The high cost of low taxes: Americans don’t want to maintain America

Welcome to the future of “small government.” America’s infrastructure was once the best in the world. But we didn’t want to pay to maintain it.

David Cay Johnston: “America’s Coming Infrastructure Disaster”

For decades, America has scrimped on taking care of the public furniture, endangering people and weakening the economy as bridges rust, roads crumble, dams weaken, and water mains leak. The sudden collapse of an Interstate highway bridge in Minneapolis in 2007, killing 13, and the cracks that shut down the Sherman Minton Bridge connecting Indiana and Kentucky last year (it reopened in February) are warning signs of widespread, but hidden, dangers lurking all around us.

Even greater threats can be found among the decrepit corporate-owned infrastructure, including high-pressure oil and natural-gas pipelines that can explode without warning, electric power poles long past their replacement dates, and a telecommunications system that is far less reliable today than it was two decades ago — despite customers paying more than a half-trillion dollars for upgrades.

America’s infrastructure gets a grade of “D” from the American Society of Civil Engineers, which recommends that we spend $2.2 trillion on repairs and maintenance.

… Under the banner of deregulation, the monopolies that supply electricity, water, gasoline, natural gas, and Internet access have been hollowing out the privately owned infrastructure on which modern life and economic activity depend. Instead of putting more into maintenance, they have slashed budgets. At the same time, they earn phenomenal profits: up to 55 percent on their assets, eight times the average for all corporations.

Corporate monopolies that own railroad bridges, hydroelectric dams, and high-pressure pipelines have skimped on taking care of this infrastructure, putting lives and property across America at unnecessary risk from blackouts, collisions, and explosions, even the threat of entire towns being washed away by bursting dams.

Photo by Leon Tucker, The (Cherry Hill, NJ) Courier-Post.

KYW/CBS Philly: “Freight Train Derails, Spills Chemicals in Paulsboro, NJ; Evacuations Ordered”

Officials say a freight train derailed over the Mantua Creek, leaking a chemical called vinyl chloride, which is considered toxic and highly flammable. Hazmat crews are currently on scene.

It appears the five cars derailed when a bridge they were traveling over collapsed. Some of the trains are currently submerged in the Mantua Creek.

Rescue units have been dispatched to the scene after numerous people complained of respiratory problems. A number of people in the immediate area have been evacuated.

The U.S. Coast Guard has also been notified because the chemical might be leaking into the Delaware River.

Travis Waldron: “How Increasing Infrastructure Spending Provides a Major Boost to Our Economy”

The United States has a massive infrastructure deficit, with independent analysts finding that the country could need as much as $2 trillion in immediate investments just to bring its infrastructure up to date. With the economy recovering slowly and our nation’s roads and bridges crumbling, a new paper from the San Francisco Federal Reserve found that making investments into infrastructure has substantial short- and medium-term benefits for the economy.

Each dollar invested into infrastructure boosts state economies by at least two dollars, the paper found:

Federal highway grants to states appear to boost economic activity in the short and medium term. The short-term effects appear to be due largely to increases in aggregate demand. Medium-term effects apparently reflect the increased productive capacity brought by improved roads. Overall, each dollar of federal highway grants received by a state raises that state’s annual economic output by at least two dollars, a relatively large multiplier. [...]

In other words, for each dollar of federal highway grants received by a state, that state’s GSP rises by at least two dollars.

  • EllieMurasaki

    Yes, of course, I can simply borrow twenty thousand dollars to start my own business. My creditworthiness isn’t a concern because banks and venture capital firms are itching to lend money to startups and don’t care that half of all businesses fail in the first five years, and in the wildly unlikely event that I can’t get a loan from such an entity, I have parents who make so much money that lending me twenty thousand is barely a blip on their bank statement and if I lose it all they’ll never miss it. And I won’t have to worry at all about a health catastrophe hitting me while I have no employer-provided health insurance and can’t afford to self-insure.
    (Notice how the word ‘government’ didn’t appear in that paragraph at all.)
    (Also, look up the lyrics to “Sixteen Tons” and do some research into the problems that inspired the song.)

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- You’re missing the point. corporations LIKE regulations. the use the to keep out competition, that’s why there are like 5 banks. They are terrified of competition, not regulations.

  • EllieMurasaki

    Which of course explains all the corporate lobbying against tighter safety standards and a higher minimum wage. And certainly no regulation could be put in place to prevent banks growing too large–Ma Bell broke up entirely off its own bat.
    (I thought you were a libertarian? What happened to the free market being king? A market that isn’t competitive is not in any meaningful sense free.)

