Fall of the Dutch

[eppie]

This doesn't make any sense to me. Even you have admitted that this is not the right time for austerity. If the Dutch start spending more (the only possible implication of breaking the "hard line"), then surely this can only help boost economic growth everywhere else in Europe? The "wounds" are not beginning to heal in Europe. To the contrary, economies are beginning to shrink, because every government is pursuing insane "contraction during a contraction" policies. Since nobody can devalue, the only way out of the trap is for rich (Netherlands, Germany) Eurozone countries to run deficits. In this context, a hard line is precisely the opposite of what needs to be done.

-Jester

Correct, but this is one of the great misteries of politics.
The right wing is always for letting the market solve things while the left wants the government to have more influence. Now it is crisis and the right wing wants to cut cost and limit spending while they know that that will damage the economy, and now the left says to not be too strict with saving.

[kandrathe]

Correct, but this is one of the great mysteries of politics.

With government, whatever you do, you need to work to undo someday. They never tend to make temporary changes. So this is why the tension exists between those that want government smaller, and those that want government larger. The "right wing" feel that they face huge obstacles in trimming back once things are established in law. The rhetoric from the "left wing" always becomes one of damaging the lives of pensioners, or young people (like Crusader). And, yes, certainly it is the change in removing a giveaway that is most painful. The rhetoric from the right wing is always about deficits, debts, fraud and wasted spending. And, yes, it is always the case that it is only a small minority of funds that are squandered (although, with a Trillion dollar budget the small % misappropriated would feed and clothe all of our poor for a year).

In the US... I am for as small a government as is possible (in programs), since this is a limitation on the power of the majority against the minorities (laws, enforcement and courts defend them). I don't presume to understand the inner workings of other countries enough, or their peoples will to advocate otherwise. I would also desire to see the US scale back their military might to what is needed to defend the US (and to make good on promises made to defend others until those others can defend themselves).

That said; As Jester has pointed out, I do see a role for a national government to "invest" at those times when people and businesses see high risk in spending money. For example, if you have a vital roadway that is typically congested for hours every day, spending the money to create more lanes or fix broken pavement will improve the traffic flow increasing the productivity of that urban area. Or, another way to boost the local economy would be to give businesses an assurance of lower costs (at least until the economy were growing steadily again).

The root causes of this current economic problem was malinvestment in housing, where due to unfavorable investing opportunities most everywhere else, the government subsidized (risk ameliorated) housing market seemed a stable and profitable investment. We found the level where even the very large US government couldn't underwrite the risk in an economic downturn.

[Pantalaimon]

For example, if you have a vital roadway that is typically congested for hours every day, spending the money to create more lanes or fix broken pavement will improve the traffic flow increasing the productivity of that urban area.

But will it? I realize this is a throw-away anecdote and a complete derailment of this thread. But what the heck, we're on the LL.

Leaving aside the question of whether it improves the traffic flow (and I've personally worked on many road widening projects which were unequivocally shown at the planning stage to produce neutral or negative long term benefits for the network, but proceed as fast-tracked political wins), I ask you to seriously question the assertion that transportation is linked to productivity. Commuters spend the same number of hours at the office regardless of their length of commute, so their personal contribution to their employer is the same regardless of the traffic jam. Impeded freight movement? Perhaps, although industry often has more flexibility than commuters to reroute spacially or temporally. Additionally, increased shipping costs hurt the manufacturer, but employs an entire industry. Would the economy be better off, as a whole, if we could teleport goods directly from factory to docks?

So what drives the net loss in productivity? "Congestion = bad for GDP" is an assertion that I encounter every day in my working life, and it's quite dear to my heart. The media loves those annual reports about how congestion is "wasting $3 trillion every year". In the political and layperson arena, it goes largely uncontested. But in my view, for many jurisdictions transportation expansion (note: not just roads - rail, transit, bicycle, air) in the name of GDP is their #1 waste of public funds. And it's orders of magnitude larger than fraud, corruption, tax evasion or even the war on drugs.

Take, for example, this study: http://www.strc.ch/conferences/2008/2008...ty_GDP.pdf

The researchers found that transport intensity had no relationship to GDP; rather it was only linked to the mean distance from that jurisdiction to all other jurisdictions.

...the analysis provided no evidence of a correlation between road freight transport indicators expressed in number of trips or km driven and GDP, or with the structure of the economy, that can sustain itself when the variable peripherality is partialled out. In fact, the level of peripherality seems to be the only variable accounting for variations in the transport indicators.

Another study (http://econpapers.repec.org/article/eeet...37-151.htm ) found that GDP growth can be linked to growth in transportation, but it can also be independent or even inversely linked. I would hypothesize that it depends on the major focus of your economy - is it manufacturing, intellectual services or resource based?

