Massive profits. Where is the hiring???

Originally posted by telerion
From what I've read on the issue of high speed rail, high speed rail only makes sense between heavily populated areas that are about 150-200 miles from each other. It's just incredibly expensive to build and maintain. A train that goes 55-60 mph between Cleveland and Columbus wouldn't be sustained without a lot of subsidy. I can't speak for all the other ...[text shortened]... , did any of you read Alan Blinder's WSJ article laying out his job creation idea?

I'll respond tomorrow after I've had a chance to look at Blinder's article (is it in today's WSJ?).

Originally posted by no1marauder
I'll respond tomorrow after I've had a chance to look at Blinder's article (is it in today's WSJ?).

Yes read the article then get back to us with your opinion when you know everything about the subject as usual.

Originally posted by Zapp Brannigan
Yes read the article then get back to us with your opinion when you know everything about the subject as usual.

I like to actually read something before I have an opinion about it.

Originally posted by Zapp Brannigan
Yes read the article then get back to us with your opinion when you know everything about the subject as usual.

It was yesterday. Here's a link.

http://online.wsj.com/article/SB10001424052702303678704576439813221655044.html

It's an interesting idea.

Originally posted by no1marauder
I once thought that too, but now I'm not sure. Obama's rather skillfully lying the groundwork for blaming Republican intransigence if there's no extension of the debt limit. If that has all the negative consequences our banker and economic elite friends tell us it will, he may well be able to deflect criticism for continued economic problems.

Mitch McConnell seems to agree with me(!):

In a radio interview on the Laura Ingraham Show, McConnell predicted that if Congress fails to act, Obama will argue "that Republicans are making the economy worse and try to convince the public, maybe with some merit, if people start not getting their Social Security checks and military families start getting letters saying their service people overseas don't get paid."

"You know it's an argument he has a good chance of winning, and all of a sudden we (Republicans) have co-ownership of a bad economy. That is a very bad positioning going into an election," he said.

http://www.msnbc.msn.com/id/43739011/ns/politics-capitol_hill/

Originally posted by no1marauder
Mitch McConnell seems to agree with me(!):

In a radio interview on the Laura Ingraham Show, McConnell predicted that if Congress fails to act, Obama will argue "that Republicans are making the economy worse and try to convince the public, maybe with some merit, if people start not getting their Social Security checks and military families s ...[text shortened]... an election," he said.

http://www.msnbc.msn.com/id/43739011/ns/politics-capitol_hill/

I agree. I see Republicans having to cave on this one eventually. They are still getting a sweet deal if you ignore their "no tax increase" pledge.

Originally posted by telerion
From what I've read on the issue of high speed rail, high speed rail only makes sense between heavily populated areas that are about 150-200 miles from each other. It's just incredibly expensive to build and maintain. A train that goes 55-60 mph between Cleveland and Columbus wouldn't be sustained without a lot of subsidy. I can't speak for all the other , did any of you read Alan Blinder's WSJ article laying out his job creation idea?

I'm just dubious about how much return a huge repair project would bring. After all, if these projects are such high return, why weren't they being done before?

I’m not exactly sure of your point, here, Tel—but isn’t there a public goods question on infrastructure investment? That is, the private sector has seldom been good at such investment, even though private sector industries may well realize (un-accounted-for?) returns from public investment? Who would argue that that trucking industry (and the shipping industry in general, for that matter) has not benefitted from public highway investments—but who would argue that such investment would have been directly undertaken by the private sector? Or even that the kind of piecemeal investment that might have taken place would have been as broadly efficient?

I believe that there are public-goods areas where appeal to private sector returns just don’t hold water (Demsetzian “bribery hypothesis” arguments to the contrary), and empirically never have.

Appreciate your comments…

EDIT: I am well aware of arguments from unintended consequences, and unrecognized foregone alternatives--I just (unlike the Austrians?) think they need to be explicitly and rigorously/empirically recognized (rather than just "Well, maybe..." ).