  • stardreamer42

     Heh. I’m glad I’m not the only one who thought about that.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Kmart is lobbying FOR a higher minimum wage.  

    If a company can make something cheaper and better I don’t care how big  or small they are.

  • EllieMurasaki

    Is it really? I’ll have to shop there more. You’ll want to provide a citation first, though. And Walmart’s bigger than Kmart and wants nothing to do with higher minimum wage and has more like-minded friends than Kmart.

  • http://www.facebook.com/people/Charity-Brighton/100002974813787 Charity Brighton

    He’s right to a certain extent. Larger businesses often support regulations that they can afford to adhere to but smaller businesses can’t. However, what he’s missing is that they usually prefer to not have any regulations at all; in an unregulated market, it’s not hard for them to use their greater financial clout to simply smash small businesses out of existence and drive out competition through monopolistic business practices like cartelization and other practices that might be illegal now but wouldn’t be in a world without regulation. But realistically they know that they have to have some regulation, so they’ll lobby for the ones that hurt their competitors more than they hurt them.

  • EllieMurasaki

    True enough.

  • Lori

     

    I meant all the people who died in the wars not money coming back to life.  

    This is even more ridiculous than what Dave thought you meant. Did you flunk every single year of history when you were in school?

  • Lori

     

    corporations wouldn’t have any power without the government.  

    You have said this before. It is not true. We have explained why it is not true. You keep saying it.

    Your willful ignorance renders you pointless to talk to.

     

    You wouldn’t have to work at a corporation if you didn’t want to, you
    could start your own business because there would be no restrictions
    barring entry the way there is now.  

    This is not ignorant, this is actually dumb.

  • EllieMurasaki

    To be fair, I learned about the problems underlying “Sixteen Tons” from Dear America, not from school. (A Coal Miner’s Bride: The Diary of Anetka Kaminska, Lattimer, Pennsylvania, 1896)

  • http://profile.yahoo.com/ZNNUWEXUPQUQAYGBFDHTEIJBUI Joshua

    The Kmart thing might be true, but I’d be surprised. Kmart is basically what Walmart would be if Walmart was barely clinging to life and operating at a net operating loss every year for the past… well, almost forever, even after it was rescued by Sears. It’s basically a shittier Walmart, since it treats its employees about as badly but doesn’t even turn a profit while doing so. 

    (Seriously, Kmart is basically a case study in a dying retailer. Capital spending is in the toilet, they appear to think that retrenchment is a long-term business strategy — as if cutting costs while slashing revenues works for private companies any better than it does for the government, and they’ve somehow managed to get it so that their brand image is below Walmart and Target in quality, which just beggars the imagination. I mean, what do you have to be doing where Walmart (!?!) seems more prestigious than you? I’d be surprised if they even have any money to spend on lobbying at all, much less actually have the resources to pay a higher minimum wage while they’re, you know, hemorrhaging money.)

    Amazon is going to start lobbying for online income tax. you won’t know what hit you when that happens.

    Is it worth asking what the Hell an “online income tax” is? Is Chris Hadrick just now discovering that Amazon.com sells TurboTax CDs?

  • EllieMurasaki

    My best guess is that Chris is talking about Etsy hiking its transaction fees to account for federal tax on the transactions, thus relieving me of the need to tally up my Etsy sales and account for that money on my 1040. Or some such thing.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    It may also refer to uniform collection of state sales tax across states, which is something a lot of retailers have, so far, lobbied against in order to preserve the competitive advantage that comes with being “in that place with no state sales tax so even with shipping it’s cheaper”.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    I meant Wal Mart not Kmart.

    and online sales tax!  I was drinking sorry.Amazon is lobbying for online sales tax because now that they have a presence in many states they will have to pay it, so they don’t want other companies who use UPS to not have to pay it. it’s not because they like local taxes and want to help.Also, They have developed a presence in so many states because they will make more money from it in the end.  Obviously that won’t help local retailers.

  • EllieMurasaki

    Walmart.

    Lobbying to pay more money to the people whose work hours they try to avoid letting become full-time (legally speaking) if at all possible in order to keep from paying them benefits.

    Yeah, you’re gonna need to cite the ever-living fuck out of that.

