt” bumper stickers?) I particularly recall an Indiana agency head during the Daniels administration who made all his employees read the “two most important books”–Atlas Shrugged and–wait for it– the bible.

Rand, of course, was a very outspoken atheist who insisted that her philosophy was an explicit rejection–and antithesis– of Christianity.

Then we have Paul Ryan, another Rand fan, who is intent upon keeping Americans from becoming dependent on such “giveaways” as health care (and who was able to go to college after his father’s death thanks to Social Security).  I wonder if he will see the parallels between an infrastructure scheme that will enrich crony capitalists and Rand’s withering description of the morally indefensible “looters” who used government to enrich themselves at the expense of the truly productive  (Rand’s version of the “makers and takers” worldview).

Ayn Rand had an excuse for her extreme worldview; she was a product of  Soviet collectivism, and saw first-hand the danger that such a system posed to human diversity and individual excellence. What she failed to see was the equivalent danger posed by a society that defines success solely as the attainment of wealth, however acquired, and encourages contempt rather than compassion for the weak and powerless.

The latter society is the one that produced Donald Trump, who is already promising to be looter-in-chief.

Outsourcing Responsibility

Sometimes, I wonder why we bother to elect chief executives, since an increasing number of them are clearly uninterested in that boring activity called…what was it? oh yes…governing. Public administration. Management.

Yesterday’s news highlighted the latest in a series of missteps (a nicer word than “fuck ups”) by the Pence Administration. (Actually, I believe this one dates back to Daniels’ time.)

State officials threatened Wednesday to find a private developer in default of its contract for building a 21-mile section of the Interstate 69 extension in central Indiana after a major subcontractor stopped work over lack of payment.

The Indiana Finance Authority has issued a notice of non-performance to I-69 Development Partners LLC for the project upgrading the current Indiana 37 route between Bloomington and Martinsville.

According to bids submitted for the project in 2013, I-69 Development Partners consists of OHL Concesiones of Madrid, Star America Fund LLC of Roslyn, New York, and UIF GP LLC of Delaware.

The dispute comes after Crider & Crider Inc., the contractor responsible for the project’s earth-moving operations, halted work this week.

For the past several decades, public officials–especially but certainly not exclusively Republican elected officials–have had a love affair with so-called “privatization.” I say “so-called,” because genuine privatization involves government’s withdrawal from a given activity (Margaret Thatcher selling off steel mills to the private sector, for example.) In the U.S., what is usually called privatization is actually outsourcing–the practice of choosing a for-profit or nonprofit surrogate to manage a job or provide a service on behalf of a government agency.

I have written extensively about the issues involved in outsourcing, and I’m not inclined to belabor the issue here. Suffice it to say that agencies of government may contract with private entities to provide government services, but they cannot contract away their ultimate responsibility for seeing to it that the project or service is appropriately managed or delivered.

When government hires a contractor to perform a service–in this case, to build a road–it still has the obligation to supervise that contractor’s performance. Effective and competent outsourcing requires that the relevant government agency retain sufficient capacity to manage and monitor the contractor.

Some government functions, of course, simply should not be outsourced. (Private prisons come to mind.) Reasonable people can argue about the wisdom of contracting with private developers to manage the building of roads, but those reasonable people will usually agree that the state retains an obligation to supervise and control its contractors, who are, after all, being paid with tax dollars.

In this case, clearly, that supervision was lacking. And we all know who pays the price when government fails to discharge its most basic responsibilities, one of which is infrastructure:

State Rep. Matt Pierce, D-Bloomington, said many people are frustrated with the traffic delays on Indiana 37 caused by I-69 construction and that he’s not been able to get answers from state officials or the developer.

“People don’t understand why they’re driving through miles and miles of traffic barrels and seeing little, if anything, getting done,” he said.

About 95 miles of the I-69 extension have opened since 2012 between Evansville and Bloomington through southwestern Indiana. The total cost of the I-69 extension is estimated at $3 billion, but the cost of the final leg from Martinsville to Interstate 465 has not been determined.

When that cost is determined, we all know who will pay it.