Originally posted by vistesd
[b]I'm just dubious about how much return a huge repair project would bring. After all, if these projects are such high return, why weren't they being done before?

I’m not exactly sure of your point, here, Tel—but isn’t there a public goods question on infrastructure investment? That is, the private sector has seldom been good at such investment, eve ...[text shortened]... to be explicitly and rigorously/empirically recognized (rather than just "Well, maybe..." ).[/b]

I don't think a high-speed rail train fits the definition of a public good.

It is both rivalrous and excludable.

Now high-speed rail does provide a social externality by reducing pollution. Moreover for short commutes one could argue that the reduced pollution (from not having traffic blocked up on a 100 mile stretch of interstate) offsets the additional investment cost. In fact, you could measure this. Over longer distances though, the number of commuters falls off considerably reducing the social externality.

A bridge or highway is much closer to a public good though.

You're right that the government does not always identify the highest return projects, and the private sector may not undertake those projects because of the public goods problem. Perhaps there are a lot of bridges and roads that are in such disrepair that fixing them would produce very large social returns (like you say in your edit though I'd like to see the rigorous empirics since "Well, maybe," can cut both ways.)

If some one is arguing for a large-scale public works project (PWP) though, they must also overcome other hurdles. Not only must the social returns justify the investment (admittedly the social returns includes the reduction of any negative externalities caused by long-term unemployment), but it also must be shown that the government would be able to effectively identify projects and implement the PWP within a reasonable time period (if it takes 2-3 years to really get this thing going then it is likely that you just have a huge misallocation of labor at that point). Also the PWP would have to be cheap to downsize once the private labor market gets back on its feet. After all, ten years from now we don't want a glut road construction workers with few useful projects left to build.

Of course, this debate is purely academic anyway. The government sector is shrinking and there is little political support for a PWP.

Originally posted by no1marauder
Mitch McConnell seems to agree with me(!):

In a radio interview on the Laura Ingraham Show, McConnell predicted that if Congress fails to act, Obama will argue "that Republicans are making the economy worse and try to convince the public, maybe with some merit, if people start not getting their Social Security checks and military families s ...[text shortened]... an election," he said.

http://www.msnbc.msn.com/id/43739011/ns/politics-capitol_hill/

Suppose we do default. Who decides what gets paid and what doesn't?

Originally posted by telerion
I don't think a high-speed rail train fits the definition of a public good.

It is both rivalrous and excludable.

Now high-speed rail does provide a social externality by reducing pollution. Moreover for short commutes one could argue that the reduced pollution (from not having traffic blocked up on a 100 mile stretch of interstate) offsets the ad ...[text shortened]... yway. The government sector is shrinking and there is little political support for a PWP.

The American Society of Civil Engineers in a 2009 report (http://www.infrastructurereportcard.org/sites/default/files/RC2009_full_report.pdf) gave the US public infrastructure a "D" grade and identified serious defencies in all areas. They concluded that the US needed to invest an additional $1.1 trillion over the next five years to put our infrastructure in a "good" condition. I don't see that "identifying" needed projects is much of a problem; Obama's first stimulus in this area floundered because he insisted on letting State government bureaucrats have a large say in the selection of projects and this caused incessant delays and inefficiencies (not that the amount for the projects in that stimulus was anywhere near sufficient). If the Fed just went ahead and said, "we have to repair dams A, B, C" for example, project selection wouldn't have such problems.

If by political support you mean among the economic elites, then I suppose you are right. Polls suggest a very substantial majority of Americans would support a rather large PWP to decrease unemployment, however. Here's one study involving roads:

The survey showed that 71% of voters think leaders in Washington should seek common ground on legislation related to roads, bridges and transit systems, including 66% of Tea Party supporters and 71% of Republicans. Two out of three voters say that improving the country’s transportation infrastructure is highly important. Nearly half of all voters said that roads are often or totally inadequate and that only some public transportation options exist. Eighty percent of voters agree that federal funding to improve and modernize transportation will boost local economies and create millions of jobs, and view it as critical to keeping the United States as the world’s top economic superpower.

http://www.rockefellerfoundation.org/news/press-releases/rockefeller-foundation-infrastructure

So what we have is a political system that is listening to the elites, but not the people.