  • David Peterson

    I’ll just leave this here: http://www.strongtowns.org/journal/2012/5/21/the-value-of-value-capture.html

    Just a different perspective on the value of investing in infrastructure. Question: Should we be widening highways to four lanes from two lanes when we can’t afford to maintain what we currently have? 

  • EllieMurasaki

    If the two lanes are consistently jammed, then yeah, probably we should do what we can to unjam them, and making more lanes is a generally reliable way to do that. Whether we can afford to maintain the new lanes, or the old ones, doesn’t actually come into it, though of course we need to figure a way to maintain all the infrastructure that exists at any given moment.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    The fact that your typing under the influence looks the same as when sober does not lend much credibility to your statements – especially your claims wrt Wal-Mart.

    Particularly when they’ve been sued regarding wage payments, and they don’t seem to much bother with employee safety either.

  • http://dpolicar.livejournal.com/ Dave

    Agreed that if the existing system is consistently jammed, we should probably do what we can to unjam it.

    That said, I disagree that our ability to afford maintenance doesn’t come into it. Making more lanes may generally be a reliable way to unjam the existing
    system, but if we can’t maintain the new lanes it doesn’t seem like it would be reliable in this case… certainly not in the long run. If we can’t maintain the lanes, we should probably explore alternative ways of unjamming them rather than implement a generally reliable solution that we expect to fail in this case. 

    For example, we could investigate where all this traffic is coming from and how we could reduce it. Perhaps we should be investing in commuter rail instead, or providing incentives for businesses to relocate to somewhere less central, or some other approach.

  • Lori

     Obviously not all infrastructure is created equal. I strongly suspect that there’s a reason Fred’s infrastructure posts tend to focus on things like repairing bridges, modernizing the electric grid and internet delivery and rail, much more than on new road construction.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    If anything, stimulating the “work at home” trend is a good idea, since decentralization of work would probably cut down 0n fuel consumption, cutting down on pollution, and improving the quality of life all around.

    In that respect, infrastructure doesn’t become moving more people around so much as it becomes improving the flexibility people have in moving around. If you can shift more traffic and travel into the night hours that takes pressure off the daytime traffic cycle.

    The USA was forging ahead of Canada in this respect back in 2005. I don’t know how things have changed but I can guess that the US government is expanding the telework program if only because it helps save on gasoline.

  • The_L1985

    Dude. INFLATION HAPPENED. The can of Coke that would have cost me 50 cents in 1990 now costs $1. Each dollar is worth substantially less than it was 20 years ago.

  • The_L1985

    Wal-Mart’s minimum-wage employees are striking for more pay. Wal-Mart’s CEOs and upper management would pay said workers fifty cents an hour if they thought they could get away with it.

  • http://blog.trenchcoatsoft.com Ross

     

    I know almost nothing about Bush 1. I think that’s why I like him
    relatively speaking. All the presidents should be like that. stop it
    with the fireside chats and rallies. keep us out of war, don’t spy on
    us, stay inside.

    FTFY.

    I like my leaders to do some actual *leading*.

  • http://blog.trenchcoatsoft.com Ross

     

    Amazon is going to start lobbying for online income tax. you won’t know what hit you when that happens.

    This would be the same amazon who, when the state of california was considering requiring them to collect taxes, responded with “Hey, that’s a mighty nice set of cottage industries in california who rely on our infrastructure to do business. It’d be a real shame if something were to, ahem, “happen” to them…”?

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Incidentally, for the last 15 years or so it has been rather firmly lodged in my brain that a can of Coke costs $1.

    That’s a rather impressive lack of inflation, but Canadian Coke Classic has different components than US Coke Classic, so prices aren’t a 100% straight across comparison. (also: exchange rates)

  • http://twitter.com/lesterhalfjr Chris Hadrick

    L1985- no one would work for 50 cents an hour. You have to pay people what they are willing to work for. If my boss lowered my pay to half what I am making now I would leave. thus, he can’t cut my wages in half.  

    Ross- The President is the leader of the group of representatives we hire to do things for us.  He’s  their president really , not ours. We’re his boss.

  • EllieMurasaki

    no one would work for 50 cents an hour.