... distinguishes between three general types of relations: the GDP growth and the growth of transport can be coupled, decoupled or negatively decoupled. In the 1990’s there were differences between countries within the EU in the degree of decoupling. While in the UK, Germany, Luxembourg, Austria, Finland, the Netherlands and Sweden a weak decoupling could be observed, countries like Ireland, Denmark, France and Belgium showed expansive coupling (Tapio 2005).

Do investments in transportation infrastructure impact quality of life? Probably - although the quality of life in LA or Houston is not significantly higher than anywhere else. Do they impact GDP? In some cases, but not everywhere.

[kandrathe]

Do investments in transportation infrastructure impact quality of life? Probably - although the quality of life in LA or Houston is not significantly higher than anywhere else. Do they impact GDP? In some cases, but not everywhere.

Yes. :-) I do agree that many projects are done more for political purposes than utility. It does show how even what might be an obvious example of how public money might be spent for productivity gains is fraught with the peril of wasteful political influences. The bridges to no where not withstanding...

Commuters spend the same number of hours at the office regardless of their length of commute, so their personal contribution to their employer is the same regardless of the traffic jam.

I disagree with this. My experiences as a worker and as a boss tend to support that people attempt to arrive and depart at the same times each day, and their excess commute (beyond normal) robs the business of the time on either end. As a parent who picks up at the end of the day, I need to leave early enough to avoid congestion to ensure I am there on time. So, for an hour commute, I need to leave 1.5 hours before the pick up deadline (6:00pm). Being that I live in Minnesota, my company also suffers from commute robbing time on bad weather days. An hour commute may take 2 or 3 hours, and people show up late to the office. I would say that a major challenge for a businesses in commute heavy cities is to get the expected productivity from their workers (also setting aside the physical and mental health detriments of long commute on worker productivity).

But in my view, for many jurisdictions transportation expansion (note: not just roads - rail, transit, bicycle, air) in the name of GDP is their #1 waste of public funds. And it's orders of magnitude larger than fraud, corruption, tax evasion or even the war on drugs.

I can see (and have seen) that this very much can be the case when the proposed project is not based on need/demand, but rather on wishful thinking (if we build it they will come). In fact, my wife and I were commenting on that this morning. We were driving alone in the HOV (high occupancy vehicle) lane while the low occupancy commuters were bumper to bumper. Great for us, however, it was based on the assumption that people would double/triple up and form car pools. Its been 10 years now, and it just doesn't happen. So, they now issue an electronic pass which allows the wealthy driver the opportunity to drive in the commuter lane at a high price. The commuter lanes are still mostly empty during rush hours. Then, there is the cost to the highway patrol to enforce that the lane remain empty, except for valid wealthy people or the rare HOV.

In my locality we are having a debate currently involving whether and how our taxes would help to foot a large portion of the bill to build a new football stadium. At the same time, we've suffered three years of cost cutting and underfunding public systems to meet budget pressures with the biggest amount of shortage taken out of K-12 education.

The people need to decide whether entertainment trumps our obligations to K-12. I like football, and I'd be sad to see them go. But, it is a business, and I'm against this recurring subsidy given to the business of professional sports. Whereas, the things that would benefit the people more than the entertainment from those 8 games played in the stadium per year would be things like educated children, or a transit system that would allow people to get to their jobs.

[Pantalaimon]

I disagree with this. My experiences as a worker and as a boss tend to support that people attempt to arrive and depart at the same times each day, and their excess commute (beyond normal) robs the business of the time on either end. As a parent who picks up at the end of the day, I need to leave early enough to avoid congestion to ensure I am there on time. So, for an hour commute, I need to leave 1.5 hours before the pick up deadline (6:00pm). Being that I live in Minnesota, my company also suffers from commute robbing time on bad weather days. An hour commute may take 2 or 3 hours, and people show up late to the office. I would say that a major challenge for a businesses in commute heavy cities is to get the expected productivity from their workers (also setting aside the physical and mental health detriments of long commute on worker productivity).

Travel time reliability is significantly different than the raw travel time itself, and has actually been shown to correlate with GDP. A roadway that is completely congested all the time will actually outperform lightly used roadways in that regard - it's moving a 5 mph every day, not just when there's an accident.

If travel times are reliable and you still have a worker that has to leave a 4:30pm due a 60 minute commute, and doesn't come in earlier to make up that difference, well that's hardly unforeseen. The employer is consciously accepting lesser productivity from that worker.

[kandrathe]

Travel time reliability is significantly different than the raw travel time itself, and has actually been shown to correlate with GDP. A roadway that is completely congested all the time will actually outperform lightly used roadways in that regard - it's moving a 5 mph every day, not just when there's an accident.

Yes, I can see that reliability would be key. Around our cities in the US you find that truckers intentionally take their breaks during rush hour to avoid wasting their time(nerves) in congestion. Although, if traffic moves predictably at 5mph, then beyond a certain range, the time and money spent commuting may not make employment at some places feasible. For commerce, it would make the costs of transport by that road prohibitive.

[Pantalaimon]

Huh. Bot necro brings me back after 7 years. Nice to see this place is still kicking