Originally posted by no1marauder
I'll respond tomorrow after I've had a chance to look at Blinder's article (is it in today's WSJ?).

Anything better's than nothing though I have my doubts about how many jobs his proposal would lead to. I proposed a few ideas back in December 2010 that I still think would be good. Among them:

Some kind of big business tax cut conditional on the firm hiring workers. 0% Corporate profit rate if you increase your US payroll of your firm 5% with jobs paying above median wages and providing health care, for example.

http://www.redhotpawn.com/board/showthread.php?threadid=136132&page=&page=1

Originally posted by telerion
I don't think a high-speed rail train fits the definition of a public good.

It is both rivalrous and excludable.

Now high-speed rail does provide a social externality by reducing pollution. Moreover for short commutes one could argue that the reduced pollution (from not having traffic blocked up on a 100 mile stretch of interstate) offsets the ad ...[text shortened]... yway. The government sector is shrinking and there is little political support for a PWP.

You’re right, of course, I was conflating public goods with the question of whether or not factors such as externalities make it more efficient for some goods and services to be publically provided. For high speed rail systems (setting aside their desirability on other grounds) to be left to the market to provide, I think would present some significant problems. First of all, there would be property-rights questions with regard to routing, that could make it very costly at the least, to put together efficient (in the practical sense) routes. Second, private ownership would have to be of sufficient lengths of route to prevent having some “start-and-stop” toll-pay system between tracks of separate ownership that would defeat the purpose.* For example, a particular high-speed connection might make sense between two hubs only if a particular third hub was also included; and maintenance costs might also diminish to scale over a significant distance. In any event, there are likely to be some barriers to entry on the basis of practical scale.

As far as infrastructure questions, similar issues might affect, say, rebuilding large-scale sewer systems over urban areas—as well as bridges and highways, as you note.

Surely there have been empirical studies that can be relied upon, at least in terms of general issues? In any event, to paraphrase something I think that Samuelson said: Surely there are things worth some inefficiency (assuming he meant in the economic/Paretian sense) to do, as opposed to not doing.

Thanks, Tel.
__________________________________

* In addition to such a system simply defeating the purpose of high-speed rail, it imposes transaction costs on the section owners to exclude free-riders (pun intended) from one section to another. Although, it may be rivalrous and excludable, I’m not sure that there would not be significant costs to enforcing excludability (e.g., monitoring costs as transaction costs).

Originally posted by no1marauder
So what we have is a political system that is listening to the elites, but not the people.

This could conceivably serve as humanity's epitaph.

Originally posted by AThousandYoung
The Dune universe is based on the premise that humanity had to genocide all artificial intelligences because they got too uppity. That's why they have Mentats. They don't trust mechanization any more.

Here's the prologue to Dune:

YouTube

Originally posted by AThousandYoung
Suppose we do default. Who decides what gets paid and what doesn't?

Obama and Little Timmy Geithner.

The Soc Sec checks go out unless one of those two guys orders otherwise.

btw, what ever happened to the Soc Security "Trust Fund" we're heard about all these years? We've gone from "oh, Soc Sec is solvent until 2035" to "Soc Sec is solvent through July 2011".


"Social Security Trust Fund Solvent Till 2035"
http://schotline.us/2011/07/17/social-security-trust-fund-solvent-till-2035/

"... There is currently 2.6 trillion in cash sitting in the trust fund coffers as Obama described them... "


At any rate, the Feds take in more than 10x the amount each month needed to pay Soc Sec, so if the checks don't go out, it's because Obama and Little Timmy decided not to mail them.