    “Look,” the young man said. “S’pose you got a job a work, an’ there’s jus’ one fella wants the job. You got to pay ‘im what he asts. But s’pose they’s a hunderd men.” He put down his tool. His eyes hardened and his voice sharpened. “S’pose they’s a hunderd men wants that job. S’pose them men got kids, an’ them kids is hungry. S’pose a lousy dime’ll buy a box a mush for them kids. S’pose a nickel’ll buy at leas’ somepin for them kids. An’ you got a hunderd men. Jus’ offer ‘em a nickel—why, they’ll kill each other fightin’ for that nickel. Know what they was payin’ las’ job I had? Fifteen cents an hour. Ten hours for a dollar an’ a half, an’ ya can’t stay on the place. Got to burn gasoline gettin’ there.” He was panting with anger, and his eyes blazed with hate. “That’s why them han’bills was out. You can print a hell of a lot of han’bills with what ya save payin’ fifteen cents an hour for fiel’ work.”

    (Five cents went further in Steinbeck’s setting than today, but the same principle applies.)

  • http://twitter.com/lesterhalfjr Chris Hadrick

    that’s life. There’s nothing you can do about it.  

  • EllieMurasaki

    Let’s recap.

    The_L1985: Big corporations that like a small payroll would pay their employees minuscule amounts if they could.

    Chris Hadrick: No one would work for that little money.

    EllieMurasaki: If the other option was even less money or none at all, yes they would.

    Chris Hadrick: That sucks but there’s nothing to be done about it.

    Nothing, Chris? Nothing whatsoever? Because it seems to me that this is what minimum-wage laws are MEANT for.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    What if someone needs help in their store and only have 6 dollars an hour to spare because they are barely breaking even and someone says they would like to work there and 6 dollars an hour is fine?  Why is that wrong?

  • P J Evans

    the use the to keep out competition

    That’s why we have the Sherman Anti-Trust Act. It’s all about maintaining competition, and it isn’t a regulation, it’s a LAW. Which should have been enforced a lot more in the last 30 or so years.

    Beckwit.

  • EllieMurasaki

    If the potential hire is looking for pocket money, nothing, though if the employer has that little margin then there’s probably something wrong that adding more labor is unlikely to fix. If the potential hire is looking for money to live on, everything.

    The difference involves a bunch of things that the employer should not be allowed to know. Not while making hiring decisions, and preferably not ever.

  • P J Evans

     If the store is barely breaking even, then they don’t have money to hire with. That’s what ‘breaking even’ is: they aren’t making money, but they aren’t losing money either.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- How can the law possibly tell the difference between someone who is looking for work for pocket money or to make a living. Do you formally announce it somehow?

    PJ- anti trust sounds good in theory, but prices generally rise for other reasons.  Sherman himself was an avid protectionist which of course benefits certain companies at the expense of consumers. Wether or not THAT is a defendable position is another story.

  • http://blog.trenchcoatsoft.com Ross

     I think what he’s saying is that if you can’t get paid a living wage, the fault is not in the employers, who are just behaving rationally; the fault is in your fellow workers for accepting sub-living wages rather than all refusing to work.

    So, basically “Don’t blame the job creators, blame those Other Poor People who are Taking Yr Jrrbs.”

    Basically par for the course.

  • EllieMurasaki

    How can the law possibly tell the difference between someone who is looking for work for pocket money or to make a living. Do you formally announce it somehow?

    Precisely my point, which is why the law should assume that everyone who is employed full time at minimum wage needs to get enough money in that forty hours a week for one adult to maintain a week’s worth of adequate if basic standard of living.

  • EllieMurasaki

    Yeah, blame people for wanting their kids to be a little hungry instead of desperately hungry, that makes complete sense.

  • EllieMurasaki

    I mean, I’m all in favor of worker strikes when necessary, but first make bloody sure they’re necessary, because loss of paycheck hurts, especially paycheck-to-paycheck types, even when a higher paycheck on the other end is guaranteed which with strikes it isn’t. And also I suspect Chris Hadrick opposes strikes and unions and other forms of worker collective action.

  • EllieMurasaki

    Also also, any such strike would have to have the cooperation of everyone who isn’t employed as well as everyone who is, because (in any state where it’s legal to fire someone with no stated cause, or not illegal to fire someone for going on strike) anyone who went on strike could simply be replaced by someone willing to work for the same crap money and unwilling to go on strike. Especially in this economic climate.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    That’s accurate. I don’t like unions. I can see if you work in a mine or something the need for one though.

    Ross-  What makes people pay a chef at a fancy restaurant a 6 figure salary? Why don’t they pay him 50 cents an hour? 

    Why do basketball players get paid tens of millions for shooting a ball? because that’s what it’s worth. If no one liked basketball their skill would be worth much less.

