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The government is an inefficient beast

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May 11, 2009 – Comments (7)

 

I have been a big skeptic of the government's "stimulus" spending since its details first came out.  It's not that the money won't help the economy some, just that the government is such an inefficient, inept beast that it will almost assuredly be used extremely inefficiently. 

Here is yet another example of how large organizations like the federal government, and even state governments, operate inefficiently:

STIMULUS WATCH: Road money skips over needy areas

Places hit hardest by job losses are getting the least from federal road money

Many of the counties in the United States that currently have the highest unemployment rates will receive the least help from one of the most simulative aspects of the new program, the construction of bridges and roads.  {sarcasm} I am absolutely shocked! {/sarcasm}

According to a survey of the 5,500 planned transportation projects with a combined cost of $18.9 billion nationwide by the AP, the government's planned stimulus spending on roads is 50% higher per capita in areas with low unemployment than it is in areas that have high unemployment.

For example, Elk County, Pa., 13.8% unemployment, is not receiving any stimulus money for roads yet Riley County, Kan., 3.4% unemployment, is receiving $56 million to build a new highway, improve an intersection, and restore a historic farmhouse (huh?).

Similarly, Perry County, Tenn., which sports an shocking unemployment rate of 25.4% isn't scheduled to receive a dime in spending on roads.

Part of the problem is that the government understandably wants to spend the stimulus money as quickly as possible.  As someone who has been critical of it not being spent quickly enough, I completely understand.  Unfortunately, the most beaten down communities do not have "shovel ready" projects waiting for funding because they didn't even have the money to plan any.

Interestingly, states will lost their earmarked stimulus money if they don't spend it quickly enough but even though states are technically required to spend stimulus money in economically depressed areas there's no penalty if they don't.

In low-unemployment counties (top 25%), the federal government is spending about $89/person versus $59/person in the worst-hit areas (bottom 25%).

The analysis also found that counties with the highest unemployment are most likely to have been passed over completely in the early spending.

Quite frankly, less than a hundred bucks per person in spending isn't going to do much in the grand scheme of things anyhow, but still...

It's good that the AP is bringing this issue to light, because its survey only looked at approximately half of the scheduled stimulus spending on roads.  Perhaps someone in Washington will make note of this criticism and spend some of the future money in the areas where it's actually needed.  One has to wonder how the AP and its likely limited resources was able to come up with information like this so quickly yet the billion people who work in Washington couldn't.

Never underestimate the government's ineptitude, Democrat or Republican.  It's not that believe the government should not exist.  Clearly the lack of regulation that got us into this mess shows that it is needed to some extent, I just don't believe that inefficient government stimulus spending which will likely eventually lead to higher taxes is the solution to all of our problems.

Deej

7 Comments – Post Your Own

#1) On May 11, 2009 at 8:10 PM, devoish (96.49) wrote:

Government is certainly the solution to some of the problems. Especially the immediate ones.

 "Shovel ready" was for two reasons, one was to prevent local Governments from trumping up make-work projects and reduce that type of waste. The second was to get money out quickly and stem the rising tide of unemployment.

After an examination of 18.9 billion in stimulus projects the two AP reporters are not reporting that the money is being wasted on make-work.

As far as deciding where the money is being spent is fair or unfair, a family without work suffers.

Here is a list of unemployment rates for metropolitan areas. I don't need to be explaining that there just is not enough money.

 

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#2) On May 11, 2009 at 8:31 PM, Bojac3728 (< 20) wrote:

Great post Deej. For those who are old enough to remember a great statesman once said; "We contend that for a nation to try and tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle." Winston Churchill

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#3) On May 11, 2009 at 11:26 PM, thrasherrrr (< 20) wrote:

 "Shovel ready" was for two reasons, one was to prevent local Governments from trumping up make-work projects and reduce that type of waste. The second was to get money out quickly and stem the rising tide of unemployment.

 

Devoish,

 As somebody in the engineering/construction industry, the quick-throw money stimulus will not go as planned. The problem overall is the amount is pathetic at best. I'm currently working on a project that costs $500 million- and its one expressway interchange.

 The other problem is the meager sum thrown at our infrastructure is going all towards these asenine "shovel-ready" jobs. Can anyone tell me what happens when you throw a wad of money out there right away? The price of construction materials will rise by the end of summer.

 The government will therefore have created a demand that previously did not exist. And though the price of goods may have risen with any form of stimulus, the problem is the speed of everything happening at once and not dispersing the funds to projects at VARIOUS phases will ultimately mean the taxpayer will get less bang for his buck.

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#4) On May 12, 2009 at 6:25 AM, TMFDeej (99.26) wrote:

As the famous quote goes:

"Never in the history of the world has there been a situation so bad that the government can't make it worse."

Deej

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#5) On May 12, 2009 at 4:52 PM, TheClub55 (21.97) wrote:

Here is the other problem w/ this type of "stimulus"... my father in law owns a bridge building company (3 generations and running).  Now over the last few years margins have ranged from 1-4%.  Now is goal out of all this is to bring margins up, up, up and not hire a single new person.  To date his business is booked thru 2010, margins on bids are at 20% and he's even building in penalties b/c he know he can’t hit the delivery date… and he still has no plans to hire more people.

 

So, what do we learn from this… w/ low margins he lives a great life and with higher margins the economy will not see much of a booth since most of the increase will go into savings that have been hit by the market and saving for retirement (knowing inflation will be a future risk). 


At least someone is benefiting from horrid gov spending. 

 

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#6) On May 12, 2009 at 5:00 PM, alexxlea (48.13) wrote:

Better idea than throwing money at, say, C, my least favorite bank ever, but you have to admit that such projects are just a result of the government backhandedly admitting how much our road and bridge maintainence sucks in this country.

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#7) On May 12, 2009 at 9:28 PM, devoish (96.49) wrote:

alexxlea,

I definitely agree with that statement.

thrasherrr,

The problem overall is the amount is pathetic at best.

Can anyone tell me what happens when you throw a wad of money out there right away? The price of construction materials will rise by the end of summer.

A pathetic amount won't do much to the price of construction materials and if we don't start fixing the roads the materials won't be any cheaper after China grabs them up. It is tough to argue Government is more wrongheaded than private enterprise, to start spending based upon the idea they will drive up construction costs when private enterprise just lost their shirts by funding construction at the highest prices in the history of mankind. The Stimulus will only slow the fall, private enterprise jumped off the cliff. The only real advantage of the stimulus is that you get something built that should have already been done, for your money, as opposed to food stamps and get nothing.

Theclubb55,

For shovel ready projects aren't the bids already in and construction costs at least estimated? To arbitrarily raise prices 20%, unless you know somebody, winning the bid should be pretty hard.

Estimates for my home building project are coming down, and I might just hire for $20.00/ hour.

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