While I go back and forth on whether I believe Keynesian Economics works in to the extent that it is being employed by the current Administration (and the last one for that matter) I am positive about one thing about Keynesian Economics – when the public is footing the bill waste will be plentiful.
One of my favorite non-personal finance site is The Cato Institute. They update it every couple days with editorials that were featured throughout the Country in major newspapers. When I saw the title, “Just Another Government Pyramid” written by Jim Powell (originally appearing in The DC Examiner) I had to read the article. Truth be told I thought it was going to talk about Social Security as a Ponzi Scheme. However, I quickly figured out what the article was about,
Obama envisions a government-run “infrastructure bank” to overhaul America’s transportation networks. This sounds like the kind of grandiose project politicians love to brag about — the modern equivalent of pyramids. They cost a fortune, they look great, they increase the number of government employees but do little if anything for living standards.
Ah, we are talking about Government Wasteful Building Projects. Mr. Powell provides some great examples of the waste that can incur.
Examples of Wasteful Government Building Projects
Javits Center Government Waste
During the stagflation of the 1970s, New York City’s economy tanked, and state development officials approved a new 675,000 square foot facility that became the Javits Convention Center.
The New York Times reported on “the shoddy work and high bills of politically connected consultants and contractors. Complicated by a bid-rigging scandal and structural problems, the project fell two years behind schedule and was $111 million over budget.”
Boston’s Wasteful Big Dig
In 1985, Boston’s “Big Dig” was estimated to cost $2.6 billion, and it was scheduled to be finished by 1998. Taxpayers around the country picked up most of the tab. The project, that re-routed eight-lane Interstate 93 through a 3.5-mile long tunnel in an effort to reduce traffic congestion, was years late.
The project ended up costing $14.6 billion, and interest on debt reportedly will push the total to $22 billion. According to the Boston Globe, the project improved downtown traffic flows and induced people to drive more. Unintended consequence: “Many motorists going to and from the suburbs at peak rush hours are spending more time stuck in traffic, not less.”
Wasteful Federal Government Spending
Obviously the Federal Government isn’t much better and Mr. Powell highlights multiple projects but here are 2 of my favorites:
How has government done with something more modest like a mail sorting facility? In the early 1990s, the U.S. Postal Service authorized spending $199.7 million for a new Main Post Office in Chicago.
Because of poor planning and other problems, the project eventually cost $332.9 million. The Postal Service subsequently acknowledged that despite all the money spent on the Main Post Office, Chicago suffers from the slowest mail delivery of any major U.S. city.
Or how about something really simple such as a visitor center? Members of Congress caught grandiose fever and approved a proposal for the Capitol Visitors Center. Initially budgeted at $71 million, this became a $621 million, 580,000 square foot shrine to spending – three-quarters the size of the U.S. Capitol itself. It opened in December 2008 and will appeal to everyone who enjoys what the Washington Post calls “slick pomposity.”
If government spending makes you sick OR you don’t believe it happens you should really check out the article in full.