    Ellie- So I can’t agree to work for someone for 5 dollars an hour if I want? Why not, it’s a consensual agreement.

  • EllieMurasaki

    Can you live on forty hours a week of five dollars an hour?

    (Not in the US you can’t. Not unless you’re paying dramatically below market rate on housing and food.)

    Query: if the market wage for a job is not enough to live on, how, given that you’ve ruled out legislation and collective action and I seem to recall that you’re not fond of government antipoverty measures either, do you propose to ensure that everyone who does that job for a living can actually make a living?

  • http://profile.yahoo.com/ZNNUWEXUPQUQAYGBFDHTEIJBUI Joshua

    Ah, that actually makes it worse. I can sort of imagine a scenario where Kmart might want to position itself as a higher-end version of Walmart (about where Target is now, or even a little bit higher) with a package of strategies that includes pay-for-performance and an increased base salary to attract better employees. It’s not a believable scenario but it could sort of fit together kind of.

    But this crap? Is this guy seriously arguing that Walmart (!?!?!) wants to pay its employees more?

    (Has this guy ever run a business? Hell, has he ever held a job? I don’t get the impression that he’s done anything more advanced than introduction to macroeconomics, and I doubt that he even understood it.)

    Chris — do you know how colossal Walmart is? They dominate almost every single industry they enter — from grocery stores to home appliances to basically anything but electronics (they’re second to Amazon) and maybe one or two other things. They’re three times the size of the next two biggest retailers combined

    Do you think that, if it really wanted to raise the cost of labor in the retail sector, it would even need the government’s help? When you’re the largest single employer in the world, you pretty much set the minimum wage. If they decided that they were going to set their lowest wage bracket at $20 an hour, any retailer that didn’t follow suit or came up with some other way to attract employees wouldn’t be able to find good talent any more. Walmart would have its pick of anyone they wanted for their company. They could do that more or less at will.

    (Lobbying? Are you kidding me? Have you seen how dysfunctional and worthless our Congress is right now? Do you really think that if Walmart had a cunning strategy to increase their market share (presumably from gargantuan to Brobdingnagian) they would wait for Congress to get its shit together and pass a new labor reg? Really?!)

    Cripes.

  • http://blog.trenchcoatsoft.com Ross

    And why do we allow legislation that restricts the rights of Unicorn-owners?

    Freedom is all well and good, but the freedom of an imaginary percentage of people do behave self-destructively is not a good enough reason to set up a system that can not avoid fucking over the vast majority of people.  Your freedom to save a few bucks by buying the tainted meat is not worth the rest of us living in a world where meat inspection is an optional expense no sane business owner would shell out for.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie-  Maybe their spouse has a job.

    Joshua- do we have a problem with them paying people 20 dollars an hour? That would be great.  it would also result in a lot of over qualified people wondering what in the world was going on but they probably wouldn’t mind too much. The people who worked at wal mart who got driven out by the new faster 20 an hour ers would probably make their old wage someplace else.

  • EllieMurasaki

    The employer shouldn’t know marital status of potential employees either. And even if we suppose that it’s perfectly all right to pay someone five dollars an hour if their spouse is employed, that just leaves us with a married couple making five dollars an hour apiece. Ten dollars an hour isn’t a living wage for one person, let alone two, and what if there’s a kid that they need to pay childcare for while the parents work, or arrange their work schedule so that there’s always a parent with the kid but consequently the parents never actually see each other?

  • http://profile.yahoo.com/ZNNUWEXUPQUQAYGBFDHTEIJBUI Joshua

    I… think you kind of missed my point. I wasn’t saying that Walmart will or would increase their starting pay to $20/hour. I’m saying that if they wanted to they could basically set the minimum acceptable wage for their industry almost at will, because they have such a colossal market share for retailers and they are also — literally — the world’s largest private employer. Do you understand what that means? 

    They set the bar for their industry, and they can move it wherever they want and the other gnats are helpless but to respond to it if they want to survive in the industry.
    I really think you have a fuzzy idea at best as to how the business world actually works. 

  • EllieMurasaki

    It’s economics in general that he’s fuzzy on. He seems to forget that there’s real people with real needs behind all these numbers. And no one seems to have mentioned to him that money, like manure, does wonders at making things grow provided it’s spread around properly, but if stacked up and left there it’s just a stinking pile of crap.

  • Lori

    I’ve never had the impression that he forgets the real people. He simply doesn’t think about them because they aren’t important, which isn’t the same thing.


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